Licensing of Intangible Transfers of Technology

1. Licensing of Intangible Transfers of Technology John Sonderman Office of Export Enforcement Bureau of Industry and Security U.S. Department of Commerce

2. 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

3. 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

4. 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

5. 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.

6. 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

12. 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

13. 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

14. 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

15. 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