Export Controls: How to stay compliant in an academic medical setting.

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Export Controls How to stay compliant in an
academic medical setting.

• Chad Copeland
• Research Compliance Officer Texas Tech Health
  Sciences Center

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The export controls maze How do I get my
research done and stay compliant with the
regulations?
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What is an Export?

• Transfer of controlled technology, information,
  equipment, software, or services to a foreign
  person in the U.S. or abroad by any means. For
  example
• Actual shipment outside the U.S.
• Visual inspection in or outside of the U.S.
• Written or oral disclosure.

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Recognize Potential Export Control Issues. Seek
Guidance.

• All researchers are ultimately responsible for
  their own individual compliance.
• At a minimum, researchers need to know how to
  recognize that an export control issue may exist,
  and then whom to contact for assistance.
• This presentation is a summary designed to
  provide sufficient information for researchers to
  be able to spot export control issues.

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What is the Intent of Export Control Laws?

• Restrict exports of goods and technology that
  could contribute to the military potential of
  adversaries
• Prevent proliferation of weapons of mass
  destruction (nuclear, biological, chemical)
• Prevent terrorism
• Comply with U.S. trade agreements and trade
  sanctions against other nations

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What are the Export Control Laws and their
Federal Agencies?

• State Department International Traffic in Arms
  Regulations (ITAR), which pertain to inherently
  military technologies
• Commerce Department Export Administration
  Regulations (EAR), which pertain to dual use
  technologies (civilian or military use)
• Treasury Department, Office of Foreign Assets
  Control (OFAC) Prohibits certain transactions
  with countries subject to boycotts, trade
  sanctions and embargoes

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ITAR

• Covers military items found on the United States
  Munitions List (USML) - munitions and defense
  articles
• Includes most space related technologies because
  of application to missile technology
• Includes technical data related to defense
  articles and services

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EAR

• Covers dual use items found on the Commerce
  Control List (CCL)
• Regulates items designed for commercial purposes
  but also have military applications (computers,
  pathogens, civilian aircraft, etc.)
• Covers goods, test equipment, materials and the
  software and technology
• Each item has an export controls classification
  number (ECCN)

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Office of Foreign Assets Control ("OFAC")
Regulations

• OFAC enforces economic and trade sanctions
  against specific foreign countries, terrorists,
  international narcotics traffickers, and those
  engaged in weapons of mass destruction
  proliferation.
• Countries include Cuba, Iran, Iraq, Libya, North
  Korea, and Sudan.

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What do the regulations cover?(EAR and ITAR)

• Export controls cover
• Any item in U.S. trade (goods, technology,
  information)
• U.S. items wherever located, even internationally
• Deemed exports (access to controlled technology
  and source code by a foreign national in the
  U.S.)
• Providing defense information or ITAR technical
  data to a foreign national in the U.S. or abroad
• Excludes
• Items in the public domain
• Artistic or non-technical publications

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Key issues and risks for universities

• Public Domain
• Deemed Exports
• Fundamental Research Exclusion (FRE)
• Situations that invalidate the FRE
• Faculty start-up funds and non-sponsored research
• Equipment Use
• Shipping and payments to foreign persons outside
  the U.S.
• Travel

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Public Domain

• Includes information that is published and
  generally available to the public
• Through sales at bookstands and stores
• At libraries open or available to the public
• Through patents
• Through unlimited distribution at a conference,
  meeting seminar, trade show, generally accessible
  to the public in the U.S.
• Includes technology and software that are
  educational and released by instruction in
  catalog courses and associated labs and
  universities

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Deemed Exports and Defense Services

• The EAR defines a deemed export as the release of
  technology to a foreign national (no green card)
  in the U.S.
• Applies to a foreign or visiting faculty,
  research assistants, and students
• Can effect tours of laboratories
• phone calls, emails, visual inspections
• Transferring ITAR technical data to or performing
  a defense service (includes training) on behalf
  of a foreign person in the U.S. or abroad
• Does not apply to U.S. Citizens, permanent
  residents and those with U.S. asylum protection

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General Rule

• General Rule Research faculty and employees may
  not send or take export-controlled equipment,
  chemicals or technologies to foreign persons
  without a license from the U.S. Government,
  unless an exclusion applies.
• What are the exclusions?

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Exclusions from Export Control Laws

• Public Domain Exclusion (ITAR, EAR)
• Education Exclusion (ITAR, EAR)
• Fundamental Research Exclusion (ITAR, EAR)

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Public Domain Exclusion

• No license is required to export or transfer
  information and research results that are
  generally available to the interested public
  through
• Libraries, bookstores, or newsstands,
• Trade shows, meetings, seminars in the U.S. open
  to the public,
• Published in certain patent applications, or
• Websites accessible to the public.
• Note the public domain exclusion applies to
  information and research results -- not physical
  equipment, substances, etc.

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Fundamental Research Exclusion

• No license is required for fundamental research,
  defined as basic or applied research in science
  or engineering
• at an accredited institution of higher learning
  in the U.S. and
• resulting information is ordinarily published and
  shared broadly in the scientific community.
• Fundamental research is to be distinguished from
  research the results of which are restricted for
  proprietary reasons.

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The Fundamental Research Exclusion (FRE) can be
lost if

• University based research is not considered
  fundamental research if
• You accept restrictions on the publication of the
  results of the project
• Pertains to many industry contracts and testing
  agreements
• EAR/ITAR have a carve-out for delay of
  publication for a pending patent application

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The FRE can be lost if

• The agreement requires sponsor approval prior to
  publication
• Sponsor Review vs Approval
• Okay to review and comment, but not approve

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Employee Exemption

• Foreign persons who are full-time regular
  employees of US institutions of higher education
  with permanent abodes in U.S. throughout
  employment
• Applies to unclassified technical data directly
  related to defense articles
• Does not apply to foreign nationals from
  prohibited countries (22 CFR 126.1)
• Does not apply to foreign graduate students
• Must be informed in writing and agree not to
  transfer technology to another foreign national
  without a license

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• Unless the fundamental research exclusion
  applies, a universitys transfer of controlled
  (on the CCL or the USML) technology to a
  non-permanent resident foreign national may
  require a license from Commerce or the State
  Department.

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Faculty start-up funds or non-sponsored research

• Could have export control issues depending on the
  nature of the research and if you plan on
  releasing to the public domain
• proprietary research could have export control
  implications
• if not run through sponsored projects office, may
  not get an export controls review
• foreign nationals on project could be an issue
• Nondisclosure agreements

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Shipping and vendor payments

• Shipping equipment, technology, software,
  computers, goods, outside the U.S. may require a
  license
• Payment to foreign entity outside the U.S. should
  raise a red flag!

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Travel outside the U.S.

• Commerce and State have regulations that affect
• Physically taking items with you on a trip such
  as
• Laptop
• Encryption products on your laptop
• Blackberry (cell phone)
• Data/technology
• Blueprints, drawings, schematics
• Other tools of the trade
• Giving controlled technology/data to a foreign
  person outside the U.S.

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What does this mean?The good news

• Travel to most countries does not usually
  constitute an export control problem!
• Taking a laptop with only Microsoft Office Suite,
  Internet Explorer, etc. okay to most countries
  no license required
• Export issue if taking to Cuba, Syria, Iran,
  North Korea, or Sudan

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The good news.License exceptions/exemptions
available

• In most cases, if you are taking or need to work
  with export controlled info abroad, a license
  exception or exemption is available!
• An exception/exemption is not needed if you are
  taking a clean laptop to countries other than
  Cuba, Syria, Iran, North Korea, or Sudan
• There are some items you can take that are
  controlled but dont require a license to most
  countries i.e., you dont need to use the
  exception
• Items, software should be evaluated before travel

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Licensing the technology and goods

• EAR not too complicated, can apply
  electronically, no fee
• Deemed Export license required for foreign
  national working with certain controlled
  proprietary technology
• License needed to ship certain goods/technologies
  outside the U.S.
• ITAR very complicated and expensive
• DSP-5/Technical Assistance Agreement required for
  foreign nationals working with export controlled
  technology/defense service
• Technology Control Plan required

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Do I need to be concerned about export controls
in this research?

• Public domain, and
• No equipment, encrypted software,
  listed-controlled chemicals, bio-agents or
  toxins, or other restricted technologies are
  involved, and
• Information/software is already published, and
• There is no contractual restriction on export, or
• Fundamental Research
• (note definitions and caveats associated with
  this exemption)

• Equipment or encrypted software is involved, or
• Technology is not in the public domain, and
• Technology may be exposed to foreign nations
  (even on campus) or foreign travel is involved,
  and
• The equipment, software or technology is on the
  Commerce Control List, or
• Information or instruction is provided about
  software, technology, or equipment on the CCL, or
  
• The foreign nationals are from or the travel is
  to an embargoed country
• The contract has terms e.g. a publication
  restriction that effect the Fundamental Research
  Exemption

1. Equipment, software, chemical, bio-agent, or
   technology is on the US Munitions List (ITAR), or
2. Equipment, software, chemical, bio-agent or
   technology is designed or modified for military
   use, use in outer space, or there is reason to
   know it will be used for or in weapons of mass
   destruction, or
3. Chemicals, bio-agents or toxins on the Commerce
   Control List are involved, or
4. The contract contains a restriction on export or
   access by foreign nationals

Probably (further review is required) License May
Be Required
YES License Will Be Required
NO
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Voluntary disclosures

• If you realize you have violated the regulations,
  notify State, Commerce, or OFAC
• Procedures are spelled out in ITAR and EAR
• Honest errors are acceptable but gross negligence
  is punishable
• It is better to self-disclose than not say
  anything
• Violations are civil and criminal---Fines and
  jail time!!!

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The cost of noncompliance

• EAR
• Criminal 50K to 1 million or 5 times value of
  export, whichever is greater, per violation, 10
  years imprisonment
• Civil revocation of exporting privilege, fines
  10K-120K per violation
• Examples
• Bass-Pro - 510K for shipping guns without a
  license
• ITT fined 100M for exporting night vision
  materials without license

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The cost of noncompliance

• ITAR
• Criminal Up to 1 million per violation and 10
  years imprisonment
• Civil seizure and forfeiture of article,
  revocation of exporting privilege, up to 500,000
  fine per violation
• Professor Roth (Univ. TN) convicted on 9/3/08 and
  recently sentenced to four years
• Raytheon fined 25M
• Hughes Electronics and Boeing Satellite Systems -
  32M
• Boeing - 4.2M
• Lockheed Martin - 13M

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The Roth case

• Professor John Roth, University of Tennessee, was
  sentenced to 48 months for violating the Arms
  Export Control Act by illegally exporting
  technical information relating to USAF research
  contracts.
• He was developing plasma technology for use on an
  advanced form of an unmanned air vehicle (UAV)
• Roth gave ITAR technical data to a Chinese and an
  Iranian student
• Downloaded his project from a Chinese colleagues
  computer while in China
• His laptop and flash drive were confiscated
• The university export control officer warned Roth
• Interesting article indictment, and trial brief
• http//www.patentbaristas.com/archives/
  2009/09/17/professor-gets-4-years-in-prison-for-ex
  porting-technical-information-on-uavs/

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Federal Websites

• BIS - http//www.bis.doc.gov
• EAR database Commerce Control List
• http//www.access.gpo.gov/bis/ear/ear_data.html
• ITAR - http//www.pmddtc.state.gov/regulations_law
  s/itar.html

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QUESTIONS?

• Chad Copeland
• chadley.copeland_at_ttuhsc.edu
• 806-743-4752