Did you know that a product does not have to travel across the U.S. border to be considered an export? In fact, an export need not involve a product at all. Under the rules governing deemed exports, merely exposing a non-U.S. citizen to information about export-controlled technology, even on U.S. soil, may be treated as an export. Such a disclosure of information, if made without a proper license, is potentially a violation of federal law that could result in harsh penalties. It is therefore vital that universities researching, or utilizing, export-controlled technology thoroughly understand this rule and how the exemption for “fundamental research” may — or may not — apply.
The Deemed Export Rule is codified in §734.2 (b)(2)(ii) of the Export Administration Regulations (EAR), and it basically states that a release of controlled technology, software or information to a non-U.S. citizen will be considered an export to that individual's home country. This rule covers any activity on the campus, not just sponsored research. However, these provisions generally do not apply to information that is released to individuals holding U.S. citizenship, green cards or status as a "protected individual."
These demands may appear burdensome, especially since a single research project could require a school to obtain multiple export licenses. For example, a given study might involve the collaboration of scientists from several different countries, and it might require the use of many different kinds of technology. And if universities fear being punished for inadvertently failing to obtain the proper export license, they may simply decide that the research project is not worth the risk. Just imagine if a school like Harvard, Stanford or UCLA suddenly stopped seeking a cure for cancer because they were afraid of violating export-control laws. What a tragedy that would be!
Fortunately, there is an exemption under §734.8 of the EAR that allows universities to conduct “fundamental research” without needing to comply with all of the detailed licensing requirements. This provision covers basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly in the scientific community. However, this is not a blanket exemption that applies across the board. For example, research involving certain types of encryption software may not be exempted (see Supplement No. 1 to §774 of the EAR), and proprietary research or industrial development, design, production, and product utilization — the results of which are ordinarily restricted for proprietary or national security reasons, as defined in §734.11(b) — may not be exempted.