NATO is investing heavily in innovation across defence and emerging technology, but it is doing so without protecting the asset that makes innovation valuable in the first place: intellectual property (IP). As it leans on deep‑tech startups and dual-use breakthroughs, its outdated IP posture leaves critical inventions exposed long before they reach patent status. Closing the gap will require modernized secrecy rules, stronger protection for pre-patent innovation, and safeguards for the private-sector partners driving much of the Alliance’s technological weight. Without action, NATO risks advancing an innovation agenda that cannot withstand the strategic pressures shaping today’s defence landscape.
IP, encompassing creations of the mind such as inventions, industrial designs, and trade secrets, increasingly resembles new-age gold as strategic advantage shifts to intangible assets. It has becomeparamount in a geopolitical environment where economy and security are intertwined, sitting at the crux of both competitiveness and threat mitigation. For defence and security institutions, IP now representsearly-stage military capability rather than merely commercial value. But this value also brings a built-in contradiction: while public disclosure is routine in the patent process, some inventions must remainsecret for national or alliance security.
To manage this, NATO relies on its only explicit IP agreement, the 1960 Agreement on the mutual safeguarding and the secrecy of defence-related innovations for which patent applications have been made. Also known as the Mutual Safeguarding Agreement, it created an exception to typical patent law by allowing secrecy for defence-related IP and established mechanisms for NATO members to safeguard shared information. This framework reflected a defence innovation era that was primarily government-driven, linear, and siloed.
But the world that agreement was built for no longer exists. Today, many strategically significant technologies originate in commercial and academic environments outside traditional defence governance structures. Distinctions between civilian and military technology have also eroded, especially in hot-topic fields like AI and quantum. Combined with the persistent threat of cyber theft, these shifts have outpaced the assumptions embedded in the 1960 framework.
As emerging and disruptive technologies (EDTs) proliferate beyond state control, NATO increasingly views them as both an advantage and a vulnerability. Its 2022 Strategic Concept committed the Alliance to deeper EDT investment through private-sector collaboration, a shift reflected in innovation pipelines like the venture capital-based NATO Innovation Fund (NIF) and the Defence Innovation Accelerator for the North Atlantic (DIANA). Yet even as these initiatives identify, test, and scale early‑stage deep‑tech and dual‑use technologies, they operate without corresponding reforms in IP safeguards. This oversight has left NATO’s innovation posture fundamentally misaligned with how value is created and captured in today’s defence landscape.
That misalignment becomes more acute considering the underlying structural shift in where innovation occurs. Government bodies once supplied roughly 70 percent of research and development (R&D) in major OECD countries, but by 2018 that figure had dwindled to about 10 percent. NATO’s emphasis on cross-sector collaboration mirrors this evolution, but without a broader protection framework, its strategic advantage becomes undermined.
In expanding its collaboration with private-sector innovators, NATO must also contend with the heightened risks this creates. Early-stage R&D – especially within startups – is acutely exposed, and theft can be conducted anonymously from anywhere, with consequences that often compound over time to erode technological advantage.
The rise of digital IP theft exposes the Mutual Safeguarding Agreement’s stark limitations in grappling with modern cyber espionage. Russia is among the more blatant offenders: its 2022 Decree 299 effectively legalized uncompensated use of patentable inventions, industrial designs, and utility models from “unfriendly” countries. Yet no specific instances can be publicly traced; Russia does not publish records of IP it appropriates, and affected companies have little incentive to publicize infringements they cannot contest.
But Russia is not alone. In 2021, a breach of Microsoft’s servers – later attributed to a hacking group operating out of China – resulted in billions of dollars in stolen IP and data, despite a 2015 U.S.-China agreement to refrain from cyber-enabled IP theft.
Given these realities, the biggest threat to NATO’s innovation ambitions is its lack of a coherent IP strategy. To be effective, a modern IP posture would need to account for three defining features while recognizing that IP is both highly valuable and vulnerable throughout its lifecycle:
- Dual-use technologies, which now underpin much of NATO’s innovation base;
- Private-public partnerships, including venture-backed startups and cross-border collaboration; and
- Cyber-enabled exfiltration, which targets IP at every stage of development.
A logical starting point, and the highest-impact reform, is for the North Atlantic Council (NAC) to modernize the Mutual Safeguarding Agreement to reflect today’s digital and commercial realities. Addressingpre-patent, nascent IP should be treated as a priority, given its vulnerability during early-stage development. As part of this process, bodies such as the NATO Innovation Board or Science and Technology Organization (STO) should assess whether private actors can be responsibly integrated into the secrecy framework, or whether a parallel mechanism is needed for NATO’s cross-sector collaborators.
Operationally, the Boards of Directors at DIANA and the NIF are best positioned to implement program-level safeguards. Providing guidance for participants, particularly startups with limited legal and cyber-defence capacity, would reduce exposure across the innovation pipeline. Furthermore, making cyber-resilience assessments a condition of funding is a practical step that protects both NATO and its innovators.
More broadly, the Alliance should embed IP protection as a baseline requirement across its innovation and EDT strategies. Incorporating IP-specific risk assessments, mitigation plans, and breach exercises into NATO’s Cyber Coalition scenarios would also normalize IP protection as part of NATO’s operational culture. These measures inevitably involve trade‑offs: tighter safeguards may constrain transparency with cross-sector partners, and added security requirements can introduce friction for early-stage firms. How NATO navigates these tensions will determine whether IP governance reforms succeed.
If IP protection remains at the margins, NATO’s innovation agenda will rest on foundations it cannot defend. A modern IP strategy is not a bureaucratic add-on; it is the shield that determines whether NATO’s technological edge endures.
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
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