That's what the mouse-over tooltip says, but if you open status and watch your defense rating the defense boost lasts the full 15s of APO.
I'm not sure which one is wrong, but I favor the status window personally.
That's the way it looks like it works to me too.
But even if the tooltip is correct, the powerful part of AP:O is the immunity to movement debuffs. There's a big difference between my very vanilla Patrol Escort getting 42% defense (what I get at half-speed) and -2.4% defense at a dead stop. And I have absolutely nothing on that ship and captain adding to defense other than captain skills and speed -- other people have already pointed out how it's possible to add 20% or more to the baseline.
Looking at it, a basic escort using mission-reward gear with nothing else modifying defense running at ~60 engine power has ~ 20% defense at 1/4 speed, ~40% at 1/2 speed, and ~65% at full speed. That seems to be relatively balanced, and it's probably what Cryptic designed around.
The problem is that and additional 10% defense is a 50% improvement at 1/4 speed, and a 25% improvement at half-speed. If there were a trait made all your resistances 125% or 150% of what they are normally, it would obviously be overpowered. That's why Elusive and Accurate are basically required traits for space PvP.
I don't think the mechanic needs to be removed, but the highs are too high and the lows are too low. Immobilization shouldn't kill defense completely, because you are already screwed if you are immobilized; the damage buff doesn't need to be a part of it. Modifiers to defense are generally too high; a player who has 40% defense at half-speed and one who has 60% are not even in the same class, and in many cases the difference is due to traits that were chosen years ago.
If cryptic removed the defense penalty for immobilization, and capped defense at 60% or 70% including bonuses, that would go a long way to evening things out.
I kinda think that it might be a good idea to separate things like crit, accuracy, and defense from the raw percentages too. Give them a rating, or merge them into the appropriate captain skills, but make it so the biggest gains come with a few points, while piling on bonus after bonus gives diminishing returns.