The Bureau of Industry and Security (“BIS”) just reported a settlement agreement it entered into with JSR Micro under which JSR Micro agreed to pay a civil penalty of $270,000. JSR Micro had voluntarily disclosed to BIS that it had exported photoresists classified under ECCN 3C002.a without the required licenses from BIS.

A photoresist is a thin material placed between a mask and a substrate, such as a semiconductor, which allows circuits or other patterns to be etched onto the substrate. Light is used to expose the photoresist and then a chemical process is used to remove exposed or unexposed portions of the photoresist. The shorter the wavelength of the light used to expose the photoresist, the higher the resolution of the image achieved on the substrate. Under ECCN 3C002.a, export licenses are required for photoresists optimized for use with light wavelengths that are 350 nm or shorter. (The Wassenaar Arrangement, by contrast, only requires licenses for photoresists optimized for use with wavelengths that are 245 nm or shorter).

According to the documents filed with the settlement agreement, JSR Micro engaged in 45 separate unlicensed exports of the photoresists to Israel, Singapore and Taiwan. These documents, however, charged JSR Micro with 90 separate violations. Each export was deemed a violation of section 764.2(a) of the Export Administration Regulations (“EAR”). Additionally, each export was deemed a violation of section 764.2(g) of the EAR because the Shipper’s Export Declarations filed with the exports stated that no license was required for the exports. Since each violation could result in an $11,000 fine, the charging letter asserted a potential liability of $990,000.

In fact, however, BIS was clearly double-charging the offense to try to extract a higher fine from JSR Micro. In every case where an exporter ships an item without a required license, it will always be the case that the SED states that no license is required, and yet BIS does not consistently add the SED charge in its charging documents for all unlicensed exports. The additional SED charge might seem fair where the exporter knew that a license was required and yet said that one was not on the SED. But there are no allegations here that JSR Micro knew that a license was required.

Even if one thinks that $270,000 is a fair settlement of a $990,000 liability in a voluntary disclosure case, it seems hard to feel the same about the same fine in such a case where only a $495,000 liability is asserted. That’s not even a fifty-percent reduction.

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