University IP licensing deal blocked by UK government on grounds of national security

On 4 January 2022 the UK government implemented the National Security and Investment Act, which allows the government to scrutinise and intervene in certain acquisitions that could harm the UK’s national security.

As reported earlier, the Act applies to dealings in intellectual property (IP) in sensitive areas and could make transactions in IP, such as patents, subject to government approval.

In a move that will be of interest to universities and others, an IP licensing deal between the University of Manchester and a Chinese company, Beijing Infinite Vision Technology Company Ltd, has been blocked by the UK government.

The University of Manchester and Beijing Infinite Vision Technology Company Ltd had entered into a licence agreement to enable the latter to use IP relating to SCAMP-5 and SCAMP-7 vision sensing technology to develop, test and verify, manufacture, use, and sell licensed products. The technology is seen as having applications in embedded vision applications such as robotics, VR, automotive industries, toys, and surveillance. On their website the Chinese company describe themselves as providing “the cutting-edge 3D rendering technologies to deliver realistic still image, animation and virtual reality for residential cultural and commercial projects”.

A final order to block the licence agreement from proceeding was made by the Secretary of State for Business, Energy and Industrial Strategy (BEIS), Kwasi Karteng, pursuant to Section 26 of the Act. It was considered that “there is potential that the technology could be used to build defence or technological capabilities which may present national security risk to the United Kingdom” and “those risks would arise on the transfer of the intellectual property to the Acquirer”.

Since IP licensing forms an integral part of the university business model, universities will need to re-evaluate their risk assessment processes and voluntary notification procedures. 

BEIS has recently published a set of market guidance notes providing practical advice in making notifications, information about whether certain types of acquisitions are qualifying acquisitions, and help for higher education institutions to decide whether to notify the UK government under the Act.