Editor’s note: John Lindsey is a member of the law firm of Daniels Daniels & Verdonik, P.A.The Bureau of Industry and Security (BIS) of the Department of Commerce, the primary agency responsible for dealing with export licenses, has recently announced changes to help employers deal with employees who are not U.S. citizens or permanent residents.
Under current law, all information provided to such persons is deemed to have been exported. So, when an employer applies for a visa for such persons, the employer must also consider what export license it may need to obtain for the “deemed exports” that will occur when the foreign employee is given access to, for example, sensitive technology and software. Until recently the export licenses available, known as “Deemed Export Licenses,” were generally granted for a two-year period, a period often shorter than visas for foreign nationals working in the United States. BIS will now tie the term of the Deemed Export License to the term of the nonimmigrant visa of the foreign national for whom the license is obtained.
All U.S. origin commodities, technology and software are subject to the U.S. export control laws and regulations enforced by BIS or other U.S. government agencies. Technology and software (principally source code, which can be read) released to a foreign national in the United States are considered U.S. exports under these rules, since such release is “deemed” exporting to the foreign national’s home country. Deemed exports can occur in a number of ways, including visual inspection (by reading specs or plans or code, or by taking part in plant tours, for example), verbal communication (including telephone calls, staff meetings or training sessions) or electronically (by email, computer access or fax transmissions, for example).
Although not all “deemed” exports will require written license authorization prior to export (i.e., communication to the foreign national), release of technology or software to a foreign national in the U.S. without the appropriate export license constitutes an export violation, and can subject the exporter to significant fines as well as loss of export privileges, and, depending on the nature of the violation, the individuals involved may be subject to prison terms. The foreign national may be deported in such circumstances.
‘Controlled’ technology, software
For purposes of the deemed export rule, a written export license is required prior to export for “controlled” technology or software, that is, technology or software necessary to develop, produce or use products for which export is restricted under the various export regulations enforced by the U.S. government, including BIS. Reasons for export control include national security, nuclear nonproliferation, weapons control, encryption, crime control and anti-terrorism. Written license requirements may also vary by the home country of your foreign employees. For example, suppose your company produces handcuffs, a controlled item for crime control reasons to all destinations except Canada. You may, without obtaining a written license from BIS, release to a Canadian employee working for you on a TN visa your company’s technology used exclusively to develop or produce the handcuffs, but you will need to obtain a written license from BIS (a Deemed Export License) prior to releasing the same technology to an Indian employee working for you on an H-1B visa.
The deemed export rule applies to release of technology or software to any foreign national who is not a U.S. citizen, U.S. permanent resident or an individual designated as a political refugee or under asylum status. This definition includes those foreign nationals present in the United States under employment-based nonimmigrant visas, such as H-1B, L, TN and E visas. The fact that a foreign national has a nonimmigrant visa is not relevant to the determination whether the company employing that person will need to obtain a written export license before he or she has access to the company’s sensitive technology or software.
Before releasing its technology and software to a foreign national in the United States, a company should determine what export restrictions, if any, may apply, and the government agency that will enforce any applicable restrictions. In some cases, the company may wish to obtain a classification opinion from BIS to confirm that no written license is required prior to release. Companies should be aware that applications for written export licenses can take months to obtain.
Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. John Lindsey practices in the areas of copyright, trademark, immigration, international trade and corporate law. Questions or Comments can be sent to firstname.lastname@example.org.