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

Export Controls: How to stay compliant in an academic medical setting. Chad Copeland Research Compliance Officer Texas Tech Health Sciences Center

The export controls maze: How do I get my research done and stay compliant with the regulations?

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.

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.

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

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

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

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)

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.

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

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

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

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

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?

Exclusions from Export Control Laws • Public Domain Exclusion (ITAR, EAR) • Education Exclusion (ITAR, EAR) • Fundamental Research Exclusion (ITAR, EAR)

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.

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.

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

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

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

Unless the fundamental research exclusion applies, a university’s 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.

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

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!

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.

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

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 don’t require a license to most countries; i.e., you don’t need to use the exception • Items, software should be evaluated before travel

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

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 • Equipment, software, chemical, bio-agent, or technology is on the US Munitions List (ITAR), or • 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 • Chemicals, bio-agents or toxins on the Commerce Control List are involved, or • 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 28

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!!!

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

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

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 colleague’s 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-exporting-technical-information-on-uavs/

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_laws/itar.html

QUESTIONS? Chad Copeland chadley.copeland@ttuhsc.edu 806-743-4752

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