Intellectual property in the public defence sector: A growing field for strategic legal advice

The public defense sector in Norway is undergoing a period of significant investment and regulatory development. With procurement budgets expanding rapidly and new international industrial cooperation arrangements being structured, questions relating to intellectual property (“IP”) have moved from the margins to the very centre of defense contracting. Norway's updated guidelines for procurement in the public defense sector, effective 1 January 2026, together with associated regulations on industrial cooperation, create a rich and complex IP landscape – one in which experienced legal counsel is indispensable.

This article provides an overview of the key IP provisions applicable to defense procurement in Norway, and highlights the practical areas where specialist legal advice adds the most value

The Core Principle: Non-Exclusive Licensing as the Starting Point

The public defense procurement guidelines require that procurement authorities lay down provisions on IP and royalties in contracts, and that ownership of IP and any royalty for rights of use shall appear clearly in the tender documentation and in the contract itself.

IP is defined broadly in the guidelines as a collective term encompassing, among other things, inventions, technical solutions, works of authorship (including software, source code and algorithms), designs, trade secrets and know-how. Intellectual property rights (“IPR”) covered by the guidelines include patents under the Norwegian Patents Act, trademarks under the Norwegian Trademarks Act, design rights under the Norwegian Designs Act, copyright under the Norwegian Copyright Act, trade secrets under the Norwegian Trade Secrets Act, and contractually established rights to IP.

As a general rule, the public defense sector is to enter into agreements that provide it with user rights that meet its actual needs in connection with a procurement and subsequent operation, maintenance and further development – rather than acquiring ownership outright. This general preference for non-exclusive licenses over outright ownership transfers means that the specific scope, duration, and limitations of user rights must be carefully drafted in every contract. An exception applies where there are compelling reasons to acquire ownership, or to demand exclusive use rights, as discussed below.

When Transfer of Ownership or Exclusive Licenses May Apply

Exceptionally, the public defense sector may agree to a transfer of ownership of IPR from the supplier, or to an exclusive license, where it clearly is strictly necessary and particularly weighty security considerations exist – this ground applies specifically where such strict necessity can be demonstrated, including situations falling under the Norwegian Act on Inventions of Importance to the Defense of the Realm of 26 June 1953 No. 8 with associated regulations. The same would apply if such transfer or exclusive license represents the most economically advantageous alternative (as elaborated in the Ministry of Defense’s Guidelines for Procurement Procedures in the Defence Sector). Such arrangements may be limited in time and scope to selected elements of technology or knowledge.

Advising on when these strict thresholds are met, and how to structure arrangements that satisfy the regulatory requirements while also adequately protecting the client's commercial interests, is a core area for specialist legal counsel.

Interface Documentation and User Rights

The public defense sector is entitled, without charge, to use technical documentation delivered under a contract that is necessary to include in tender documents or otherwise make publicly available in order to describe interfaces and functionality in connection with procurement of adjacent systems or materiel — so-called “Interface Documentation” ("Grensesnittdokumentasjon").

Interface Documentation may cover overarching form, fit and function descriptions; information necessary for overall installation, operation, maintenance and training; corrections and amendments to technical documentation; publicly available information; and other technical information delivered by the public defense sector to the supplier.

The public defense sector must also ensure that it may, free of charge and for its own internal use, reproduce and distribute technical documentation delivered by the supplier.

Defining the precise boundaries of Interface Documentation in contracts – and ensuring that a supplier's commercially sensitive documentation retains appropriate confidentiality protections – is an area where careful legal drafting is essential.

Comprehensive Contractual IP Assessment

At each contract signing, the procurement authority must assess, among other things, that the agreed IPR covers both the present and future needs and purposes of the public defense sector.

Contracts must also address the right to share IP within the broader public defense sector where necessary, including sharing within the total defense framework (such as user manuals), sharing with other industry actors (such as Interface Documentation), and sharing with other nations' armed forces (such as technical handbooks).

Contracts must address questions of liability and indemnification in the event of infringement of third-party rights, in order to protect the public defense sector and ensure alternative solutions if a breach of third-party rights cannot be resolved.

Contracts must also address legal scenarios where the development to be carried out does not, for whatever reason, reach completion, or where the supplier subsequently becomes insolvent, ceases operations, or discontinues its focus on the relevant technology – ensuring that, in such cases, the public defense sector can secure all necessary rights to protect its interests.

Specifically, contracts must ensure compliance with the Employee Inventions Act, the Trade Secrets Act, the Act on Inventions of Importance to the Defense of the Realm, and the Copyright Act – both to secure the rights to which the public defense sector is entitled and to ensure compliance with confidentiality requirements. This applies equally to the public defense sector's own employees who participate in R&D projects with a supplier.

The sheer breadth of this statutory checklist – ranging from patent law to copyright, trade secrets and specific defense-sector legislation – highlights why IP expertise in this sector is not merely helpful but necessary.

The Obligation to Agree on Royalties

Where the public defense sector has wholly or partly financed the research and development of a product, an agreement on royalty must be entered into.

The royalty amount shall be tailored to the individual case. As a general rule, royalty shall not exceed 5% of the sales price of a product/service, or sub-components of a system, where the public defense sector has financed a development or procurement (investment acquisition). This 5% ceiling applies both as a per-contract maximum and, as discussed below, as an aggregate cap across all public defense sector agencies for the same product. The royalty rate shall be assessed against market potential, development costs relative to production costs, and any per-unit levy. Importantly, royalty shall normally not be required in R&D contracts where the public defense sector's contribution to the development does not exceed NOK 5 million (excl. VAT), regardless of the budget line from which the financing is drawn. In addition, waiver of royalty may be considered for small and medium-sized enterprises in early phases of a development cycle where the public defense sector contributes financing in a product's start-up phase; any such waiver must be approved by the Ministry of Defence.

Royalty shall be payable from the first sale. As a general rule, royalty shall be waived once the public defense sector's contribution or investment has been repaid, and an end date for royalty payments may be considered based on an assessment of the technology's useful life. However, this waiver-upon-repayment rule and time-limitation shall not apply to IPR that the public defense sector itself has developed; in such cases, license agreements and royalty requirements vis-à-vis industry shall instead be based on the requirements applicable to the public defense sector's operation as a market actor under the state aid rules, for which a guiding royalty rate of 5% is considered market standard within the defense segment.

The public defense sector shall in principle be treated as a single actor, meaning that royalty for the same matter shall not be demanded multiple times by different agencies. Accordingly, the aggregate royalty payable across all agencies shall not exceed the 5% ceiling referred to above for the same product, regardless of the number of separate contractual relationships in place.

Royalties upon Further Development

Where a supplier further develops a product, or uses parts of a developed product as part of another system, royalty shall also be payable. In cases of further development, the royalty is calculated as: The public defense sector’s royalty = X × (A / (A + B)), where X is the originally calculated royalty, A is the public defense sector's development costs (including its own contribution), and B is the supplier's further development costs.

The supplier must present documentation to the procurement authority supporting a reduced royalty rate, and may not report royalty at a reduced rate until the procurement authority has received and approved the basis for that reduction.

Reporting, Audit and Verification Rights

The procurement authority must impose on the supplier a registration obligation, including a duty to maintain a specific overview of the exact number of units sold and the invoiced value. The supplier must report on sales and collected levies for each calendar year, even if no sales have occurred in the period.

The public defense sector has the right of inspection with the supplier to verify underlying documentation, and the right to obtain information through relevant agencies regarding any sales to foreign countries.

Norwegian Defense Materiel Agency (“FMA”) manages the public defense sector's ability to require royalty for development financed through the sector's investment procurements, whilst the Norwegian Defense Research Establishment (“FFI”) manages royalties in connection with licensing of the public defense sector's own IPR to industry.

Where royalty may be claimed by both FFI and FMA for the same product, royalty payment to FFI takes priority where the royalty relates to licensing of the public defense sector's own IPR within the 5% ceiling.

By way of illustration, a royalty dispute may arise where a supplier further develops a public defense-funded product and claims a reduced royalty rate under the formula set out above, but the procurement authority disagrees with the supplier's calculation of its own further development costs (B). In such a scenario, the supplier may not apply the reduced rate until the procurement authority has approved the underlying documentation – creating a potential cash-flow and accounting dispute that requires both technical and legal resolution. Similarly, where multiple agencies have separately funded aspects of the same product, disagreements may arise as to whether the aggregate 5% ceiling has been reached, and which agency's royalty claim takes priority.

Foreground information is information that is created or developed in the course of carrying out a collaboration or development project – typically in connection with a specific procurement project, or in R&D projects preceding a procurement.

Foreground information arising from a procurement project may be relevant to subsequent upgrades and maintenance, or to the ability to re-procure in the event that a supplier becomes insolvent or ceases operations. For this reason, the public defense sector must be secured the right to use foreground information from a project for subsequent procurements and potential follow-on competitions, while protecting trade secrets and commercially sensitive information.

Agreements must be clear in their descriptions and must not give the public defense sector the right to share rights or foreground information with third parties unless specifically agreed. In subsequent competitions, the public defense sector should as a main rule use aggregated, non-sensitive results from foreground information when engaging with third parties.

Ownership of a product arising from foreground information generated through an R&D project prior to a (potential) procurement normally remains with the supplier. This principle is of significant commercial importance: it means that a supplier retains the ability to exploit the product commercially, including through export sales to third countries, provided that such sales do not contravene the applicable export control regulations (which constitute a strict prohibition rather than a mere compliance formality). The public defense sector secures the user rights it requires. However, the precise delineation of what constitutes the “product” versus the underlying foreground information – and the extent to which the public defense sector may use that information in subsequent competitions – is frequently a key negotiation point requiring careful contractual drafting.

A distinct but closely related area involves the IP aspects of industrial cooperation obligations triggered by foreign defense procurements.

Approved categories of industrial cooperation projects include technology collaboration (including R&D collaboration) and technology and knowledge transfer to Norwegian partners.

Technology collaboration is defined as projects in which Norwegian and foreign partners participate on an equal basis and with a reasonable degree of equal effort, with the aim of producing a next-generation product, preferably at system level.

In the context of technology collaboration, the Norwegian partner's rights to technology and knowledge constitute one of the elements in the value assessment of the project.

Similarly, in technology and knowledge transfers, the Norwegian partner's rights to technology and knowledge are a key element in value assessment.

Industrial cooperation projects must not result in the export of Norwegian defense materiel, technology or expertise in contravention of current export control regulations.

The intersection of IP ownership, technology transfer obligations, and export control compliance is one of the most technically demanding areas of defense IP law, and one that regularly requires specialist legal structuring.

The regulatory framework outlined above gives rise to a number of practical areas where specialist legal counsel at the intersection of IP law and defense procurement adds particular value:

IP Audits and Rights Mapping Prior to Contracting 
Mapping a supplier's or procuring entity's existing IP portfolio – and identifying which rights are likely to be engaged by a particular defense contract – is a critical pre-contractual step. This includes background IP, potential foreground IP, and employee inventions.
 

1. Drafting and Negotiating IP and Royalty Clauses 
   The guidelines impose detailed requirements on the content of IP provisions, including user rights, Interface Documentation, third-party indemnities, insolvency protections, and royalty formulas. Schjødt can assist both suppliers and the public defense sector in drafting balanced, compliant, and commercially protective clauses. It should be noted that the rules for conducting procurement procedures in the public defence sector (“RAF”) is an internal instruction that does not in itself confer rights or obligations on third parties, including suppliers; however, its requirements are given contractual effect through the procurement documents and the resulting contracts, making familiarity with the RAF essential for any party negotiating defense contracts.
    
2. Structuring R&D Contracts and Collaboration Agreements 
   For development projects, clear allocation of rights to foreground and background IP – and ensuring that the public defense sector obtains the specific rights it requires without unnecessarily divesting the supplier of commercial value – is a skilled drafting exercise.
    
3. Advising on Royalty Disputes and Verification 
   Given the public defense sector's extensive audit and inspection rights, and the complexity of royalty calculation on further developments, disputes over royalty obligations and reporting requirements are an emerging litigation and dispute resolution area.
    
4. Technology Transfer in Industrial Cooperation Agreements 
   Schjødt can advise foreign suppliers and Norwegian industrial partners on the IP implications of technology transfer projects under industrial cooperation agreements, including the structuring of IP ownership, rights to results, and the interplay with export control law.
    
5. Handling Defense-Critical Inventions ("Forsvarsviktige Oppfinnelser") 
   Where a procurement falls under the Act on Inventions of Importance to the Defense of the Realm, and security considerations may necessitate a transfer of ownership or exclusive license, specialist advice is required to navigate the strict necessity threshold and to structure the arrangement appropriately.
    
6. Post-Contract Compliance and Royalty Reporting 
   Ongoing support for suppliers subject to annual royalty reporting obligations, audit exposure, and verification processes is an area of sustained demand as long-term defense contracts mature.

IP in the public defense sector is no longer a secondary concern in defense procurement – it is a central pillar of contract negotiations and a source of significant commercial risk and opportunity. Norway's updated 2026 defense procurement guidelines have codified a detailed and demanding IP framework that applies to every contract in the sector. 

Looking ahead, the increasing role of artificial intelligence, autonomous systems, and multi-national collaborative development programs will further complicate the IP landscape – raising novel questions about ownership of AI-generated inventions, cross-border licensing of jointly developed technologies, and the application of existing statutory frameworks to new categories of intangible assets. Navigating this evolving framework successfully – whether as a supplier, an industrial partner, or the procuring authority itself – requires specialist expertise at the intersection of IP law, defense procurement law, and commercial contract law.

Stakeholders across the public defense sector are well advised to engage specialist IP counsel early in the procurement cycle – from pre-contract strategy through to dispute resolution – to ensure that their rights are adequately secured and their obligations clearly understood.