Export Control
In today’s global economy, outsourcing can offer a variety of tangible and intangible benefits for intellectual property firms and individual practitioners, and as an industry has seen strong growths over the past several years. Some U.S. companies have moved entire legal departments abroad, and firms ignoring this reality take the risk that clients may search elsewhere for their patent prosecution needs that may be more cost competitive without sacrificing quality. While there is nothing unethical or illegal about a lawyer outsourcing legal and non-legal services oversea, the U.S. government’s system of export control laws and regulations ensures that controlled products and technologies are not shipped to certain countries, entities, or individuals or made available for certain prohibited end-uses. A few points of clarification are as follow:
1. Export control is limited to few items that primarily relate to military, defense, nuclear energy, space, and national security. Published patent applications and patents, and non-technical data are not controlled.
Not all technologies require a license for exporting. In the United States, the two governing bodies are the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). License requirements related to patent prosecution outsourcing are generally dependent upon technical characteristics of the intellectual property and the destination country for that particular technology. However, according to the U.S. Department of Commerce, Bureau of Industry and Security, “Most exports from the United States do not require a license” [Introduction to Commerce Department Export Controls, 2018].
ITAR regulations are administered by the U.S. Department of State’s Directorate of Defense Trade Controls and cover defense articles, technical data and defense services on the United States Munitions List (USML, 22 CFR Part 121). Examples include:
- Information, other than software as defined in §120.10(a)(4), which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles;
- Classified information relating to defense articles and defense services;
- Information covered by an invention secrecy order; and
- Software as defined in §121.8(f) directly related to defense articles.
EAR regulations are administered by the U.S. Department of Commerce’s Bureau of Industry and Security and relate to all items that are not subject to the ITAR. These are referred to as “dual use” and are those that have both commercial and military applications. These items are contained in the Commerce Control List (CCL, 15 CFR Part 774). To determine if your product falls under the jurisdiction of EAR, please refer to the CCL.
2. We have staff located in the United States, allowing us to obey all export control laws.
Even in the rare case that a technology is impacted by ITAR or EAR, our U.S. patent legal assistants will support and perform the same services as our oversea workers to ensure that applicable material never leaves the country.
The period of full export controls amount up until the time of registration and grant of a foreign filing license, such as by filing a provisional patent application. Once a foreign filing license is granted, there is a relaxation of export controls in the form of a limited right to send technical information in patent applications extraterritorial or outside of the United States, such as for the purpose of obtaining patent protection in a foreign patent office. Next, under the normal progression of patent applications in the U.S., the application will automatically publish at the 18-month point (unless one opts out and doesn’t foreign file the application). After the USPTO (or another entity) publishes the technical data, this result in the patent application being in the public domain, at which time all remaining ITAR or EAR export controls are removed.
Appropriately trained foreign personnel can then assist in further patent preparation and prosecution work for that patent application. In practice, there is still much patent prosecution activity that typically takes place after a patent application is published—particularly for any continuation or divisional children of the published parent patent application. Examples include responding to Office actions, drafting claims for a continuation application, creating or revising formal drawings, and general maintenance of granted patents.
In addition, our system is set up such that foreign personnel have only a single point-of-contact in the U.S. for receiving work projects. The responsible person in the U.S. ensures compliance with export control regulations before such information is made available to the foreign personnel. Foreign personnel are also instructed on how to comply with the U.S. export control laws so that they do not accept technical data that hasn’t been appropriately cleared for export.
Our oversea office also screens staff to make sure that we do not allow access to technical data by persons on the lists of U.S. Government’s Prohibited Persons, and all foreign technical personnel executes a “Letter of Assurance” as part of their employment agreements to not disclose, use, or re-export the patent application technical data, or to export the direct product of the patent application technical data. Although most of our data is located in private encrypted servers in the United States, we ensure the same level of security and confidentiality in our foreign office. In addition, our staff members have separate permission levels and access rights to data and files.
3. We screen all technologies received.
If there is a concern about whether a particular technology or technical data is controlled for export purposes, we will perform a self-classification assessment or we will confer with the DTC or BIS, and may involve legal and technical experts in the field.
The export classification assessment can be done using the following methodology:
a) Determine whether the technology is subject to International Traffic in Arms Regulations (ITAR) of the Department of State—Directorate of Defense Trade Control (DOS-DTC).
This can be done either by self-assessment of the United States Munitions List (USML), or by filing a Commodity Justification (CJ) with DOS-DTC.
b) Determine whether the technology is subject to Export Administration Regulation (EAR) of the BIS.
This can be done either by self-assessment of the Commerce Control List (CCL), or by filing a Commodity Classification Request (CCR) with the BIS.
c) Screen all parties to the export transaction against the lists of US Government’s Prohibited Persons, such as the DOC Denied Persons list, the DOC Denied Entry list, the DOC Unverified list, the DOT-SDIE list, and the DOS Debarred Person’s list.
If the technology to be off-shored is found to be classified, then we can obtain an export license from BIS or DOS-DTC, whichever is relevant, or we will typically have our U.S. staff members perform the filing or prosecution activity until the sensitive information is made publicly available.