Sales executives travel abroad often with company-issued or personal laptops, tablets, and handheld devices.
Today, sales executives are traveling abroad now more than ever. Do you know what they are taking with them? In-house counsel should be aware of the export controls associated with traveling with a laptop or mobile device.
Michelle Schulz and Elsa Manzanares, co-chairs of the International Trade Group with Gardere, recently sat down with Inside Counsel to discuss how U.S. companies are managing export controls on laptop travel from a practical perspective.
Sales executives travel abroad often with company-issued or personal laptops, tablets, and handheld devices. It is common to carry product information, presentations, and other information on these devices when making a sales pitch. For example, according to Schulz, an executive may have a proposal that includes detailed product specifications as well as information on pricing and delivery. The device itself may contain software that is controlled for export to the destination country, or it may contain encryption items.
Under the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), the U.S. government controls the release of certain technology and software abroad. These releases are exports from the U.S., and may require a license. A release can occur as soon as a sales executive crosses the border of the destination country – meaning an export license may be required to travel to a country with certain technical information, software, or encryption items.
“We sometimes encounter a misconception that only military or very sensitive technology is subject to export controls,” explained Schulz. “In fact, government controls are more common than one would expect - covering some oil and gas related product specifications, electronics information, chemical formulas, design software, and a variety of other everyday items.”
In-house counsel should be familiar with export controls on software, encryption, and technology. Schulz says that it is very important to know what types of controlled technology are in the company’s inventory so that the company can categorize those items and control releases of that technology during travel abroad. In fact, per Schulz, unauthorized releases can lead to fines and penalties adding up to millions of dollars.
“We can’t underestimate the importance of employee training on this topic. Each traveler needs to think about what they are doing that might cause an unauthorized release of software or technology,” explained Manzanares. “You can implement policies and procedures on travel, but the procedures won’t work if employees don’t understand why compliance is important and their role in the process.”
So, what are some best practices for in-house counsel managing export controls on software, encryption, and technology?
According to Manzanares, the best practice in this area is to travel with clean laptops. But, if that is not possible, she recommends companies conduct a review of whether their software and technology qualifies for license exceptions.
She added, “Reliance on those license exceptions must be documented, however. In crafting policies and procedures for laptop travel, it is important to note that there is no one-size-fits-all solution.”
In addition, a procedure adopted by one company may not work for another. “Companies should tailor their policies and procedures to their particular risk profile. Are executives traveling to high risk countries? Which department employees are traveling most frequently? Employees in marketing, sales, and product development are more likely to carry technology that might require authorization,” she said.
Lastly, changes in a company’s inventory of software and technology may have an impact on procedures, so companies should consistently monitor their policies and procedures to address gaps that can arise.