Executive Summaries Jun 3, 2021

Intellectual Property Issues in the Aerospace Industrie

At times criticized, at other times acknowledged as a powerful legal tool for controlling and valuing inventions, the patent system endures and thrives. More than just the aircraft manufacturers, the entire supply chain has joined this legal arms race.

Patrice Cros (Air & Cosmos) has co-authored this article. From the AIR&COSMOS | No 2737 | May 28, 2021 | File prepared and organized by Patrice Cros.

Intellectual property (IP)1 and industrial secrets were always key elements in the creation and development process in the aerospace industry. The rush to be the first to invent and file patents and thus prevent others from manufacturing or marketing an invention goes back as far as Clement Ader and the Wright Brothers. While Ader filed for a patent on an airplane design as early as 1890, it wasn't until 1906 that the Wright brothers were granted their patent for their flight control method. This and many other patents paved the way for what would become the Wright Brothers’ patent war as they sought to strengthen their monopoly over aircraft manufacturing in the United States, which generated many lawsuits and prompted the industry to set up a cross-licensing system that would keep the industry from being paralyzed while ensuring that a “fair and reasonable” portion of the profits went to the patent holders.

The patent system, which is sometimes criticized and other times acknowledged as a powerful legal tool for controlling and valuing inventions, continues to thrive including in the aerospace industry. Over the last few decades, the industry’s leading companies have built up gigantic patent portfolios which have become valuable bargaining chips in patent pools, allowing the most recent technologies to be marketed. More than just the aircraft manufacturers, the entire supply chain has joined this legal arms race. Apart from the hype generated by the disclosure of patent portfolios sizes (in France, Safran, Airbus and Thalès are among the 10 biggest patent applicants every year) or those with deceitful purposes as with the Boeing Sonic Cruiser in 2002, what is at stake are strategic and financial issues: who will have control over future technologies and, above all, how much of the profits will be redistributed and to whom.

The bitter discussions between manufacturers about sharing IP show how critical the division between industrial and commercial territories is and therefore how important it is to have full ownership of “intangibles”. The DGA has not outsourced IP rights negotiations for the FCAS. Just as in the automobile industry, tensions regarding intellectual property are not limited to competition, they also affect relationships between system integrators and suppliers, thus the need for an engine or equipment manufacturer to have full control over its system’s IP in order to be free to market it to customers while sustaining profits.

New Emerging Fields

In recent years, new fields have emerged in the aerospace industry, such as civil and military drones, as well as a renewed interest for space exploration. Patenting statistics in both fields are clear: China is on the rise. Its technological leadership is now backed by large patent portfolios which prevent access for everyone else in the world. These patent portfolios, which are made available to the public, are merely the tip of the iceberg when it comes to their actual massive research and development efforts. The submerged part is made of industrial secrets, the know-how for which confidentiality is regulated by legislative (e.g., the Anti-Unfair Competition Law in China, the Business Secrecy Directive in Europe) or contractual (non-disclosure agreements) measures.

Trade secrecy is SpaceX’s favourite way to value its intellectual property - after NASA’s inventor and engineers’ methodical “brain drain” - at least until competitors become real threats and start to build up their own patent portfolio.

History keeps repeating itself...

1Intellectual property includes industrial (patents, trademarks, designs, domain names), literary and artistic property (copyright and related rights).

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