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Export Control for Patent Research Off-shoring
1.
Patent Research Off-shoring:
Busting the Export Control Myths Author: Arpit Chhabra, Director Research
2.
Patent Research Off-Shoring:
Busting the Export Control Myths Table of Contents Overview ............................................................................................................................. 3 BIS on what technologies do not require any authorization for export (off-shoring)?...... 4 BIS on what technologies are subject to the Department of Commerce controls and need further assessment for off-shoring? .......................................................................... 4 Why are Export Control Checks required for off-shoring patent prosecution work?........ 5 Is Foreign Filing License the solution? ................................................................................ 5 How to assess if patent prosecution work involving a particular technology can be off- shored? ............................................................................................................................... 5 How to confidently conduct an export classification assessment?.................................... 6 Conclusion........................................................................................................................... 6 © 2009. Sagacious Research LLC 2
3.
Patent Research Off-Shoring:
Busting the Export Control Myths Overview Off-shoring of Patent Research work to destinations like India is now a very common practice followed by many US-based companies, law firms, and universities. Although, patent research off-shoring industry is now almost a decade old, but still there are a lot of questions and apprehensions when it comes to compliance with export control regulations while exporting (off-shoring) patent research. Notices issued by the USPTO in the past have reiterated that companies that are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce (DOC) for the appropriate clearancesi. These notices have created a wrong perception that off-shoring patent research is not legitimate. This paper is aimed at answering the questions related to the export control regulations while exporting patent research and creating awareness about the topic. Further, this paper is aimed at busting the myth that off-shoring patent research is not legitimate. © 2009. Sagacious Research LLC 3
4.
Patent Research Off-Shoring:
Busting the Export Control Myths BIS on what technologies do not require any authorization for export (off-shoring)? Except from BIS website: “Publically Available” technologies do not require any authorization. These include patent applications; publicly available technology and software (other than software and technology controlled as encryption items) that are already published or will be published; technology which arises during or as a result of “Fundamental Researchii”; or technology which is educational.iii Conclusion: As “Publically Available” technologies do not require any authorization, therefore, outsourcing of projects that require analysis of “Publically Available” technologies is allowed without any authorization. Such projects can include Patent Landscape Studies, Freedom to operate studies, Patent Portfolio analysis, Litigation Support Services, Invalidity/Validity Searches. BIS on what technologies are subject to the Department of Commerce controls and need further assessment for off-shoring? Excerpt from BIS Website: 1. Technologies which are in the US or of the US origin, in whole or in part 2. Foreign technology with U.S.-origin technology commingled to a degree above a de minimis level 3. Some technologies are under the exclusive jurisdiction of another agency of the U.S. government and are not subject to the EAR. These include defense services which are under the jurisdiction of the State Department and technology related to the production of special nuclear materials which is under the jurisdiction of the Energy Department.iv Conclusion: Department of Commerce controls are applicable to technologies that are “Not Publically Available”. Therefore, off-shoring of projects that require use of undisclosed or proprietary technologies may require authorization from the Department of Commerce depending on the export classification assessment of the technology involved. In most of the cases, the authorization may not be required as the technologies involved don’t require any authorization for export. Such projects can include Patent Prosecution work, and Patentability Searches. © 2009. Sagacious Research LLC 4
5.
Patent Research Off-Shoring:
Busting the Export Control Myths Why are Export Control Checks required for off-shoring patent prosecution work? As patent prosecution work involves, use/analysis of undisclosed or proprietary technologies belonging to the US, therefore it requires authorization from the Department of Commerce before it can be off-shored. Is Foreign Filing License the solution? No, Foreign Filing License (FFL) is limited to purposes related to the filing patent applications in foreign countries. FFL is issued by the USPTO. However, for exporting subject matter abroad for preparation of patent application to be filed in the US, a company is subjected to a variety of export controls that are administered by the Bureau of Industry and Security (BIS) at the Department of Commerce.v How to assess if patent prosecution work involving a particular technology can be off-shored? In order to off-shore patent prosecution work, the company off-shoring the patent prosecution work needs to perform an export classification assessment. The export classification assessment is performed in order to determine whether the technology to be exported (read outsourced outside US for patent preparation) is controlled for export purposes. The export classification assessment can be done using the following methodology: 1. 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 preferably, by filing a Commodity Classification request (CCR) with the BIS. 2. 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 preferably, by filing a Commodity Justification (CJ) with DOS-DTC. 3. Screen any parties to the export transaction against the list of US Government’s Prohibited persons, like, the DOC Denied Persons list, the DOC Denied Entity list, the DOC Unverified list, the DOT-SDIE list, and the DOS Debarred Person’s List.vi In case the technology to be off-shored is not classified under CCL or USML, then the technology to be off-shored can be off-shored by just documenting that the review of © 2009. Sagacious Research LLC 5
6.
Patent Research Off-Shoring:
Busting the Export Control Myths the technology to be off-shored was done prior to divulging the disclosures to off-shore vendor. Otherwise, if the technology to be off-shored is export-classified, obtain an export license from BIS or DTC, whichever is relevant. Conclusion: Not all technologies require a license for exporting. ONLY those technologies require licenses which are classified under CCL or USML. Technologies not classified under CCL or USML do not require licenses for export. How to confidently conduct an export classification assessment? There are US-based Law Firms specializing in Export Control Laws that can help you determine whether a patent prosecution work relating to a particular technology can be off-shored without needing an authorization from the BIS or DTC. Sagacious Research can help you with the process. Conclusion The paper clearly describes that off-shoring of patent research is definitely legal and governed by certain export control regulations like any other business. Off-shoring of projects that require analysis of “Publically Available” technologies is allowed without any authorization. However, off-shoring of projects that require use of undisclosed or proprietary technologies of the US may require authorization from the DOC or DOS-DTC depending on the export classification assessment of the technology involved. In most of the cases, the authorization may not be required as the technologies involved don’t require any authorization for export. Only those technologies require licenses which are classified under CCL or USML. Technologies not classified under CCL or USML do not require any license for export (off-shoring). i http://uspto.gov/web/patents/patog/week53/OG/TOCCN/item-94.htm ii "Fundamental research" is basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community. It is distinguished from proprietary research and from industrial development, design, production, and product utilizations, the results of which ordinarily are restricted for proprietary and/or specific national security reasons. Normally, the results of "fundamental research" are published in scientific literature, thus making it publicly available. Source: http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#16 iii http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#14 iv http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#14 v http://uspto.gov/web/patents/patog/week53/OG/TOCCN/item-94.htm vi http://321patent.wordpress.com/tag/legal-process-outsourcing/ © 2009. Sagacious Research LLC 6
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