A key area of interest and concern in the South African Defence Review 2012 is “defence intellectual property”. The review recognises that a “vib- rant defence industry remains a critical component of an effective South African defence capability”. Research, development, engineering and manufacturing components, products and systems for defence generates intellectual property. These activities are often funded by the Department of Defence (DoD).

The review defines defence intellectual property as “[a]ny intel- lectual property that is created exclusively or partially with defence funds and may be found in, or take the form of, books, manuscripts, reports and notes, computer software, inventions, drawings and designs, data items, data packs, specifications, models, photographs, trademarks and other graphical images. “Defence intellectual property includes intellectual property that is created through indirect contracting, such as contracts made by the other party with a sub-contractor, as well as intellectual property that is obtained or created exclusively or partially through the Defence Industrial Participation programme or other contracts or cooperations of the Defence Force with foreign entities or countries, where the Defence Force and/or the other party are legally entitled to the intellectual property.”

Such defence intellectual property can be created by means of investment in and development of products, as part of an acquisition programme; investment in a specific defence science, engineering and/ or technology research and development (R&D) programme; and invest- ment stemming from a defence industrial programme. The Defence Force should establish a broad policy regarding the management of defence intellectual property. In particular, this should include contractual arrangements controlling procurement and R&D programmes.

The defence review recommends that decisions regarding the management of intellectual property regarding sovereign or strategically critical capabilities be made by the Minister of Defence with the advice of the Secretary of Defence and the CEO of defence matériel acquisition (and R&D) agency Armscor. The Armscor CEO would also be made responsible for the routine management of all intellectual property owned by the South African National Defence Force (SANDF). Such intellectual property should not be disposed of without the Minister of Defence agreeing that such a step would not present a strategic risk.

“The ownership of all and any intellectual property in respect of any defence matériel or technology developed under a direct government defence contract or indirectly as part of a direct government defence contract, will reside with defence, unless specifically ceded to another body or person, regardless of any patents that may be lodged,” states the review. However, some projects will be cofunded by the DoD and the company or companies concerned, or may be developed in cooperation with other countries. In the former case, the ownership of the resulting intellectual prop- erty should be held on a pro rata basis, set out in the relevant contracts. (These would cover such issues as sovereignty and secrecy, royalties, the use and possible future transfer of the intellectual property.) In the latter case, the issues of intellectual property should be governed by binding government-to-government agreements.

The review recognises that the State will have to exercise rigour in its management of future defence contracts. Issues that will have to be dealt with include – the “management of commercial background and foreground intellectual property”, the ownership and transfer and use of this background and foreground intellectual property, security, dispute settlement, and arms control and dual use and nonproliferation concerns. Other such issues include the ownership, use and transfer of any defence intellectual property created by a programme, including (where appropriate) co-ownership matters; the management of defence intellectual property that is indivisable; royalties; the licen- sing of defence intellectual property; its sale or change of owner- ship; patent registration; the loss or unlawful use of defence intel- lectual property and the management and disposal of defence intellectual property that is no longer required.

The defence review does not recommend that the SANDF patent its intellectual property. This would be to avoid significant continuing costs and would undermine the security of the relevant intellectual property. Instead, reliance should be placed on the proper management of secret material and on the country’s national secrecy and security capabilities.