Spacetech – Law, Statistics and Growth

What is Spacetech?

Space technology, largely using satellites as infrastructure, can be used to address complex issues on Earth relating to climate change, telecommunications, agriculture and farming. This is achievable through the ability of the technology to, among other things, facilitate capturing high-resolution digital imaging and mapping, provide uninterrupted connectivity and real-time location data, and collect vast amounts of data.

Growth and Statistics

• The “privatisation of space”, largely on the back of satellite technologies by companies like SpaceX and Amazon, has resulted in myriad “spacetech” ventures and vertiginous levels of investment, particularly promoted in the US.
• McKinsey reported that from 2012 to 2021 the level of private-sector investment increased from $300 million to $10 billion, and commercial R&D spending has risen by 22% annually compared to government spending.
• The UK Government reported that the UK is the second largest attractor of space sector investment in the world.
• While an increase in private investment is one of the primary drivers for the boom in innovation, there is also increased interest among investors to exploit and fund projects at lower altitudes (“low-Earth orbit”) which are less costly than projects at the “medium-earth orbit”.
• Morgan Stanley estimates that the global space industry revenue is likely to grow to $1 trillion by 2040 as a result of the significant levels of investment currently taking place.
• UK Government has recently committed to investing £1.84 billion to fund projects promoting the development of technologies in space. Part of this includes £206m to improve telecommunications programs and develop new constellations of Low Earth Orbit Satellites and £71m to support the creation of new technologies and help smaller businesses enter the space tech market.

Legal concerns with which SMB can help:

1. Mergers and Acquisitions: Given that spacetech is still in its infancy and rapidly growing, there are countless opportunities for collaboration and investment opportunities. This could give rise to decisions to acquire companies, enter into a partnership or joint venture arrangement, or even acquire an interest in a company.
2. Collaboration and other Agreements: These kinds of relationships and transactions necessitate a range of key legal agreements including R&D, joint venture, partnership and shareholders’ agreements.
3. Funding: This may take the form of debt or equity, and may even arise through government initiatives.  Regardless of the form it takes, there are also likely to be legal concerns and the terms of the arrangement must be recorded in formal legal agreements to protect the interests of the parties (e.g. facility agreements, loan notes, Share Purchase Agreements.).
4. Anti-Trust: Care should also be taken in these situations not to fall foul of competition law by ensuring that the proposed arrangement does not foreclose actors from participating in the market or enable strong players in the market companies to abuse their strength.
5. Intellectual Property Rights:
   1. As innovation continues to flourish in these areas and more actors enter the market, new intellectual property rights arise and require legal protection from potential misuse and theft.
   2. Patents are the most commonly thought of way to protect new innovations, though patent applications require the invention to be made known to the public, which in some cases may be undesirable to the parties involved. To avoid disclosing the invention, it may be possible to protect it under the trade secrets or confidential information regimes.
   3. Other intellectual property rights issues may arise in relation to the licensing and ownership issues surrounding the use of application program interfaces or other relevant software used in a spacetech product or service.
6. Data Protection:
   1. Satellites will collect a whole host of new and valuable data, and AI will have the ability to extrapolate and produce insights based on this data.
   2. There will be concerns about personal privacy and transparency regarding the use of personal data processed from space-based satellites. This may bring about new regulatory measures seeking to notify data subjects of when data is being collected and their rights; it will be interesting to see whether specific legislation develops to this effect.
   3. There are equal concerns about the ease of satellite interception, which may present an enhanced data protection risk and may demand more attention to privacy protecting measures.
7. Regulatory compliance and competition concerns:
   1. Nations have their own regulatory approach governing commercial activities in space and the UK is no exception; it has the Space Industry Act 2018.
   2. While the legislation provides a framework for obtaining licences for commercial space and sub-orbital launch activities, the regulatory framework is likely to become increasingly comprehensive in time, particularly with respect to regulating the activities of market actors and the grant of securities.

For further information, please contact the head of technology law at SMB, simon.halberstam@smb.london.