The National Security and Investment Act allows the government to scrutinise acquisitions that could harm the UK’s national security.
The new rules apply to acquisitions that are in progress and incomplete as of 12 November 2020 and apply to 17 areas of the economy that are deemed to be sensitive.
These areas are pretty much what you’d expect - nuclear technology, defence, military and satellite and space technologies. However, the 17 areas include other technologies that are current and fast growing areas of research worldwide. For example, energy technology, artificial intelligence, communications, computer hardware, advanced materials and synthetic biology.
HOW WILL THE NEW NATIONAL SECRUITY AND INVESTMENT ACT IMPACT INTELLECTUAL PROPERTY?
The Act applies to dealings in intellectual property (IP) in the sensitive areas and could make transactions in IP, such as patents, subject to government approval.
This means that if the transaction involves an IP asset that has effect in the UK and the level of control acquired over the asset exceeds a threshold, then the rules require the parties to notify the government.
Interestingly, the guidance also states that, for intellectual property, the rules apply to IP “used in connection with activities carried on in the UK” or “used in connection with the supply of goods or services to people in the UK”.
This could be interpreted as applying to intellectual property that has territorial scope outside the UK but is critical to supply of goods or services to people in the UK. The guidance gives an example of an “offshore wind farm which is used to generate electricity which is supplied to the UK”. Extending this example to the world of IP, then the rules could equally apply to IP that can be used to prevent or control the use of machinery by a third party, where that third party supplies the UK.
The scope of some IP rights can be significant and therefore provide the owner with a large degree of control over the use of technology.
Accordingly, it would be prudent to consider the government guidance and obtain professional advice if an IP transaction would give you control over technology in the sensitive areas whether in the UK or that could impact supply of goods and services to the UK.
WHERE CAN YOU FIND OUT MORE ABOUT THE NEW NATIONAL SECRUITY AND INVESTMENT ACT?
The Government has provided more detailed guidance at: