Setting up defense production facilities in Ukraine necessarily involves transfer of intellectual property rights, which includes dual application technologies that can be applied to both military and civilian sectors.
For example, foreign defense companies, like the U.S.-based AeroVironment, work jointly with Ukrainian companies to produce Switchblade 600 loitering munitions in Ukraine using their dual application technology. Initially AeroVironment will ship the components to Ukraine for assembly, followed by production of certain components in Ukraine, all of which requires transfer of intellectual property rights to the Ukrainian entity.
Still other foreign companies, such as Czech holding Czechoslovak Group (CSG) have signed an agreement with Ukrainian Armor, a private defense company, to cooperate on the production of 155mm shells. Specifically, CSG will supply components and share the technology and manufacturing documentation for the production of the shells to Ukrainian Armor, with the licensing process to be finalized by the end of 2024, and production to start in early 2025. Again, this project includes transfer of dual application technology.
With regard to the transfer of dual application technologies to a Ukrainian legal entity (joint venture or 100% foreign owned subsidiary), the owner of the intellectual property (IP) rights has two options: (a) contribute its dual application technology to the authorized capital of its Ukrainian subsidiary or (b) enter into a license agreement for the use of technologies (with corresponding royalty payments).In our recent article, “Transfer of Dual Application Technology in Ukraine,” we discuss both options, as well as registration of dual application technology IP rights. You can find it here.
