How does the government call-in power apply?
Licenses to, and assignations of, rights in IP: NSIA gives the government power to call in certain dealings in intellectual property for assessment where there is a perceived risk of harm to national security.
The National Security and Investment Act (NSIA) gives the government power to call in certain dealings in assets, including intellectual property (IP), for assessment where there is a perceived risk of harm to national security. This power will apply to some projects and activities which involve the grant to partners of licenses to, and assignations of, rights in IP.
Unlike qualifying acquisitions of qualifying entities, IP licensing arrangements are not subject to any statutory notification requirement. Notwithstanding, although a decision not to disclose a licensing arrangement to the government does not render the arrangement void, or risk regulatory or criminal sanction, there is nonetheless a government power to call projects involving IP licensing arrangement in for assessment where there is a perceived national security concern. The call-in power persists for five years following the creation of the arrangement.
In the context of assets like Intellectual Property, a qualifying acquisition is defined as the acquisition of a right or interest in, or in relation to, an asset where the level of control acquired meets any of the following thresholds:-
- The acquirer is able to use a qualifying asset;
- The acquirer is able to direct or control its use; or
- The acquirer is able to do so more than it could prior to the acquisition.
Following a call-in, the acquisition will be assessed for risk of harm to national security. The assessment can result in the acquisition being cleared, made subject to conditions, blocked, or in the event that a licensing arrangement has already taken effect, unwound.
A Voluntary Notification is a means of seeking clearance for a project and can be made by the transferor of the asset, not just the acquirer.
Once a completed Notification has been accepted, the government has 30 working days within which to review the project and to decide either to issue a clearance, or to call the project in for national security assessment.
If the project is called in, the government has a further 30 working days to complete its national security assessment, although this can be extended by an additional 45 working days if more time is required. As is the case where the call-in is initiated by the government, the identification of a risk of harm can result in the project being made subject to conditions, blocked, or – if already under way – unwound.
You can access the Voluntary notification form, together with Government guidance on completing and registering it, here:
The NSIA Online Notification Service can be found here:
Government guidance on NSIA for the higher education and research intensive sectors provides a summary of the legislation, the relevant timescales and illustrates a series of acquisition scenarios: