• IP News Bulletin

UK government stops IP Licensing over national security concerns

A final order prohibiting the licencing of intellectual property relating to SCAMP-5 and SCAMP-7 vision sensing technology, developed by The University of Manchester, to Beijing Infinite Vision Technology Company Ltd. (the "Acquirer") was issued on July 20, 2022, according to the UK's Secretary of State for Business, Energy, and Industrial Strategy.

This is the first instance in which the National Security Investment Act of 2021 ("NSIA"), which went into effect on January 4, 2022, has been used by the UK government to prohibit a deal.

In this instance, the Acquirer would have been entitled to utilise the technology to develop, test, verify, produce, use, and market its licenced products thanks to the intellectual property supplied under the licencing agreement.

Due to the license's "dual-use applications," which meant that it might have been used for both civil and military reasons "to strengthen defence or technology capabilities," the government's final order notice forbade its issuance, as it was thought to represent a risk to UK national security. The final order notification effectively stops the licencing of the intellectual property from moving forward.

It's interesting that the transaction was reported on a voluntary basis because it did not come under the purview of the mandatory notification system. This emphasises the government's willingness to adopt an interventionist strategy that is not limited to the industries that qualify.

The deal may have still been subject to a call-in review for up to five years post-completion. Additionally, the transaction did not involve the traditional share purchase or acquisition of complete control; rather, licencing and other agreements that provide purchasers the authority to use or control qualifying assets may be subject to government assessment under the NSIA.

The parties now have 28 days starting from the date of the final ruling to submit a claim for judicial review in order to appeal.

Kwasi Kwarteng, the secretary for business, energy, and industrial strategy stated that there was "a possibility that the technology might be utilised to construct defence or technological capabilities, which may constitute national security risk to the United Kingdom." "Those risks would come into play once the acquirer received the intellectual property."

The technique can be employed in nanny cams, drones, and other monitoring equipment in addition to 3D renderings. Cameras can now process a lot of photos more quickly thanks to technology.

Separately, Kwarteng is doing a thorough national security analysis of Nexperia, a Dutch affiliate of China's Wingtech Technology, which last year acquired Newport Wafer Fab, the nation's largest semiconductor manufacturer, for £63 million (US$75 million).

The greater scrutiny of technology deals by Chinese and other foreign firms comes at a time when Sino-British relations have deteriorated recently over a variety of issues, including the implementation of a contentious national security law for Hong Kong and alleged human rights violations in the Xinjiang Uygur autonomous region in western China.

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