Navigating Intellectual Property Rights in Defence Procurements

Intellectual property rights are protected rights to non-physical assets created through intellectual effort, such as inventions, software, technical solutions, designs and trade secrets.  

The Guidelines for Procurement in the Defence Sector (RAF), which on 1 January 2026 replaced the Procurement Regulations for the Defence Sector (ARF), address, among other things, how the intellectual property rights to procured technology are to be regulated in defence contracts.  

The basic principle of the RAF is that the Armed Forces should normally not own the technology, but should be granted the rights of use necessary for the procurement and subsequent operation, maintenance and further development. 

One change from ARF to RAF concerns the conditions for transfer of ownership or an exclusive licence. The threshold for the Armed Forces to demand a transfer of ownership or an exclusive licence under ARF was set relatively low – the condition was that it appeared necessary or economically advantageous. Under RAF, the threshold has been raised and the transfer of ownership or an exclusive licence can only be agreed in exceptional cases, and requires that it is clearly strictly necessary and that there are particularly compelling security considerations. 

Rights to IP – balancing operational benefit and supplier safeguards 

To ensure that the Armed Forces obtain sufficient rights for their operational use, the Armed Forces shall normally have the right to use technical documentation supplied under a contract and which is necessary to include in the tender documents, or otherwise made generally available , in order to describe interfaces and functionality in connection with the procurement of adjacent systems and equipment (so-called interface documentation). 

It can also be expected that the Armed Forces will require sharing of intellectual property rights internally across the sector, as well as in situations requiring sharing outside the defence sector – including with the overall defence, other industries and the armed forces of other countries. For suppliers, it is crucial that the contract clearly defines what may be shared.  

A particularly complex legal landscape arises where the project involves technology development based on both parties’ existing knowledge. In such cases, the contract should include: 

• A clear definition of what constitutes the supplier’s and the Armed Forces’ background IP respectively, i.e. rights that exist prior to the start of the contract and which remain with the respective party.
• Rules regarding who owns newly developed technology (foreground IP), including whether this is jointly developed or supplier-driven.
• Licence rights to background IP necessary for the Armed Forces to fully utilise the foreground IP.
• Provisions regarding further development based on the jointly developed technology, so that the parties agree on who may carry out further development and on what terms. 

This is particularly critical in R&D contracts characterised by high uncertainty and a long time horizon. The more the Armed Forces contribute financially to the development, the stronger their position is to claim rights – but under the RAF, the supplier’s ownership of its background IP is better protected than before. 

Safeguarding continuity 

A practical issue in long-term defence contracts is what happens if the supplier goes bankrupt, ceases trading, or undergoes a change of control – for example, through acquisition by a foreign entity with different interests. 

The RAF addresses this directly and sets out expectations that the defence sector should be enabled to safeguard its interests in such situations. 

The most effective tool for ensuring such continuity is an escrow agreement. A source code escrow involves the supplier depositing source code, technical documentation, algorithms and other critical information with a neutral third-party custodian. If agreed trigger conditions occur – typically bankruptcy, breach of contract over a given period, or cessation of product support – the material is released to the Armed Forces so that it can operate, maintain and, if necessary, continue the technology with an alternative supplier. Key issues in assessing escrow terms are what is included in the escrow, which trigger conditions apply, and who has the right to use the material after release. 

Right to royalty 

If the Armed Forces have financed the research and development of a product, either in whole or in part, the RAF requires that a royalty agreement be entered into. As a general rule, royalties shall not exceed 5% of the sale price of a product or service. 

This represents a significant material change from the ARF to the RAF. Under the ARF, royalties were payable from the first NOK of sales, even continuing after the defence sector’s costs had been covered. Under the RAF, the starting point is different: royalties are payable from the first krone of sales, but as a general rule, royalties are waived once the defence sector’s contribution and investment have been reimbursed. 

For suppliers, this is a significant improvement. Under RAF, the royalty obligation is linked to the repayment of the Armed Forces’ actual investment, not to an unlimited levy on future commercial success. In addition, the RAF introduces a new threshold value. Normally, no royalty requirement shall apply in research and development contracts where the defence sector’s contribution to the development does not exceed NOK 5 million excluding VAT. 

The complex landscape of IPR 

Depending on the nature of the procurement, it may fall under the Act on Inventions of Importance to the Defence of the Realm, which grants the state special rights and imposes restrictions. Relevant considerations relating to this Act must be addressed in the contract, which places specific requirements on the contract’s content. 

Intellectual property rights in defence procurement constitute a legal landscape characterised by high complexity, significant value and potentially far-reaching consequences. The introduction of the RAF from 2026 entails important substantive changes which, overall, strengthen the position of suppliers, particularly regarding the threshold for the transfer of rights and the cessation of royalty obligations. At the same time, the risk profile for both parties is significant: inadequate regulation of background IP, foreground IP, escrow and change of control can have serious consequences for technology access, operational continuity and commercial freedom. 

Proper contractual regulation of intellectual property rights is not merely a legal formality. It is a strategic tool for safeguarding the company’s long-term interests, balanced against the Armed Forces’ legitimate needs. 

This article is intended as general information and does not constitute legal advice.