Joyce said the Government had written a clause into the new Growth Grants programme, which made it much easier to claw back funds in the event of a change that reduced the benefit of the funding to New Zealand, such as a firm being wound down or its R&D operations shifted overseas.
The Growth Grants fund 20 per cent of R&D expenses for research-intensive firms and last year replaced the Technology Development Grant programme, under which NextWindow received the $2.6 million in funding.
Joyce said it was more difficult to recoup cash awarded under the previous scheme, but Callaghan Innovation - the Government's high tech research body - was "looking into" whether it could claw back any of the funding provided to NextWindow.
"We can't say right at this time whether they would definitely have to repay money or not, under the old system," he said. "They [Callaghan] are basically going through the contract and assessing what [NextWindow] were required to provide, versus what they have provided ... it's a little bit early to make a judgement on it."
Last week technology entrepreneur Selwyn Pellett said he would be fully supportive of the Government requesting Smart to pay back the funds NextWindow received.
And Al Monro, NextWindow's former chief executive, agreed, saying: "I do believe that if companies move intellectual property out of the country or shut down R&D facilities then, yes, the Government should be able to claim the money back."
A Smart spokesperson said the company had no comment.
Pellett, a critic of R&D grants going to foreign-owned firms, said grants that didn't force ownership of companies to stay in New Zealand would result in "a continual waste of money".
Pellett co-founded Auckland-based technology firm Endace, which was awarded government funding worth more than $10 million prior to announcing in late 2012 that it would be sold to Californian network solutions firm Emulex.
Joyce, who exchanged blows with Pellett on Twitter in 2012 when the entrepreneur said taxpayers should be unhappy about government funds awarded to Endace prior to the acquisition, disagreed that R&D grants awarded to foreign-owned firms were a waste of money.
"He [Pellett] is being a bit self interested to say that it's fine if an entrepreneur like him is a beneficiary of it, but if it's somebody else who's conducting R&D in New Zealand that's not necessarily 100 per cent New Zealand owned then they shouldn't benefit from it," Joyce said.
He said the main aim of the grants was to encourage research and development to take place in New Zealand, regardless of whether the company receiving the funds was foreign or locally owned.
"It helps build the R&D eco-system," Joyce said. "For example, Fisher & Paykel Appliances [now owned by China's Haier], under the Growth Grants system, has just been given a grant that is helping them to increase the size of their R&D operations in New Zealand, which I would argue is good for New Zealand."
The Government also awarded a Growth Grant to (now US-owned) Endace last month.
