A U.S. subsidiary of a German company sends all invention disclosures to its parent company in Germany for review by the company’s patent committee. In an effort to reduce costs, another U.S. company decides to outsource its patent processing to a technology center in India. All information about U.S. inventions is provided to the patent processing center in India, where engineers and patent agents prepare applications for filing in the United States. Do these scenarios raise questions under U.S. export controls? Short answer: Yes. If a foreign filing license were obtained from the United States Patent and Trademark Office (PTO), would it cover these transactions? Short answer: No.
The United States has established a comprehensive system of export controls that regulates the worldwide transfer of U.S.-origin goods, technology, and services. These controls apply to technical assistance and technology transfers, services, and other activities involving non-U.S. persons, including when technology is transferred to non- U.S. persons in the United States. Exports of technology related to commercial and dual-use items are generally subject to the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS); exports of technology related to defense articles are subject to the International Traffic in Arms Regulations (ITAR), administered by the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC). However, jurisdiction is ceded to the PTO under both the EAR and ITAR for technical data that is exported for the purpose of filing or possible filing and prosecution of a foreign patent application.
When information is exported from the United States to another country for purposes of filing a patent application abroad, a foreign filing license must be obtained from the PTO. The foreign filing license authorizes the exportation of technical data in the form of a patent application, or any other form, for the preparation, filing, or possible filing of a foreign patent application. No separate authorization is required under the EAR or ITAR for the exportation of information covered by a foreign filing license.
Nonetheless, it is important for companies to understand the limitations inherent in the rights granted under a foreign filing license. First, the foreign filing license must be obtained before you can export the technical data in a patent application. Second, the technology that is exported must be that which is contained in the application or otherwise necessary to the preparation of the application that is to be filed abroad. The foreign filing license does not cover information sent abroad for preparation of filings to be made in the United States. It also does not cover all information related to the invention — only that which is truly necessary for the preparation of the application. Third, the foreign filing license does not authorize the transfers of technology that occur between employees of a company located in the United States and employees of an affiliated company overseas. If the transfer of such technology is controlled under U.S. export controls, a license must be obtained from the U.S. Department of Commerce or U.S. Department of State (depending on the type of technology) in order to engage in joint development activities — or even to report to a foreign parent company information about a new invention.
Fourth, even when a foreign filing license has been obtained, it does not authorize the transfer of controlled technology to foreign nationals located in the United States — a so-called deemed export. The foreign filing license is focused only on filings of patent applications in foreign countries; it does not contemplate the exchange of technical data to foreign nationals here in the United States. Fifth, the exportation of a company’s trade secrets is not authorized pursuant to a foreign filing license, even if the trade secrets would be included in the information related to a patent application to show what is not to be covered by the patent application. Sixth and finally, a foreign filing license also does not authorize the exportation of goods. It is limited to technology exports related to patent application filings. For instance, when a company is ready to export a prototype that is based entirely on what is in the patent application, the company should ensure that it complies with the applicable export control regulations.
Given the ease with which technology can be sent abroad in today’s world or shared with foreign nationals present in the United States, and given the additional attention being paid to exports of technology by export control enforcement personnel, it is beneficial for companies to ensure that their engineers and other employees understand the limits of foreign filing licenses and, of course, the potential controls that may be imposed on transfers of technology by U.S. export controls.
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