The UK government has blocked a proposed deal between the University of Manchester and Chinese company, Beijing Infinite Vision Technology Company Ltd (BIVTC) to licence intellectual property relating to vision sensing technology developed by the university. This is the first time the government has exercised its new powers under the National Security and Investment Act 2021 (NSI) which allows the government to intervene in certain transactions on the grounds of national security.
The licence agreement would have allowed BIVTC to use intellectual property relating to the SCAMP-5 and SCAMP-7 technology created by the university’s Innovation Factory to develop tests and verify, manufacture, use and sell licenced products. It has been reported that BIVTC had proposed to use the technology in children’s toys but the final order, published by Department for Business, Energy & Industrial Strategy on 20 July 2022, states that the technology set out in the licence agreement had dual use applications and could potentially be used to build defence or technological capabilities, which may present a national security risk to the UK.
It is interesting to note that the first prohibition order under the NSI was made in respect of a voluntary notification as opposed to a transaction subject to the mandatory notification regime. This is an important reminder of the wide-ranging nature of the NSI and shows that the government is willing to exercise its powers to intervene in transactions that fall outside of the 17 high risk sectors. Parties should therefore carefully consider whether a proposed transaction may fall within the remit of the NSI at the beginning of negotiations.