“As it proposes, the Air Force should take a flexible approach to weapons procurement. But taking an inflexible approach to IP rights is not the place to start.”
The U.S. Air Force last year announced revisions to its weapons procurement policy that will have the unintended effect of reducing its access to groundbreaking technology, thereby posing a threat to national security. Specifically, the Air Force said it would demand greater ownership of corresponding intellectual property (IP) rights. This ill-conceived policy will strip innovators of valuable property rights, and thereby diminish incentives for innovation and discourage collaboration with the military, especially the Air Force.
Threatening the Spirit of Innovation
The complexity and sophistication of modern weapons systems is self-evident. Even our most mundane appliances depend on artificial intelligence, GPS and the internet of things, and they simultaneously expose us to the risks of cybercrime, electronic monitoring, and an overall erosion of privacy. This dependence, and the associated risks, are especially acute in matters of national defense. The tools used in defense of our nation must deploy the most advanced technology, supported by extensive research and development. This demands a culture that preserves the American spirit of innovation.
The Air Force argues, however, that “Holding IP rights typically gives the producers of military systems near-exclusive control over technology upgrades during the several decades that many defense weapons remain in the inventory.” Purportedly, this conflicts with the interests of our military in that it allows those creating those systems to hold the IP rights, and thereby to make a low bid on the front end, but make more money on the back end due to “vendor lock.”
The Air Force says that by respecting the property rights of the innovators that make these advanced systems possible, it is frustrating its own ability to compete with the Russians and Chinese. Little need be said about the respect that the Russians and Chinese demonstrate for property rights, generally – much less the IP rights of those supplying military technology to those governments.
We are assured by the Air Force, however, that the “goal is not to bankrupt or do harm to the U.S. industrial base.” Instead, the Air Force speaks of finding “new kinds of flexibility,” and a business model that produces a win-win scenario.
The Air Force draws parallels to the great diversity of software apps made possible by the Apple business model. “Imagine a theoretical missile with open architecture and open IP rights.” The comment then urges that “any company can now compete to build a guidance system, software or a target seeker.” In this brave new world, a new procurement model would “reduce costs, expand the industrial base and in all likelihood make our weapons better.”
A Misguided Approach
It’s difficult to discern which is more ironic and ill-advised—the paean to flexibility in military procurement, or the notion that one can simultaneously reduce costs, increase competition, and improve quality by depriving innovators of property rights in the fruits of their labor. As H.L. Mencken famously advised, “For every complex problem there is an answer that is clear, simple, and wrong.”
Of course, the Air Force is right that this approach is routinely practiced in authoritarian regimes with no respect for property rights or the rule of law. And one might say it is characteristic of regimes that adhere to highly centralized, communist mores as opposed to the overwhelming commercial success, creativity, and technological dominance of free market, open economies that take the opposite approach to the rule of law. In that sense, if the U.S. military seeks to be more like that of Russia and China, and believes that model deserves emulation due to its ability to engender military and technological dominance, then perhaps this is a model to follow.
The smart money suggests otherwise. Today’s military weapons systems are complex technological wonders. The creation and development of those systems require the organized, sustained, and creative efforts of a highly skilled work force, laboring in collaborative, highly structured, complex business enterprises. All of this demands enormous investment, assumption of risk, planning, and patience. To suggest that we can sustain the development of successful, creative, dominating weapons technologies in a new “more flexible” model that affords only the ability to make a few more dollars on the front end is a remarkably naïve view of private enterprise, but perhaps one characteristic of military procurement.
Respect Property Rights, Bolster Security
As it proposes, the Air Force should take a flexible approach to weapons procurement. But taking an inflexible approach to IP rights is not the place to start. This is particularly so in an environment where the technology has diverse application, and the long-term value is indeterminate. A better approach would be to start with the proposition that there is great value in the intellectual capital that goes into creating these highly sophisticated systems, and that value must be respected in the form of IP rights. How those property rights are later commercially realized and exchanged in a procurement contract will be affected by myriad factors. It’s best to critically assess, and then negotiate, with those factors in mind.
The Air Force would do well to abide by the market-based incentives for innovation that have existed since our nation’s founding, and to respect the private property rights of those who bring useful inventions into existence. In doing so, the Air Force will ensure its access to the best, most advanced technologies the market has to offer, and better fulfill its mission to enhance national security.
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