Cross-Border Tech Deals: Safeguarding Innovation Without Slowing the Business

As companies expand global operations, they are forced to navigate a patchwork of local IP laws, data and artificial intelligence (AI) regulations, and ever-shifting geopolitical tensions.
Without sufficient diligence, planning, and contracting, companies can fall victim to IP leakage, downstream disputes, data protection and export control problems, and impediments to innovation.

This article outlines key IP issues that arise in global outsourcing and cross-border technology transactions and offers practical recommendations for structuring deals that safeguard innovation.

I. The Rising Stakes of IP in Global Technology Transactions

Software code, proprietary algorithms, training datasets, technical documentation, and operational know-how are often the most valuable assets exchanged or co-developed in cross-border technology transactions. In these deals—especially those involving service providers, offshore subsidiaries, or other international partners—these assets are at heightened risk of:

• Loss of ownership or unclear title
• Inadvertent transfer of rights or overbroad licensing
• Unauthorized use or replication by third parties
• Enforceability gaps in local jurisdictions

Enterprises must now balance the need for cross-border collaboration with the imperative to secure their competitive advantages. Legal teams are expected not only to mitigate IP risk, but also to enable the business to move quickly, form new partnerships, and scale technology development across borders.

II. Common IP Pitfalls and Related Risk Mitigants in Cross-Border Collaborations

Cross-border technology transactions introduce legal and practical hurdles that can compromise IP protections. Some of the most common issues include:

A. Ambiguous IP Ownership

In many cross-border deals, ownership of IP is assumed to be clear, at least until a dispute arises. For example, without precise definitions of what constitutes a deliverable and how derivative works or background IP are treated, companies risk losing control of critical assets.

To avoid these issues, legal teams should clearly delineate the ownership of:

• Pre-existing IP (Background IP): Most commonly, each party retains ownership of what they bring into the deal.
• Developed IP (Foreground IP): Specify which party owns deliverables, improvements, and derivative works.
• Jointly Developed IP: Consider joint ownership only where strictly necessary;¹ otherwise, grant reciprocal licenses with use restrictions.

Example: A US company outsources the development of a machine learning algorithm to an offshore firm. If the agreement fails to define whether training datasets or the tuned model weights are owned by the customer or the provider, enforceability becomes murky, especially if IP laws in the provider’s country assign ownership to the creator by default.²

B. Complex Data Privacy, Data Transfer, and Localization Requirements

In cross-border technology transactions, the handling of personal and sensitive data can trigger a maze of jurisdiction-specific obligations. Increasingly, countries are asserting data sovereignty through privacy laws (e.g., GDPR in the EU, PDPA in Singapore, LGPD in Brazil) and data localization requirements (e.g., in China) or other data transfer restrictions (e.g., the DOJ rule implementing Executive Order 14117 to restrict the transfer of bulk sensitive data) that restrict cross-border data flows.

Some requirements—like the DOJ’s recent rule—even apply their restrictions to anonymized and de-identified data—i.e., types of data that typically had been excluded from the definition of personal data.

To mitigate compliance risks and preserve data utility:

• Map data flows to identify which jurisdictions’ laws apply.
• Segment data environments where localization mandates cannot be avoided.

C. Confidentiality and Trade Secret Protection

While non-disclosure provisions are standard in cross-border deals, they often fall short in protecting trade secrets in practice, especially when local legal regimes provide limited remedies or recognition of trade secret rights.

Problems arise when:

• Confidentiality clauses are too generic, lacking specificity on permitted uses or handling.
• Trade secret protections rely on local employment or contract law that diverges significantly from the originating jurisdiction.

Effective contracts should:

• Define trade secrets and confidential information clearly, including technical and commercial materials.
• Include affirmative obligations (e.g., secure storage, access controls) rather than mere prohibitions.
• Specify remedies for breach, including injunctive relief and indemnification.
• Address post-termination obligations, especially in deals involving access to sensitive know-how.

Example: A Canadian firm licenses proprietary telecom protocols to a distributor in Southeast Asia. If the agreement lacks robust confidentiality terms and local courts do not recognize trade secrets absent registration or proof of economic harm, the firm may have no recourse if the protocols are later replicated.

D. Export Control and Regulatory Compliance

Cross-border technology deals may trigger export control requirements, which can pose significant legal and operational considerations. This is especially relevant where the business needs access to, or is in possession of, technology that is subject to export controls.

U.S. export controls under the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) have extraterritorial reach and may apply to transactions between foreign subsidiaries or third parties. Other jurisdictions, including China, India, and the EU, have their own control frameworks.

To navigate export control obligations:

• Map the corporate structure: Understand the ownership and control of all entities involved, as this can affect the applicability of various export control regimes.
• Identify controlled technologies early: Conduct a thorough review at the outset to determine whether any technology, software, or hardware involved is subject to export controls.
• Classify Items Accurately: Ensure that all software, hardware, and technology are properly classified under the relevant export control lists. Pay particular attention to items incorporating encryption, as these may be subject to heightened controls.
• Implement Access Controls: Where personnel from high-risk jurisdictions may be involved, consider drafting “clean team” arrangements or other access control provisions to prevent unauthorized access to controlled technology.
• Include compliance reps and warranties and termination rights for regulatory breaches.

Example: A US-based technology company forms a joint venture with a partner headquartered in the Middle East. The joint venture, also based in the Middle East, plans to operate an AI data center serving customers worldwide. To procure and use AI-capable integrated circuits that are controlled under the EAR, the joint venture must implement strict access controls to ensure compliance with US export controls. If export control issues are not addressed in the transaction documents and operational safeguards are not put in place, the company risks enforcement actions, significant penalties, and potential loss of access to controlled technologies.

Enforcement and Dispute Resolution

Any IP right is only as strong as its owner’s practical ability to enforce that right. Enforcement of IP rights across borders may be subject to legal and practical challenges, including:

• Motions to dismiss based on forum non conveniens.
• Practical limitations in obtaining injunctive relief.
• Jurisdictions with weak rule of law and/or slow-moving courts.
• Inconsistent (or unavailable) recognition of judgments and awards.
• Procedural requirements (e.g., notarization, translation, bond posting) that delay or otherwise hamper enforcement.

To mitigate the risks associated with these challenges, legal teams should:

• Select dispute resolution procedures carefully, ideally with arbitration seated in a neutral jurisdiction, and requiring the use of international arbitration rules that allow for the granting of emergency or interim relief.
• As described above, structure agreements to include clear IP ownership clauses, which courts are more likely to enforce.
• Evaluate the track record of the country where development will occur in enforcing IP judgments and injunctions.

Example: A German SaaS company licenses its codebase to a reseller in India. If the reseller breaches the license and the agreement provides that dispute resolution will occur in German courts, the company may struggle to enforce a judgment locally in India. Since both Germany and India are signatories to the New York Convention, arbitration may provide a more reliable dispute resolution mechanism.

E. Forced Technology Transfer and IP “Leakage” Risks

In some jurisdictions, foreign entities are subject to direct or indirect pressure to transfer proprietary technology—either through regulatory approvals, joint venture mandates, or informal expectations— during market entry. Even where such transfer is not formally required, contractual asymmetries and local enforcement limitations can result in erosion of IP rights.
Key risk factors include:

• Legal frameworks that mandate local ownership or code disclosure (e.g., for security audits or licensing).
• Business environments that reward or tolerate reverse engineering, rebranding, or “learning-by-doing” imitation.
• Government procurement or investment policies that favor local sourcing of IP.

To reduce exposure to these risks:

• Avoid or strictly limit IP transfer obligations, especially for source code or trade secrets.
• Use tiered licensing models, with more limited rights for less trusted partners or jurisdictions.
• Restrict sublicensing or modification without prior written approval.
• Include escalation mechanisms and other remedies for suspected infringement, such as audit rights, accelerated dispute resolution triggers, and “bright-line” termination rights.

Example: A US robotics firm forms a joint venture in China. Local regulations and informal negotiations pressure the firm to disclose source code for “compliance” purposes. Without contractual protections and technical safeguards, the code may be misused or incorporated into competitors’ products, with limited legal recourse.

F. Negligent or Malicious Actors

Robust contracts and jurisdictions with strong rule of law may not be enough to protect your intellectual property from negligent security or willful attempts at misappropriation. 

In addition to conducting thorough due diligence on counterparties, legal teams should consider advising their clients to consider practical steps to protect intellectual property:

• Providing VDI solutions and company-supplied hardware to ensure all development work is performed on the company’s network in its home jurisdiction. Disable functionality that could allow exfiltration of data or materials (e.g., print and print-screen functions, USB ports).
• Prohibit cell phones and cameras at the development facility, in addition to other physical and logical security measures.
• Staff company personnel on-site at the development facility, both to monitor your counterparty and to participate in the development process and decision-making.
• Segment different offshore development teams designing different pieces of a wider product. This may reduce the odds that any particular development team can “see the whole picture” if they plan to misappropriate your intellectual property and become a competitor.

VI. Conclusion: Enabling Innovation Through Careful Contracting

In a world where technology is both global and constantly evolving, companies must take a proactive approach to protecting IP developed or licensed on a cross-border basis.

Thinking through the risks of any cross-border development and mitigating those risks with contractual and practical protections are the first steps toward unlocking the flexibility needed to drive innovation.

¹ Because the law treats each co-owner as holding an undivided interest, neither party can grant an exclusive license, or assign its share, without the other’s consent, yet in the United States either co-owner can issue unlimited non-exclusive licenses unilaterally, eroding the asset’s scarcity and value. Divergent rules across jurisdictions (contrast US permissiveness with many EU member states that require unanimous consent for any licensing) add extra friction in cross-border deals. Day-to-day, joint owners must police one another’s use, track revenue, and account for profits, creating an administrative burden and fertile ground for disputes over diligence or under-reporting. The arrangement complicates enforcement as well: most courts will not allow one co-owner to sue infringers without joining all others, so a reluctant partner can block timely relief. Finally, shared title muddles valuation—investors discount assets they cannot freely control—making joint ownership a frequent stumbling block in later financings or exits.

² Some jurisdictions do not recognize the U.S. concept of “work for hire” as creating automatic ownership for the customer. Contracts should include explicit present-tense assignment language (e.g., “hereby assigns”) and ensure all developers sign enforceable invention assignment agreements.