Licensing of Intangible Licensing of Intangible Transfers of TechnologyTransfers of Technology

John SondermanOffice of Export EnforcementBureau of Industry and SecurityU.S. Department of Commerce

Issue• Should intangible technology transfers be

regulated?– If the answer is yes: Procedures are needed for in-

country transfers of controlled technology to prevent unauthorized export or diversion

• Can in-country transfers be regulated?– U.S. “deemed” export rule– U.S. deemed reexport rule

Controlling Intangible Technology Transfer

• Regulating the in-country transfer of controlled technology is a viable means to control intangible technology transfer

• Problems:– Large number of foreign nationals in the domestic

high technology work force– Mobile and transient work force– Global networks and economies that operate

around the clock– Complicated by non-traditional, intangible methods

of transfer

What is a deemed export?

• Release in the United States of technology or source code subject to export control regulations to a foreign national

• Such release is “deemed” to be an export to the home country or countries of the foreign national

Exempt from the Deemed Export Rule

• Any foreign national is subject to the deemed export rule except: Foreign nationals granted U.S. citizenship; Foreign nationals granted permanent

residence status; or, Foreign nationals granted political refugee

status or political asylum.

What is a deemed reexport?

• Release of technology or source code subject to export control regulations to a foreign national of another country is a deemed reexport to the home country of that foreign national

• Deemed reexport does not apply to persons lawfully admitted for permanent residence

Visit of foreign delegations for company internal technical conferences.

Visual inspection (as reading technical specifications, plans, blueprints, etc.) by foreign nationals.

Providing technical assistance (including verbal exchanges) to foreign nationals.

Examples of Deemed Export Releases

Deemed Export Evaluation Factors

• Personal background, including visa status

• Technology and purpose of the release

• Applicant’s Technology Control Program

• Projected outcome of employment

• Permanent employee

Required Information: Letter of Explanation

• Identities of all parties to the transaction

• Exact project location (where the technology or software will be used)

• Type of technology

• Form in which the technology will be released and the uses for which the technology will be employed.

• Technical scope

• Availability abroad of comparable foreign technology or software

• Applicant’s technology control plan

Required Information:Foreign National’s Résumé

• All educational institutions attended beyond highschool, with street addresses and degrees and/orcertificates received

• All positions held, with employers’ names and streetaddresses, and brief description of work done

• All time from high school graduation should beaccounted for and presented in month/year format,with no gaps greater than 30 consecutive days

• Brief abstracts of all scientific and technical paperspublished, and presentations at scientific and technicalconferences

Additional Helpful Information

• Applications need to also include details such as:

• Any strong ties to the U.S. (e.g., family here)

• Remaining ties to home country (bank account, immediate family, property, etc.)

• Any special benefits or expertise the foreign national brings to the applicant (i.e., why the foreign national brings more to the company than he or she will take away)

Technology Control Plan

• A Technology Control Plan must be in place with the following essential elements:– Corporate commitment to export compliance– Physical security plan – Information security plan– Procedural security– Personnel screening procedures – Training and awareness program for ALL

employees– Self evaluation program

Deemed Export Issues• Lack of awareness among exporters to

deemed export requirements• Large number of foreign nationals entering the

U.S. work force since end of the Cold War– Almost 50 % of graduates from U.S. universities in

advanced science and engineering – Need a balance between providing opportunities and

potential for diversion of advanced technology

• Non-traditional sectors need to be addressed– University research– Government entities involved in research– Certain industry sectors

Outreach • Education and outreach has been key to

raising industry level of awareness to in-country transfer requirements– Start by targeting sectors of concern – Use different venues– Include site visits

• Outreach needs to include relevant government agencies involved in the process

• Outreach helps licensing processes• Aids in the development of “best practices”

Technology Control Plan

Summary• Export control requirement for in-country

transfers is feasible from both a regulatory and practical perspective

• A Technology Control Plan is an effective tool in managing access and preventing unauthorized disclosure– Including intangible technology transfer

• Key to compliance is outreach and education• Important to consider measures for control of

in-country transfers to insure that employment of foreign nationals do not provide a “back door” for the diversion of controlled technology