Patent rights and flags of convenience in outer space

February 8, 2011 at 11:07 am | Posted in Space Law | Leave a comment

by Sara M. Langston and the blog faculty

Source: The Space Review

Patent rights and flags of convenience in outer space

by Matthew J. Kleiman [Full article here]

The development of a thriving commercial space industry will require significant private investment in space technologies. As a matter of public policy, an effective patent system can play a critical role in encouraging innovation and investment in budding high technology industries. Patents give inventors a period of market exclusivity for their inventions in exchange for disclosing their new inventions to the public. This limited monopoly provides an incentive for companies to invest in new technologies, while the public disclosure requirement allows inventors to design around and improve upon earlier inventions. A loophole in international space law, however, threatens to limit the patent system’s ability to properly incentivize private investment in new space technologies.

Permitting space companies to evade patents using flags of convenience will lessen the value of these patents. Space companies may find it more difficult to secure private financing for research and development activities and be more likely to keep the inventions they do create as trade secrets. This article describes the origins of this loophole in international space and patent law and explains how flags of convenience could undermine the value of patents on space technologies. The article then discusses measures that spacefaring nations can undertake to address this problem. Under current space law, each spacecraft is subject to the laws of its country of registration, including that country’s patent laws. This system of national jurisdiction could enable companies to circumvent patents on space technologies by registering their spacecraft in countries where these patents are not on file, just as the owners of merchant ships often register their vessels under “flags of convenience,” such as Panama and Liberia, to avoid burdensome taxes and regulations in their home countries.


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