Is Your Software Transmission Subject to U.S. Export Controls under the EAR?

by Miller Canfield
Contact

The release of software may require an export control license from the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) under the Export Administration Regulations (the “EAR”). Software delivery has evolved from a physically transferred product to a product now most often disseminated through electronic transmissions of the software code. This evolution diminished the interaction between software suppliers and customers, while increasing the access for customers around the world to a broad range of software products. The EAR, however, makes no distinction between software transferred through the physical shipment of tangible items and electronic transmissions.

A software export under the EAR includes “any release of technology or software subject to the EAR in a foreign country,” or any release of “source code subject to the EAR to a foreign national.” The latter example is commonly known as a deemed export.  The actions comprising a release of software and technology are broad, extending beyond the physical export of tangible goods or electronic transmissions. These actions include the visual inspection by foreign nationals, exchanges of information, or the application of personal knowledge or technical experience acquired in the United States.

The EAR applies to items on the Commerce Control List (“CCL”), classifying the items by Export Control Classification Numbers (“ECCN”). Moreover, the regulations contain an important “catch-all” category known as “EAR 99” for all items not specifically listed on the CCL, but covered by the EAR. Because the EAR is expansive, the items covered by the EAR 99 catch-all are also expansive. By definition, the reach of EAR export controls extends to (i) all items exported from the United States, (ii) all U.S.-origin items wherever located, (iii) foreign-made commodities “bundled” with U.S.-origin software, and (iv) qualified foreign made direct software.

The ECCN for controlled software predominantly informs the level of export restriction under the EAR. The ECCN provides a precise description of the item, the reason for control (e.g. anti-terrorism), and information as to pertinent license exceptions. A key determinant as to the level of control for software under the EAR is the presence of data encryption. Many unique definitions and specifications expansively control encryption software, even when embedded within software with mostly non-encryption functionality. Also, all items, whether classified as EAR 99 or under a specific ECCN, must comply with the ten general prohibitions under the EAR. Among these general prohibitions are the end-user and end-use restrictions.

Even with the broad classification of software items under EAR 99, some items remain excluded from control under the EAR. For example, the EAR excludes publicly available software from control, although this exclusion does not generally include encryption software. Information is publicly available when “published” by becoming “generally accessible to the interested public in any form.” Specifically, software publication occurs “when it is available for general distribution for free or at a cost that does not exceed the cost of reproduction or distribution”

License exceptions under the EAR may be available to export-controlled software depending on the ECCN description, the applicable general prohibitions, and other qualifying factors. Typical license exceptions which may be available for your software transaction include the following: civil end-users (“CIV”); governments, international organizations, international inspections under the Chemical Weapons Convention, and the International Space Station (“GOV”); baggage (“BAG”); limited value shipment (“LVS”); temporary imports, exports and re-exports (“TMP”); computers (“APP”); technology and software under restriction (“TSR”); technology and software-unrestricted (“TSU”); and, encryption commodities and software (“ENC”).

The EAR embargo restrictions may prohibit software transmissions ordinarily permitted under an EAR license exception. Pursuant to General Prohibition Six, license exceptions are generally unavailable for controlled software exports to countries embargoed under the EAR. However, part 746 of the EAR sets forth a positive list of license exceptions which may be available for software transmissions to customers residing in embargoed countries such as Cuba, North Korea, Syria and Iraq. Moreover, General Prohibition Seven prohibits the export of software transmissions, covered by the EAR, originating from the United States, when intended for a banned purpose, such as nuclear proliferation. These end-user and end-use restrictions arising from the general prohibitions usually prohibit a software transmission without a license.

For further information as to whether a license exception or license may be appropriate for your software transmission, we invite you to contact Miller Canfield’s Export Control Team. Visit the Export Control Team's webpage for other export control articles and alerts, as well as updates on U.S. Export Control Reform.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Miller Canfield | Attorney Advertising

Written by:

Miller Canfield
Contact
more
less

Miller Canfield on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.