Securing the Future: Canada and the NATO Innovation Fund

Created by way of treaty in 1949, the North Atlantic Treaty Organization (NATO) has been a cornerstone of collective security for over 70 years. In a world facing new and evolving threats, NATO is constantly adapting to ensure the safety and security of its member states. A part of this effort is the recently established NATO Innovation Fund (NIF) - “a standalone EUR 1 billion venture capital fund supporting ambitious founders developing emerging and disruptive technologies.” The NIF seeks to assist “high-impact verticals include artificial intelligence (AI), biotechnology, energy & propulsion, manufacturing, and space”, and “are passionate about autonomy, hypersonics, new materials and quantum, and want to shore up cutting-edge hardware and software.”

In support of this effort, the Government of Canada has just announced in its updated defence policy titled “Our North, Strong and Free: A Renewed Vision for Canada’s Defence” a significant  monetary commitment of $107 million over 20 years to the NIF. This announcement comes a few days after its $2.4B investment in AI, in particular "computing capabilities and technological infrastructure for Canada’s world-leading AI researchers, start-ups, and scale-ups."

The Rise of Dual-Use Technologies

The NIF focuses on dual-use technologies, which have both civilian and military applications. These technologies are often at the forefront of innovation, and they have the potential to revolutionize both the battlefield and our everyday lives. AI-powered systems can be used to analyze vast amounts of data, automate tasks, and even make decisions in real-time. In the military, AI can be used to improve target identification, optimize logistics, and develop autonomous weapons systems. In the civilian world, AI is being used to develop self-driving cars, improve medical diagnosis, and personalize our online experiences. 

Another example of a dual-use technology is quantum computing. Quantum computers have the potential to solve problems that are intractable for traditional computers. This has significant implications for both cryptography and codebreaking. Militaries around the world are investing in quantum computing research in order to develop new methods of secure communication and to break the encryption used by their adversaries. Reference can be made to the summary of NATO’s Quantum Technologies Strategy as well as ISED Minister Champagne’s remarks at AIoT Canada’s Spring Summit where he spoke to the importance of AI x IoT and quantum computing.

Indeed, the combination of AI and IoT is powerful, and just think of all the satellite technology (or ‘space tech’, see:  here and here) orbiting the earth, including communication satellites, which bounce radio, television and internet signals and provide telecommunications access to remote communities. It's all about connectivity between devices and people around the globe.

Intellectual Property and the NATO Innovation Fund

The development of dual-use technologies raises important questions about intellectual property (IP). IP rights, such as patents and copyrights, protect the creations of inventors and authors. They give the owner of the IP the exclusive right to make, use, sell, or import their invention or creation.

In the context of the NATO Innovation Fund, IP rights are important for a number of reasons. First, they provide an incentive for companies to invest in research and development (R&D). If a company knows that it can protect its inventions with patents, it is more likely to invest in the R&D needed to bring those inventions to market. Second, IP rights can help to ensure that NATO member states have access to the technologies they need to defend themselves. By investing in companies that develop dual-use technologies, NATO helps ensure that these technologies are available to its member states and are not controlled by others, including hostile actors. 

However these technologies, including corresponding IP assets, must be particularly well managed as a one mishap can have serious consequences. For example, if a company develops a technology with both civilian and military applications, it may be difficult:

• to decide how to classify the technology from a security level (clearance and/or classification) perspective; 

• to determine which export controls apply; and 

• to determine if the technology falls within the scope of a “defence-related invention” (or “secret invention”), which should never see the light of day, meaning that the government, depending on the jurisdiction, imposes a “secrecy order” on the patent application as it contains sensitive information which could be detrimental to national security. The secrecy order restricts disclosure of the invention and withholds the grant of a patent. According to the FAS, “this requirement can be imposed even when the application is generated and entirely owned by a private individual or company without government sponsorship or support.”

It is therefore important for these projects to be specially project managed so as to address the above issues and mitigate risks.

Canada's New Defence Strategy and the NATO Innovation Fund

As a result of Canada's participation in the NIF, it should provide Canadian companies with access to new investment opportunities. The fund will invest in start-up firms from all NATO member states, and Canadian companies are well-positioned to compete for this investment. It also provides Canadian companies with new opportunities to develop and export cutting-edge technologies abroad. 

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Additional information

For further information on the topic, reference can be made to the United Nations Agreement for the mutual safeguarding of secrecy of inventions relating to defence and for which applications for patents have been made, which was signed in Paris on September 21, 1960 and entered into force on January 12, 1961. There also exist other NATO archives pertaining to the security protection of classified patent information (e.g., AC/35-D/180, AC/35-D/195, amongst others.