Expropriation of Inventions of Importance to the Defence of Country – Major Risk or Rare Occurrence

Legislation Framework

Act on Inventions of Importance to the Defence of the Country (551/1967) regulates inventions of special interest or importance to the national defence of the Republic of Finland. The Act enables said inventions to be expropriated, as well as secrecy of said inventions and all matters related. For example, the Ministry of Defence may demand that such defence interest patents shall not be entered in the public register of patents. If the invention is expropriated based on the Act, the applicant is entitled to a reasonable compensation from the State funds.

The Act also restricts the inventor’s options to seek patent protection abroad without permission from the Government. If it is obvious that an invention is principally of importance to the defence of the country, an inventor residing in Finland, or his successor in title, may not apply for or authorise another person to apply for a patent for the invention abroad before an application has been filed for a patent for the invention in Finland and before six (6) months have passed from the date the patent application was filed. In practice, however, invoking this exceptional interference with rights has not been necessary; instead, cases have generally been resolved based on additional information requested concerning patent applications considered potentially relevant.

The Act has been amended a few times with the aim of keeping it up to date with the changing prospects of protecting inventions important to national defence. For example, the scope of the Act was expanded to include utility models (HE 47/1995). However, Lieutenant Colonel of Engineering Timo Minkkinen from the Defence Command of the Finnish Defence Forces has noted that the law is outdated from a defence perspective, and with several shortcomings of the practical applicability of the Act. For example, the definition of “importance” is outdated because, in addition to traditional defence-related inventions, such as artillery, there is now new and essential technology, including various information-related products, for which the Act does not comprehensively describe the scope of application (2023). Also, the purpose of the Act is to keep inventions significant for national defence secret so that they do not become public through patent disclosure. However, a problem arising from the current law is that an invention cannot be kept secret without undergoing a multi-layered and extensive information-handling process required for expropriation. Furthermore, an otherwise useful invention, once transferred to state ownership through expropriation, could remain entirely unused, rendering the investments made in it wasted.  

Finland joining NATO has prompted new legislation on the matter. In 2023, the Finnish Government made a proposal for the approval and implementation of the agreement on the reciprocal protection of classified patent applications related to defence, the NATO Agreement on the exchange of technical information for defence purposes, and the related implementation procedures (HE 98/2023). Said Agreement establishes the conditions for applying for a patent in other NATO member states for inventions that have been classified as confidential in the country of origin for reasons of national defence, by ensuring the confidentiality of inventions for which a patent is sought when the application is made in accordance with the procedures set out in the agreement. Thus, with agreement, NATO has aimed to support defence research and the development of defence materials across NATO without classified inventions becoming public. The proposal was followed by two acts: the Act on the agreement and implementation procedures for the reciprocal protection of the confidentiality of defence-related inventions for which patent applications have been filed (121/2024) and the Act on the NATO agreement on the communication of technical information for defence purposes and on its implementation purposes (122/2024). According to Minkkinen, the new legislature brought by the NATO Agreement brings the necessary flexibility and increases the practicality of keeping inventions confidential, as expropriation will no longer be the primary, or only available, measure.  


Review of Patent Application in Finland in Practice

All patent applications in Finland are systematically reviewed to assess whether the Act on Inventions to the Defence of the Country may apply. The Finnish Patent and Registration Office (PRH) and the Finnish Defence Forces engage in dialogue to identify the technological fields that are of particular interest to the Finnish Defence Forces, and these identified areas are taken into account in the assessment process. If the invention is deemed potentially relevant under the Act, the application is presented to a designated representative appointed by the Ministry of Defence for further consideration. Currently, three individuals appointed by the Ministry of Defence are authorized to review patent applications that may be relevant to national defence.

Although the relevant provisions have been in force for several decades, the expropriation of inventions under national defence legislation remains highly uncommon. The Act has reportedly been applied in the 1960s, but the likelihood of its use today is considered very low. Information on possible cases is not public, as expropriation decisions made under the Act are classified for reasons of national security.


Situation Abroad

According to the German Patent Act (Patentgesetz – PatG) Section 50 Subsection 1, where a patent is sought for an invention which constitutes a state secret, the examining section orders ex officio that no publication at all be made. The competent highest federal authority is to be consulted before the order is issued. It may apply for the issue of an order. Previously said applies to an invention which is kept secret by a foreign state for defence reasons and is entrusted to the Federal Government, with its consent, on condition that it be kept secret. An applicant may be entitled to compensation from the Federal Republic of Germany for pecuniary loss arising from secrecy order and insofar as they cannot be reasonably expected to carry the cost of the damage themselves.

In the United States, the handling of inventions with potential national security implications is governed by 35 U.S. Code Chapter 17 Part II. Under these statutes, if the disclosure of an invention is deemed detrimental to national security, the Commissioner for Patents, upon recommendation from defence-related agencies such as the Department of Defense or Department of Energy, may issue a secrecy order. This order suspends the patent process and prohibits public disclosure of the invention. Initially valid for one (1) year, secrecy orders can be renewed annually if the originating agency affirms that national interest continues to require confidentiality. During wartime, such orders remain in effect for the duration of hostilities and one (1) year following cessation of hostilities, and during a presidentially declared national emergency, for the duration of the emergency plus six (6) months. Inventors affected by secrecy orders are entitled to compensation. Once an application is otherwise ready for allowance, the inventor or their successors, assigns, or legal representatives, may seek damages for the delay and/or for government use of the invention. Compensation may be settled through agreement with the relevant agency, or—if no full settlement is reached—the inventor may receive up to 75% of the agency’s assessed value and pursue the remainder through litigation in the U.S. Court of Federal Claims or a U.S. District Court. Notably, inventors who did not apply for compensation during the secrecy period retain the right to sue after the patent is granted. However, no compensation is available to individuals who developed the invention while in full-time government service.


Commercial Considerations

The expropriation of invention has been, and is likely to remain, quite rare occurrence at least in Finland. The fact that the Act has become outdated in several respects has not, in practice, increased the use of expropriation. The NATO framework together with the current Act enables the State to (i) expropriate the invention or (ii) maintain its secrecy while still allowing the patent applicant in seeking patent protection in confidential manner in other NATO countries, while also using dialogue in patent examination phase in order to review whether an invention truly is of importance to the national security.

It is unlikely that expropriation of patents would become more frequent because it is often known that further R&D work is needed even after patent applications are filed. Expropriation of patents could limit the true usefulness of such inventions when the State would be unable to cultivate and develop the invention even further into actionable solutions or commercialisable products, at least within NATO member states. Rather it could be described as becoming a tendency that the State may become involved with making investments in firms it believes possess inventions important for national security. For example, the State’s investment vehicle Solidium Oy invested 40 MEUR into the Finnish satellite technology company Iceye in spring 2024, while the Finnish State’s investment company Tesi (Finnish Industry Investment Ltd) had invested for the first time to the company already in 2018 and participated also in the Series E funding round early December 2025.

For firms operating in the defence sector, it is not sufficient to be experts in sanctions: it is also crucial to have the capability to navigate the world of patent protection with the aim of commercialising inventions with dual-use or solely military applications, at least in NATO member states. In addition, such firms must be able to handle investment and transactional negotiations when the Finnish State or other countries show interest in becoming (prominent) shareholders of the company. 

Final Remarks

It seems that the legislation concerning inventions of importance to national defence in Finland functions in practice more as a mechanism for information gathering than as an instrument for actual expropriation. Although the law has been in force for several decades, its application has remained exceptional. It is also worth noting that the operational environment has changed significantly since the law was enacted. In earlier decades, the focus was primarily on weapons technology, whereas today the scope has broadened considerably, reflecting the more complex and diverse nature of modern defence-related innovation. 

The NATO framework offers practical value, though many technologies may still require significant R&D before becoming truly relevant. As a result, the State is increasingly likely to influence strategically important innovations through targeted investments. Going forward, defence-sector firms will need strong capabilities in patent strategy, in sanctions compliance with dual-use and military use solutions and in the commercialisation of such technologies, including investor engagement and negotiations as state involvement and security-driven innovation continue to expand in the NATO era.

Our experts, in collaboration with our global team, are ready to support firms operating in the defence sector with all their commercial needs.

Petteri Häkkänen, Partner, Attorney-at-Law 
Lassi Lepistö, Senior Associate, Attorney-at-Law
Ronja Taipale, Senior Legal Trainee

 

1  IPR info - Pynnönen and Parviainen: ”Naton keksintösopimus ja sen vaikutukset” (6/2023, 21.12.2023).
2  IPR info - Pynnönen and Parviainen: ”Naton keksintösopimus ja sen vaikutukset” (6/2023, 21.12.2023).