Apr
14
Here We Go Again
Posted by Clif Burns at 8:06 pm on April 14, 2008
Category: Criminal Penalties
The Chi Mak case has engendered its fair share of confusion, and the latest victim is a trade law attorney who submitted a brief article to an export law newsletter that was published today. According to that article, the verdict in Chi Mak stands for the proposition that public domain data about defense articles can’t be exported to China. That’s simply wrong and betrays a fundamental misapprehension both of the International Traffic in Arms Regulations (“ITAR”) and what went on in the Chi Mak case. (Fair disclosure: I advised the Chi Mak defense team on the public domain issue in that case).
The article states:
The case sets the precedent that “technical data”, despite entering the “public domain”, requires an export license from the Directorate of Defense Trade Controls (DDTC) if China is the country of export. The jury’s finding reinforces this interpretation of the ITAR, and the subsequently heavy sentence by Judge Carmey reflects the seriousness the United States deems Chinese acquisition of military knowledge.
What the author apparently didn’t understand was that an instruction was given, and agreed to by the prosecutors, that if the data was in the public domain as defined by section 120.11(a) of the ITAR, it wasn’t subject to ITAR. So the jury’s conviction represents a determination that the items weren’t in the public domain as so defined.
For example, the conference exception in section 120.11(a)(6) doesn’t cover every conference. That exception was at issue in the Chi Mak case because the documents were alleged to have been presented at an American Society of Naval Engineers (“ASNE”) conference According to that exception, a document is public domain if it is generally accessible to the public:
Through unlimited distribution at a conference, meeting, seminar, trade show or exhibition, generally accessible to the public, in the United States.
The jury may well have determined that the ASNE conference wasn’t “generally accessible to the public.”
The article goes even further astray when it tries to find a basis in the ITAR for a conclusion that public domain technical data can’t be exported to China.
§125.4 contains the licensing exemptions provision of ITAR. §125.4(a) states:
“The following exemptions [§125(b)(1)-(13)] apply to exports of technical data for which approval is not needed from the Directorate of Defense Trade Controls. These exemptions, except for paragraph (b)(13) of this section, do not apply to exports to proscribed destinations under § 126.1 of this subchapter…”
So if §125.4 is the exclusive exemption section of the ITAR, and China is excluded from any exemption as a country listed in §126.1, then it follows all technical data exported to China requires a license regardless of its presence in the public domain.
The critical problem with this analysis is that the definition which excludes public domain information from the definition of technical data isn’t an exemption mentioned in § 125.4. It isn’t even an exemption at all or it would be covered by section 126.1 itself, as the prosecutors initially argued, which notes that the “exemptions” in the ITAR aren’t applicable to China and the other proscribed countries.
Rather public domain material is excluded from the definition of technical data covered by the regulations. Exemptions are exceptions to licensing requirements for technical data otherwise subject to ITAR such as, for example, technical data being returned to the original source of import or technical data exported in furtherance of an approved technical assistance agreement. But if information is public domain under § 120.11, it isn’t technical data at all under § 120.10, and it can be exported without license and without reference to any exemptions.
A case that makes clear the difference between a definitional exclusion and an exemption is the way that the USML handles the QRS-11 quartz rate sensor navigational chip. There is now a note to Category VIII(e) that excludes such sensors when, among other things, they are integrated into a civil aircraft. The reason for this was to permit Boeing aircraft (all of which were equipped with the QRS-11 chip) to be exported to China. If the note is seen as an “exemption” for sensors in civil aircraft rather than as a definitional exclusion from the USML, then § 126.1 would proscribe exports of those planes to China, which was not the result contemplated by DDTC when it added that note to the USML
In short, exemptions and definitional exclusions are two very different things in the ITAR and you confuse them at your peril as did the author of the article in question. Frankly he should have been suspicious of his own conclusion because by his reasoning if someone tells a Chinese national that the B-2 stealth bomber has a “bat-wing” shape to reduce its radar cross-section, that person would be committing a criminal act, even though everyone who hasn’t spent the last two decades in a cave in Siberia is aware of the shape of a B-2 bomber and its purpose.
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Copyright © 2008 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
6 Comments:
Excellent point Clif. Moreover, an exemption is generally an affirmative defense for which the defendant carries the burden of proof, but an exclusion goes to whether there is present an essential element of the offense, i.e., whether it was defense technical data, that puts the burden right where it ought to be, on the damnyankee prosecutors. Unfortunately, as we saw in the Alabama case, the prosecutors at this Dept. of Justice like to evade and circumvent the law by the simple expedient of a commodity jurisdiction/classification determination from DDTC, hardly an impartial party, that claims the material is ITAR controlled, and then claim that the determination is not subject to judicial review.
“But if information is public domain under § 120.11, it isn’t technical data at all under § 120.10, and it can be exported without license and without reference to any exemptions.”
What is your analysis of how this relates to the exemption at 22 CFR 125.4(b)(13), which is normally applied to technical data which has been approved for the public domain? Pursuant to 126.1(a), data that has been approved for public release may be exported to proscribed destinations under this exemption. Was the conference material approved for release into the public domain by the USG? Was the material properly annotated with the ITAR exemption?
First, thanks to the author for clarifying the previously published article Chi Mak case. I knew the guy’s analysis of ITAR “public domain” was wrong, but I was too lazy to research the case. Thanks.
Kimberly, the ITAR does not require prior US Government approval to put ITAR technical data in the public domain. Prior to December 4 (or maybe December 6) 1984, the ITAR was like that. But a Federal Register notice on that day changed the definition of public domain and made it clear that the ITAR does not require US Government prior approval for a company to put ITAR technical data in the public domain.
The exemption you refer to says if you go throught he DFOISR process and get ITAR technical data approved for public release, you may export it under an exemption–but remember exemptions can’t be used for exports to 126.1 countries. If you go through that process and then put the ITAR technical data in the “public domain” the information is “public domain” as is no longer ITAR technical data and may be exported to 126.1 countries because the ITAR does not apply to it.
Of course, if you have a contract that prohibits you from releasing technical data, if you release it by making it ITAR “public domain” you have violated the contract but not the ITAR.
Background: In the early 1980’s the Regan Administration issued a directive telling State and Commerce to open up “public domain” and what the EAR called “GTDA” (now known as “publicly available” in the EAR).
I can send you that Federal Register notice, or at least part of it, if you want. My email address is [email protected]–I hope I am not violating any rule by putting my email address in here. Thanks for not laughing at my email address.
I do not find that Mr. Black’s assertions completely jive with the direction at 22 CFR 250 (See http://www.access.gpo.gov/nara/cfr/waisidx_07/32cfr250_07.html), which appears to be a codification of DoD Directive 5230.25 (See http://www.dtic.mil/whs/directives/corres/pdf/523025p.pdf). DoD Directive 5230.25 was revisited as recently August 18, 1995 – some ten years after the purported Executive’s loosening of restrictions on release of technical data to the public domain. DoD seems to be under the impression that if DoD has a quantifiable interest in technical data, the ITAR prevents its release to the public domain – regardless of whether contractual provisions address the issue.
Moreover, I believe DDTC principally views ITAR’s 120.11 as establishing those parameters upon which individuals may reasonably rely in determining whether information that has come into their possession is in the public domain, and, therefore, freely transferable without restriction. For information not squarely falling into one of the enumerated categories in 120.11, ITAR’s 125.4(b)(13) provides a mechanism via which information or technical data may be placed into the public domain. After all, if all one had to do to put technical data into the public domain was to release it, the technical data caveat at 123.16(b)(4) would be nonsensical.
Practitioners should be encouraged to act conservatively in this arena – more especially given the Mak verdict.
DDTC and DoD would likely argue that obtaining OSR release approval is really not all that hard.
Mr. L: That’s fascinating reading. Although the link you so kindly supplied is to a 2005 edition of the CFR, the references in the text of 32 CFR Part 250 refer to EAR as 15 CFR 369. The EAR hasn’t been in that CFR range in a decade. Part 250 also refers to “general licenses”, a term that hasn’t been used by DoC since it released the revised EAR in March of 1996.
If this was the Dept. of the Interior, that might be excusable, but since DoD is one of the reviewing agencies, and the one that pouts about Commerce all the time and even let one of its former employees go testify against Commerce supposedly on his own time, it is both absurd and abusive for DoD to be egging on criminal prosecutions when they are too darn lazy to keep up.
The exemption here is of techical data in the public domain. Countries outside of 126.1 exceptions, if a product is designed from technical data approved in the public domain, would the product mfg from the technical data be exempt also if exported?
Thank you,
Lesa
