Latest posts by Antigone Peyton (see all)
- A War Over Government Contracts, Space Rockets, and Nations - June 12, 2014
- Welcome to the GovConIP Blog - April 25, 2014
Elon Musk, billionaire entrepreneur and co-founder of Tesla Motors and PayPal, found a new passion. It’s space travel. SpaceX, which Musk founded in 2002, is a private aerospace company that builds and manufactures rockets for public and private clients.
Here’s the story of SpaceX’s war against the federal government, and the effect that Russia’s recent invasion of Crimea and Ukraine and the U.S.’s responsive sanctions have had on U.S. satellite launches into space. And there’s a little philosophical discussion about intellectual property protection in space thrown in, just for fun.
Who Sues Their Biggest Potential Client?
SpaceX has a $1.6 billion contract with NASA to fly resupply missions to the International Space Station. It developed a rocket (the Falcon 9) and a capsule (called Dragon), which it has been using for these missions and intends to use to support certain Air Force missions.
In early 2014, the Air Force decided to award a contract for launching military satellites to United Launch Alliance (ULA), which is a joint venture of Lockheed Martin and Boeing. Before this award, SpaceX asked the Air Force to cancel its sole-source contract with ULA, give it time to complete the certification process, and open the contract up for competitive bidding because it believed that it could deliver 36 satellites to space at a lower cost. The Air Force did not comply with this request, noting the importance of reliability when launching a national security satellite payload.
The Pentagon expects to spend almost $70 billion on this program alone by 2030, and the stakes are high for all of the parties involved. After it found out about the contract award to ULA, SpaceX sued the federal government in the Court of Federal Claims, alleging that it was improperly shut out of an Air Force contract that was not competitively bid and that ULA couldn’t supply the requested rockets and comply with recent U.S. sanctions against certain Russian products.
When Sanctions and Government Procurement Objectives Collide
The problem? Contract awardee ULA uses Russian-made engines in its Atlas rockets. So in its lawsuit, SpaceX sought an immediate injunction against ULA’s procurement of RD-180 Russian engines under the contract, asserting that action could violate U.S. sanctions. The Court issued that injunction, then lifted it after several government agencies filed information that indicated the Russian company manufacturing these engines is not subject to sanctions.
Still with me? Good, because there’s more.
International politics add another wrinkle to the story. Soon after the injunction was lifted amid tensions over Russia’s activities in Ukraine and new U.S. sanctions involving Russia’s space industry, Russia’s deputy prime minister, Dmitry Rogozin, indicated that the Russian government would not allow the company to deliver these engines to the U.S. for use in military launches. This brings us back to the debate regarding sole source contracts and the Air Force decision to avoid the competitive bidding process because ULA was the only company certified to meet all of the requirements of its rocket contract.
Russia’s Rogozin has also threatened to end the U.S.’s ability to use the International Space Station (currently we rely on Russian space shuttle flights to get there). He announced on Twitter, in Russian, that in light of the U.S. sanctions against the Russian space industry, the U.S. should get their astronauts to the space station using a trampoline.
SpaceX’s Intellectual Property Plan: No Patents
In light of all of the above, you might think that SpaceX has a wide collection of patents surrounding its new and cheaper rocket technology. Not so. In fact, SpaceX has avoided patents and has decided to protect its proprietary technology under trade secret law. That means it doesn’t need to prepare and file long patent disclosures at the USPTO that describes its technology in great detail. Generally, a well-rounded IP protection strategy is better than an all-eggs-in-one-basket approach, but this trade secret plan may be a brilliant move for a company that deals with outer space technology and doesn’t expect to widely circulate that technology to others who may be able to deconstruct it and learn how it works.
SpaceX has its reasons for avoiding patent filings. SpaceX sees its primary long-term competition coming from abroad—from countries like China where patents are routinely reviewed and used to build competitive products—without the protection of the U.S. patent system. The problem is that international IP laws and their enforcement procedures, particularly in countries like China, are perceived as weak. If SpaceX were to file patents on its technology, Chinese companies might simply rip them off, and the Chinese government wouldn’t enforce SpaceX’s patents against local competitors. But if SpaceX keeps the technology hidden, then potential competitors can’t copy it.
Also, SpaceX and other companies working with title-taking agencies like NASA have to contend with the default rule that their government partner takes title to all IP developed under a traditional government contract. This is particularly problematic when the technology has commercial market value. They may contract around these default rules by using a Space Act Agreement (SAA) and laying out a protocol for providing notice of an invention to the government and obtaining a waiver of the government’s rights to it. These terms need to be negotiated carefully, ahead of time.
SpaceX’s Intellectual Property Protection in Outer Space
While patent, trademark, trade secret, and copyright laws are territorial, many valuable technologies are not fixed in particular geographic locations. Rockets and other space-related technologies move from land to airspace to outer space. Does SpaceX’s IP protection end in the clouds?
The answer, unfortunately, is not simple or clear. I’ll write another blog post about IP protection in space soon.