Defence manufacturing in the regions
Grants are flowing — don’t lose your IP in the contract
Regional defence manufacturing is getting real government backing. The Defence Industry Development Grants (DIDG) program is funding SMEs to build sovereign capability, with the Government saying applications are open year-round until 2028 and grants can cover up to 50% of eligible costs.
That’s the opportunity. Here’s the risk:
Defence work comes with contracts that can quietly take your IP if you don’t lock down ownership and use rights.
The core concept: background IP vs foreground IP
Background IP = what you already owned before the project (your designs, code libraries, processes, fixtures, know-how).
Foreground IP = what gets created or improved during the project.
If the contract says “all IP developed under the contract is owned by the customer” without carve-outs, you can lose the improvements that make your business exportable.
The Regional IP checklist (simple)
1) Map your Background IP first
List what you’re bringing in (drawings, software modules, manufacturing methods, tooling, test rigs) and make sure the contract says it stays yours.
2) Lock Foreground IP or a strong licence-back
Either you own it and license it for the project — or they own it but you get a licence-back broad enough to reuse it elsewhere.
3) Control subcontractors
Flow down confidentiality and ensure any IP created by subcontractors is assigned to the right party.
4) Don’t ignore export/security controls
Defence-related tech can trigger export control obligations under Australia’s framework (including controlled tech/data).
5) If escrow is demanded, set strict release triggers
Limit what’s escrowed and when it can be released (e.g., insolvency/support failure), so you don’t hand over the keys.
Bottom line
DIDG funding is a tailwind for regional defence manufacturers — but the long-term value is yourexportable IP. Protect it early: definebackground vs foreground, tightenlicence-back rights, and bake insecurity/export controldiscipline.