Ukraine risks losing control of its wartime innovations

Ukraine’s booming defence industry is facing pressure from outside the battlefield.

As Kyiv opens its defence export market and its battlefield innovations draw global attention, Western investors are increasing demading intellectual property rights from Ukrainian companies in exchange for financing.

“In financing and industrial deals, the transfer of intellectual property or exclusive rights is often required,” said Ario Dehghani, a compliance lawyer at law firm Baker McKenzie in Kyiv.

Ukraine’s drones are a hot commodity, and the industry needs fresh international investment to scale up production.

Iran’s long-range, fixed-winged drones have struck multiple targets across the Middle East in recent weeks, forcing air defence systems to expend expensive interceptors. Within a few days, more Patriot missiles were used in the Middle East than during four years of war in Ukraine, President Volodymyr Zelenskyy said recently. Each of these missiles costs several million dollars.

Now, Ukraine is offering to step in with low-cost, Ukrainian-made air defence solutions.

War, not paperwork

One glaring issue, however, is that most Ukrainian drone manufacturers are unprepared to protect their intellectual property.

“In eight out of 10 miltech investment transactions, we note that the inventions are not adequately protected,” Bondaryev said, adding that he already handled a case in which an invention was effectively stolen.

As international interest in Ukraine’s anti-drone expertise grows, so too does the risk that Ukrainian firms could lose control over their intellectual property.

One obstacle is a deep-rooted scepticism towards intellectual property protection in Ukraine, Bondaryev said. More often than not, defence producers believe that everything will be stolen anyway. Some founders also worry they may be exposing their inventions or employees to Russian spies if they file for an official patent.

“I’m often asked: ‘What’s there to protect? It’s just a drone or a remote-controlled boat, after all,’” Bondaryev said.

At the same time, the legal framework governing military goods is evolving rapidly, making registration difficult, Dehghani said.

“Short-term changes to legislation or unannounced direct intervention by the government on the grounds of security concerns are possible at any time,” he added.

Ukraine’s drone innovation cycle is currently so fast that inventions can become outdated on the front line within weeks. Some military units even deploy their own mechanics to adjust models and constantly adapt them to the realities of the battlefield.

This incredible speed of innovation, the corresponding short lifespan, and the fact that manufacturers’ main goal is the defence of Ukraine mean that bureaucratic processes, such as intellectual property registration, often fall by the wayside.

Still, analysts warn that Ukraine risks losing control of some of its most important wartime innovations if intellectual property rights are registered abroad as foreign investors enter the sector.

(cm, aw)