• High-Tech Sector Should Note Proposed Changes to Licensing Requirements for Transferring Technology to Foreign National Employees
  • July 14, 2005 | Authors: Linda M. Weinberg; Lynn M. Van Buren
  • Law Firm: DLA Piper Rudnick Gray Cary US LLP - Washington Office
  • US businesses, particularly those in high-tech industries, should be aware of a proposal that may make it more difficult for them to hire and employ foreign nationals. The proposal would particularly affect these sectors:

    • Electronics
    • Computer companies
    • Telecommunications companies
    • Microchip manufacturers
    • Software firms
    • Educational institutions

    Currently, an export license is required to disclose technology to a foreign national employee, contract employee, or visitor, if the transfer of the same technology to the individual's home country requires an export license.

    The Department of Commerce Bureau of Industry and Security (BIS) is considering changing export licensing requirements for the disclosure in the United States of technology to foreign nationals -- persons having neither US citizenship nor lawful permanent US resident status (i.e., a green card). If these changes are implemented, US businesses may be required to reexamine whether an export license is required for foreign national employees to perform their duties.

    These proposed changes are important to note because of the stiff penalties associated with "deemed export" cases, which are an investigative priority of BIS's Office of Export Enforcement. US businesses that fail to obtain required export licenses for the disclosure of technology to foreign national employees or visitors may be subject to penalties including civil and criminal fines, imprisonment, suspension/debarment from US government contracts, and a denial of export privileges.

    Licensing Could Be Determined by Foreign National's Birthplace, Not Residency

    BIS is considering revising its policy to require that licensing determinations be based on a foreign national's place of birth, rather than the country in which citizenship or residency was most recently obtained.

    If implemented in its current form, this change would require US businesses to reexamine licensing requirements for all their current foreign national employees/contract employees.

    Research Activities Would Also Be Affected by Proposed Revisions

    In addition, BIS is considering narrowing the circumstances under which foreign nationals may engage in fundamental research without a license. To do this, BIS is considering requiring a license for fundamental research if the research requires that the foreign national have access to technology for the "use" of items subject to the EAR (e.g., technology for the operation, installation, maintenance, repair, overhaul, or refurbishing of EAR-controlled equipment) and a license is required to export such technology to the foreign national's home country. Thus, if the equipment used as part of the "fundamental research" would require an export license then the "use" of that equipment by a foreign national will also require a deemed export license.

    Opportunity for US Businesses to Provide Comments Regarding the Proposed Changes

    BIS is requesting written public comments regarding the potential impact of these changes on US businesses, as well as US universities. The deadline for submitting comments is May 27, 2005. Because the comments will be a matter of public record, they should not include confidential, business proprietary information.