Large and Small firms are both key to solve BUT state-acquired IP prevents small firms from interfacing

Why concentrate on IP law? Historically, the security studies subfield has paid little attention to development in international or domestic IP law, beyond a comment here or there about how technological innovation requires a sound legal basis.4 Few studies, however, have focused on how legal foundations affect a military–industrial complex or how the emerging international IP regime might affect the diffusion of military technology. But there are now several reasons to believe that IP law, both in its domestic development and in the context of the emerging international IP regime, may be having a strong, independent effect on the way states innovate and on how those innovations find their way around the international community. First, political demands of defense contracting have grown steadily more complex. Arms export agreements have increasingly taken on the character of transnational public–private partnerships. To sell fighter jets, US firms have to agree to build components in the customer country, as well as to transfer technology associated with the weapon system. This creates the need for intricate legal arrangements that delineate where and how firms can transfer technology. Second, alliances between defense firms have become ever more important to the production and development of military technology. James Hasik notes in Arms and Innovation that many of the best-known military systems of the last decades have emerged from alliances between large, traditional defense producers and small, nontraditional firms.6 These alliances inherently create the potential for conflicts over the ownership of technology and trade secrets, both between the firms themselves and between the firms and the government. To the extent that the nature of IP law affects the prospects of these alliances, it has an impact on military innovation. Third, the importance of dual-use technologies, especially in the computing and communications sectors, has complicated the relationships that firms have with the government. While most firms like selling to the government, few nontraditional providers envision the Defense Department as their only customer. Rather, they plan to sell their technological innovations on the open market- hence, “dual use.” State interest in acquiring the IP rights to the data, patents, and trade secrets of firms developing dual-use technologies runs directly counter to their commercial efforts. Finally, private firms have, over the past five decades, committed an ever-increasing percentage of total funds devoted to technological research and development. At the same time, the government remains deeply involved in most defense research, committing substantial resources to the development of new weapon technologies. Most new systems, consequently, involve some mix of state and private funding. This creates problems for the ownership of the IP associated with technological innovations, problems that IP law can either solve or exacerbate. While the broader project this article is associated with examines the role of IP law in both diffusion and innovation, this article concentrates on the former. Specifically, it examines how developments in IP law may have changed the nature of industrial espionage, especially in cyberspace. The article hopes to develop a framework for understanding the relevance of the efforts of the PLA to target the IP of defense-related firms in the United States and Europe.