Research co-operation agreements may be subject to the UDI Act - what you need to know

Collaboration agreements can constitute a single company

According to the UDI Act, investments in activities worthy of protection must be notified to the Swedish Inspectorate for Strategic Products (ISP) and receive clearance before they can be implemented. When two or more parties enter into a co-operation agreement, this can be considered a so-called simple company. Simple companies are also covered by the UDI Act. Each party to the collaboration then becomes a partner and, if the simple company conducts activities worthy of protection under the UDI Act, the collaboration may entail a duty to notify the ISP. This is particularly relevant for research institutions and universities, but also for commercial actors, as many collaborations between universities and companies, or between Swedish and foreign research institutions, may constitute simple companies within the meaning of the Act.

What research qualifies as a protected activity?

The UDI Act covers research in several areas that are considered strategically important for Sweden. These include, among others:

• Biotechnology research and development including, among others, DNA/RNA, proteins or other large molecules, cell or tissue culture/technology, process biotechnology, gene or RNA vectors, bioinformatics and nanobiotechnology.

• Research on armaments or dual-use items

• research on emerging technologies and other strategically important technologies, such as AI, battery chemistry, etc.

• research activities in nuclear technology.

All types of investments are covered

The law covers various forms of investments and collaborations, including those not based on capital injections. The provision of resources, services, technology transfer or research contributions can also be counted as investments under the law, provided that the investor gains influence over the business. Thus, as a general rule, it is the parties to the co-operation agreement, i.e. the partners of the simple partnership, who are considered investors within the meaning of the law.

What do companies and higher education institutions need to consider?

For those involved in research activities, it is important to:

• Identify whether the research in question falls within the definition of protected activities under the UDI Act.

• Be aware that co-operation agreements can lead to the creation of a simple company, which may entail a notification obligation.

• Understand that investments that are not capital injections and that are made on a not-for-profit basis may also fall within the scope of the Act, if they give any party to the co-operation agreement influence over the research or activities.

• Ensure that potential collaborators or funders are aware of the requirements and notification obligations under the UDI Act.

What happens if a collaboration or investment falls under the UDI law?

If a co-operation constitutes a simple company that conducts activities worthy of protection in Sweden, this must be notified to the authority before the co-operation begins and the simple company is formed. This notification obligation applies even if the co-operation only includes Swedish parties. The authority has the right to scrutinise and, in certain cases, prohibit investments or collaborations that are considered to threaten Sweden's security or public order.

By having a good understanding of the UDI Act and its consequences, research actors and companies can ensure that their collaborations are in accordance with the applicable regulations, while protecting academic openness and Sweden's strategic interests.