Archive for the ‘DDTC’ Category

US Implements Third Set of Export Control Reform List Shifts

Thursday, January 30th, 2014 by Brooke Driver

By: John Black

In the January 2, 2014 Federal Register the departments of Commerce and State published notices shifting export control jurisdiction over certain military items and technologies in the US Munitions List (USML) in the International Traffic in Arms Regulations (ITAR) to the Commerce Control List (CCL) in the Export Administration Regulations (EAR).  This is the third group of items that has undergone the shift from the USML to the CCL as part of the US Export Control Reform initiative.  The changes published on January 2, 2014 do not enter into force until July 1, 2014.


ITAR/USML Changes

The Directorate of Defense Trade Controls revised the USML so that this list shift applies primarily to four categories in the USML.  Those categories and the highlights of the changes are:

Category IV,  Launch Vehicles, Missiles Rockets, Torpedoes, Bombs and Mines

DDTC clarified the scope of Category IV by enumerating the items controlled in paragraphs (a) and (b).  DDTC also shifted demolition blocks, blasting caps and military explosive excavating devices to the CCL in the EAR (for example, ECCN 0A604.b for military explosive excavating devices).  DDTC also moved ablative materials from paragraph (f) to Category XIII(d).

The new IV(h) controls specified systems, subsystems, components, parts, accessories, attachments and associated equipment.  IV(h) controls certain items using the “specially designed” approach and other items using an enumerated approach.  IV(h)(28) enumerates controls on pneumatic, hydraulic, mechanical, electro-optical or electromechanical flight control systems (including fly-by-wire systems) and attitude control equipment for rockets and missiles—interestingly, IV(h)(28) does not specify attitude control equipment for teenagers as such items are not known to exist.  If attitude control equipment for teenagers were developed, I would expect the US Government would apply a 0y521 control to it.

Category V: Explosives, Energetic Materials, Propellants, Incendiaries

A significant change here is that DDTC enumerated specific controlled items and replaced the former catch-all approach in Category V.  As a result certain spherical aluminum powder and hydrazine and its derivatives shift to the CCL.

Category IX: Military Training Equipment

DDTC’s objective in Category IX is to establish a bright line between the items the USML controls and the items the CCL controls.  The newly enumerated paragraph (a) identifies training equipment, including, for example, towed targets and models or mockups used for maintenance or ordinance disposal training.  The new paragraph (b) identifies simulators including system simulators that replicate the operation of an individual crew station, a mission systems or a weapon of a controlled end-item, and simulation software.

Category X: Personal Protective Equipment

DDTC’s objective in Category X is to establish a bright line between the items the USML controls and the items the CCL controls.  Protective shelters shifted from the USML to the EAR in ECCN 1A613.  Anti-gravity suits, pressure suits and atmosphere diving suits also shifted to the EAR.  Equipment for producing Category X items shifted to EAR ECCN 1B613.  Finally, DDTC clearly narrowed the scope of Category X controls on parts and components to focus on things such as ceramic or composite body armor plates, laser protective lenses and other items.

Category XVI:  Nuclear Weapons Materials

DDTC clarified that neither the ITAR nor Category XVI apply to most of the items described in Category XVI prior to this notice because those items and technologies are under the jurisdiction of the Nuclear Regulatory Commission or the Department of Energy.  This category will continue to control tools that model or simulate the environments generated by nuclear detonations.

In addition to the changes described for the individual categories above, DDTC, as it has done with past list shift rules, added a new paragraph (x) to each category, which will be used to identify CCL controlled items on DDTC license applications.


EAR/CCL Changes

The 31-page Commerce Department notice created many detailed, new ECCNs and revised existing ECCNs.  In addition, Commerce revised License Exception TMP in EAR 740.9(a)(11) and License Exception BAG in EAR 740.14(h) to authorize exports, reexports and transfers of personal protective equipment classified under 1A613.c or d. in a fashion similar to the existing ITAR exemption for exports of personal protective equipment.

These new and revised ECCNs require careful review, especially if you are involved in the areas shifted off the USML.  The following summary is not a substitute for analyzing the new EAR controls, but it may be a useful road map.

Commerce created new 600 series ECCNs to receive the items shifted off the USML.  New ECCNs 0A604, 0B604, 0D604, 0E604 9A604, 9B604, 9D604, 9E604 control items shifted off USML Categories IV and V, with the new ECCNs in Category 0 controlling the shifted explosives/propellant-type stuff and related items and the new ECCNs in Category 9 controlling the items related to missiles and launch vehicles. Commerce created ECCNs 0A614, 0B614, 0D614 and 0E614 to receive military training equipment and related items.  ECCN0A614.a controls equipment specially designed for military training that is not controlled by Category IX.  0A614.x controls specially designed parts and components in the standard 600 series fashion. Interestingly, there is no y. paragraph in 0A614.

Commerce revised existing ECCN 1A005 for body armor and added several new 1Axxx ECCNs to control devices to initiate charges, devices containing energetic materials, charges, and other armored and protective equipment.  Corresponding changes were made to ECCNs in sub-categories B, C, D, and E in Category 1.

Finally, Commerce made revisions and conforming changes to many existing ECCNs.

 

Action Items

Even though the rules do not enter into force until July 1, 2014, export compliance personnel should find time soon to take a look at the changes to the USML and CCL.  After an initial review, you may find that you will need to work with technical experts to make specific decisions as to how the changes impact the export control classifications of your products and technologies.  This is an important, and, in some cases, difficult task.  The bad news is that, based on my initial analysis, this export control list shift does not seem to offer the benefit of moving as many items into EAR No License Required (NLR) eligibility as was the case for past changes for aircraft, gas turbine engines, land vehicles, surface vessels and submersible vessels.

As with past reform changes, after you determine how this impacts  your classifications, you need to decide your strategy for using existing ITAR approvals, transitioning to EAR approvals, and determining what type of EAR approvals you will need.  In addition, if your EAR expertise is not at the level of your ITAR expertise, you need to increase your EAR knowledge.

July 1 will be here before you know it.

DDTC Updates Part 130 Guidelines

Thursday, January 30th, 2014 by Brooke Driver

By: Brooke Driver

The State Department has updated its written guidelines on its ITAR Part 130 rules for payment and reporting of political contributions, fees and commissions.  These guidelines are a hand reference guide that help exporters sort through the complex Part 130 rules.  Here is a quick look at the guidelines.

The revised Part 130 guidelines say that license applications for exports of defense services or articles valuing $500,000 or more to or for the use of foreign military forces must inform the DDTC as to whether they or their vendors have paid, offered or agreed to pay political contributions of $5,000 or more or fees and commissions of $100,000 or more. The applicant must obtain the same information from any party that provided the applicant with more than $500,000 worth of defense articles or services for the application.

In addition, the reporting requirement does not end with the submission of the application.  Applicants are required to provide supplementary reports detailing any related substantial political contributions ($2,500 or more) or fees and commissions ($50,000 or more) agreed upon or paid after the initial license is submitted (within 30 days, to be exact).

Part 130 reports must contain:

  • The total contract price of the sale to the foreign purchaser. Contract name and/or description of the export should be incorporated into the Subject header. Subject should also include agreement number, if applicable, and license number at a minimum.
  • The name, nationality, address and principal place of business of the applicant or supplier. Note, all four items must be provided. Additionally, if the name of the applicant/supplier’s employer differs from the above, then this information, as well as the employer’s title must be provided.
  • The name, nationality, address and principal place of business for each foreign purchaser, to include the ultimate end-user (to be identified as such). Again, if the name of the employer for any of these parties differs from the party itself, then this information, as well as the employer’s title must be provided.

Supplementary reports should contain:

  • The amount of each payment, offer, or payment agreed upon. These entries should reflect the individual transactions, and not total or aggregate figures.
  • The date or dates on which each reported amount was paid, or offered or agreed to be paid. This requirement applies to each entry made in response to the previous paragraph.
  • The recipient of each such amount paid, or intended recipient if not yet paid. Reference item (b)(2) below for additional requirements.
  • The person who paid, or offered or agreed to pay such amount.
  • The aggregate amounts of political contributions and of fees or commission.
  • With respect to each payment reported, state whether such payment was in cash or in kind. If in kind, it must include a description and valuation thereof. In the example matrix provided below, these data have been combined with the “Amount Paid or to be Paid” figure. Should a transaction be input as “paid in kind,” then the related description and valuation data should appear immediately following the entry.

With respect to each recipient, state its name, nationality, address and principal place of business, its employer and title, and its relationship, if any, to the applicant, supplier, or vendor, and to any foreign purchaser or end-user. For reasons of efficiency, these data may be merged with the response to (a)(4)(iii) above.

DDTC Updates DS-2032 Statement of Registration Form: Older Versions No Longer Accepted

Wednesday, December 4th, 2013 by Brooke Driver

By: Brooke Driver

As of October 25, the State Department has introduced version 4.0 of the DS-2032 form. Be advised that older versions of the form are no longer valid. You may submit the new form electronically, through EFS, or through the mail until December 31, 2013. As of New Year’s Day, however, the form will only be accepted electronically. The changes to the form include the ability for U.S. persons to consolidate manufacturer, exporter and broker registrations, updates to ITAR USML Categories, disclosure of intermediate through ultimate parents, a certification regarding debarred or subsequently reinstated parties and a certification on violations involving any U.S. criminal studies, as well as clarification on foreign ownership.

Owner of Allied Components Faces 20 Years Behind Bars for Lying to the Department of Defense and Sharing Military Submarine Component Information with India

Wednesday, December 4th, 2013 by Brooke Driver

By: Brooke Driver

Mama always told you that lying never pays, and Robert Luba would certainly agree. The 47-year-old owner and general manager of the New Jersey-based company Allied Components LLC admitted in court on October 23 to illegally emailing information to India about a component of a nuclear-powered U.S. submarine and providing faulty aircraft parts to the U.S. Defense Department.  Allied Components had been contracted by the Department of Defense to manufacture a wing-pin product for an F-15 fighter jet, but chose to slack and ordered the product from an Indian-based company—and did not even do that well. The Indian-made wing-pins did not match the specifications for the aircraft, putting its potential pilots and passengers in danger. Prosecuting attorney Paul Fishman articulated the gravity of Luba’s corner-cutting in a released statement:

“The conduct admitted by Luba shows a callous disregard for the safety of our armed forces…By recklessly providing sub-standard parts for sophisticated weapons systems and sharing sensitive information with a foreign state, Luba not only jeopardized the lives of men and women on the front lines of our national defense, he put all Americans at risk, all in the name of making a buck.”

Luba has already agreed to pay the defense department $173,000, a large chunk of which will go to repairs for the dysfunctional F-15s, but he will suffer a much higher price on his sentencing date, February 19. At this time, the presiding judge can choose to demand that Luba pay up to $1,250,000 and serve up to 25 years in prison for his combined violations.

DTrade2 Updates: Reform and New Digital Certificate Requirements

Friday, October 25th, 2013 by Brooke Driver

By: John Black

DDTC has a notice on its website telling exporters that DTrade2 had been upgraded and new version 7.1 DSP application forms 5, 6, 61, 62, 73, and 74 are available for you to download and use. DDTC also has important guidance explaining that users must purchase and register a new SHA-256 digital certificate by December 31, 2013. For more information go to: http://www.pmddtc.state.gov/dtrade/index.html

DDTC Updates Procedures for General Correspondence Requests Concerning Amendments to Current ITAR Authorizations

Tuesday, September 3rd, 2013 by Brooke Driver

By: Brooke Driver

The Directorate of Defense Trade Controls has published an update of the June 21, 2011 description of procedures for filing General Correspondence requests for the amendment of existing ITAR authorizations due to U.S. Entity Name/Address and/or Registration Code Changes. The new procedures supposedly simplify the authorization matrix/spreadsheets by adding a time restriction for amending the GC and clarifying who may submit the GC.

Details available at: http://pmddtc.state.gov/licensing/documents/gl_GCsMandA.pdf

Aeroflex’s Inaccurate Classifications Caused Others’ Violations and Cost it $8 Million

Tuesday, September 3rd, 2013 by Brooke Driver

By: John Black and Brooke Driver

DDTC described Aeroflex Inc. as having a “Corporate-wide failure to properly determine export control jurisdiction. Despite the fact that in 2006, DDTC issued to Aeroflex a Commodity Jurisdiction determination showing how DDTC considers Aeroflex’s product to be on the U.S. Munitions List, Aeroflex failed to apply that rationale while classifying other products and failed to share that information broadly among all units of the company.

Certainly, two obvious practical lessons are 1) If a CJ shows you how DDTC wants you to classify your products, you should use that as clear guidelines to follow to classify products.  2)  If one part of your company gets that CJ guidance, DDTC considers that your whole company received the guidance, so you should make sure you share important government classification rulings broadly within your company, because the government will hold everybody in your company responsible for knowing, even if many people were never told.

The technical aspects of the wrong classifications are an interesting read and relate to certain electronic components with performance capabilities that make them particularly useful in space applications. In short, Aeroflex argued that since an electronic component did not meet the five hardening criteria in USML Category XV(d), the electronic component was not on the USML. DDTC countered with the argument that the components are not in XV(d), but their performance characteristics mean they are specifically designed for space applications, so they are controlled in Category XV(e).

An interesting aspect of this case is that many of Aeroflex’s charges were based on Aeroflex causing other parties to illegally export or reexport its components, because the company told those parties that the components were not on the USML. As a result, many of the sensitive components ended up going to sensitive users and sensitive countries—yes, China. So we see that inaccurate classifications not only can cause you to export or reexport illegally; they can give you violations, because inaccurate classifications cause you to cause others to export or reexport illegally.

Aeroflex has agreed to settle with the State Department concerning its whopping 158 alleged ITAR violations, occurring between the years of 1999 and 2009. Throughout this time period, Aeroflex business units disclosed hundreds of ITAR violations, mainly due to a failure to correctly establish jurisdiction over defense articles and technical data.

While the two-year Consent Agreement technically states that Aeroflex will pay a civil penalty of $8 million, DDTC has agreed to suspend $4 million if Aeroflex uses that amount to improve its compliance program, including extensive improvement of compliance policies and procedures, the engagement of an Internal Special Compliance Official, two audits of its compliance program during the two-year Agreement term and compliance training for staff and principals. DDTC said that debarment was unnecessary at this time, because:

  • Aeroflex disclosed most of its violations
  • Cooperated with Department reviews
  • Implemented or planned extensive remedial measures since 2008

It seems that Aeroflex has learned its (expensive) lesson, and although the price is high, the Department’s relative leniency proves that, in this case, Aeroflex made the right decision by choosing to own up to its mistakes.

State/DDTC Posts New Guidelines for Preparing Electronic Agreements

Tuesday, June 18th, 2013 by Brooke Driver

By: Brooke Driver

Effective April 22, 2013, the “Guidelines for Preparing Electronic Agreements” section of the ITAR has undergone extensive revision. Look at the Table of Contents for the stuff highlighted in yellow to find the updates.  Be sure to download and review the new procedures here:

http://www.pmddtc.state.gov/licensing/documents/agreement-ElectronicGuidelinesv4.pdf

3-D Printable Gun Defies Government Regulations

Tuesday, June 18th, 2013 by Brooke Driver

By: Brooke Driver and John Black

 
Few would deny that technology has transformed our world—and our vocabulary. New connotations for words we thought we knew multiply daily, like overly-friendly rabbits. Surf, Browse, Like, Post—it seems no verb is safe from accumulating multiple meanings. Cody Wilson, founder of Defense Distributed, recently proved that even words that are already associated with technology can collect meanings—in this case, Print. Typically, this verb is innocent, associated with work projects, school papers and the inevitable frustrating paper jam. However, ever-changing technological advancement, and Defense Distributed, has transformed the action of printing into something uncontrollably dangerous.

 
Wilson, a law student at the University of Texas, has invented a 3-D printable gun, which he calls the “Liberator,” an appropriate name, as the downloadable weapon signifies a freedom from government restrictions on gun ownership and manufacturing. The gun is composed of 16 parts, all of which (except the firing pen and an additional metal part) are made from a tough, heat-resistant plastic used in products such as musical instruments, kitchen appliances and vehicle bumper bars. The printable handgun is functional, if not high-quality. It is designed to fire standard rounds, and its interchangeable barrel can even accommodate different calibers.

 
On May 8th, Wilson received a letter from the State Department Office of Defense Trade Controls Compliance regarding the online blueprints for Defense Distributed’s 3-D-printable handgun, the so-called “Liberator,” and nine other 3-D printable firearm components. The letter demanded that Defense Distributed remove these blueprints, released on its website (Defcad.org) only three days before, until Department officials have reviewed the files for ITAR compliance. The Department letter did not charge anybody with any violations.  Instead, the letter just demanded the data be taken off the public servers.  We have not seen any information that the State Department has charged any of the websites that currently make the identical data freely available.

 
In December 1984 the State Department removed the ITAR requirement that said companies could not put ITAR controlled technical data into the public domain without prior US Government approval.  The ITAR says that once technical data is “public domain” there are absolutely no ITAR jurisdiction or restriction on the data.  Prior to the Reagan Administration days, companies were prohibited from putting technical data into the “public domain.”  For various reasons, in 1984 the State Department gave companies permission to put ITAR controlled tech data in the “public domain” and remove all export controls from the data.  The tricky thing is that the data has to meet the ITAR definition of “public domain,” which might not reflect a common sense assumption about what public domain means.

 
So why did the State Department not charge Wilson if what he did was illegal?  We do not know.  (But we do know it is easier to threaten and bully with a letter than to win a case in a legal proceeding.)  Why is the State Department not going after the others who have the identical data on their web site?  We do not know.  Why is the State Department not charging other companies that put other ITAR tech data on their web sites?  We do not know.

 
Deputy spokesman Pat Ventrell said, “Exports of non-automatic and semi-automatic firearms up to 50 caliber are controlled under the U.S. munitions list. In accordance with the Arms Export Control Act, any person who engages in the US in the business of manufacturing or exporting defense articles, furnishing defense services, or engages in arms brokering covered by the International Traffic in Arms Regulations (ITAR), is required to register with the state department.”

 
Pat Ventrell failed to mention that if your only action is creating technical data, you do not have to register.  Pat Ventrell failed to mention that “public domain” data is not a defense article in the first place.

 
Although Wilson plans to comply with the Department’s request, he also acknowledges the likelihood of its ultimate failure: “All such data should be removed from public access, the letter says. That might be an impossible standard. But we’ll do our part to remove it from our servers.” As Wilson implies, however, simply removing the files from the website will not erase them from public access; during the first two days the plans for the Liberator were available for download, 100,000 people downloaded them from a New Zealand-based storage service called Mega, created by ex-hacker and entrepreneur Kim Dotcom and obviously not subject to US regulations. The file may remain available for download on Mega’s servers. The blueprints for the 3-D printable gun have also made their way to the Pirate Bay, a censorship-resistant filesharing site.

 
Wilson claims that the company is legally protected from consequence through the  ITAR “public domain” exemption for non-profit public domain releases of technical files designed to create a safe harbor for research and other public interest activities. Defense Distributed can only qualify for this exemption if its files are stored in a library or sold in a bookstore, but, while his reasoning seems farfetched, Wilson argues that Defense Distributed fits that requirement, saying that files on the company’s site can be accessed through a library computer and that they have been sold in an Austin, Texas bookstore (which he conveniently declined to name, in order to protect the owner).

 
While Wilson might not quite understand ITAR “public domain” but he does point out the fact that the definition as it was revised in 1984 did not anticipate the existence of the internet as a method of sharing information.  The 1984 revision said you may make technical data “public domain” by handing it out at open conferences or trade shows in the United States, making it available in public libraries, or making it available in a bookstore but failed to include the internet—We assume that is because nobody knew what the internet would become.
Because “public domain” does not include the internet, many companies use the “library stretch” interpretation to justify putting their ITAR tech data on websites open to the public.  “Public domain” applies to technical data that is “generally accessible or available to the public” through any of the means in 120.11(a)(1) – (8).  120.11(a)(4) says “public domain” includes technical data generally accessible or available to the public “at libraries open to the public.”  The “library stretch” argues that if I can go into a library and see the information in a book or on the internet in a free to use PC in the library, it is accessible and thus “public domain.”  The “library stretch” is a reasonable and defendable interpretation, but it might not be literally what the ITAR says.

 
Maybe somebody should tell Wilson to get his tech data on a bookshelf so he can exactly meet the requirements of 120.11(a)(1).

 
Wilson does not consider the attempted censorship a defeat, stating that the government’s actions and its probable failure to suppress the Liberator help communicate the pitfalls of the current arms regulations system: “This is the conversation I want,” Wilson says. “Is this a workable regulatory regime?  Can there be defense trade control in the era of the Internet and 3D printing?”

 
An apt question and one that Wilson’s case seems to answer strikingly.

 
The full text of the letter:

 
United States Department of State
Bureau of Political-Military Affairs
Offense of Defense Trade Controls Compliance
May 08, 2013
In reply letter to DTCC Case: 13-0001444
[Cody Wilson's address redacted]
Dear Mr. Wilson,
The Department of State, Bureau of Political Military Affairs, Office of Defense Trade Controls Compliance, Enforcement Division (DTCC/END) is responsible for compliance with and civil enforcement of the Arms Export Control Act (22 U.S.C. 2778) (AECA) and the AECA’s implementing regulations, the International Traffic in Arms Regulations (22 C.F.R. Parts 120-130) (ITAR). The AECA and the ITAR impose certain requirements and restrictions on the transfer of, and access to, controlled defense articles and related technical data designated by the United States Munitions List (USML) (22 C.F.R. Part 121).
The DTCC/END is conducting a review of technical data made publicly available by Defense Distributed through its 3D printing website, DEFCAD.org, the majority of which appear to be related to items in Category I of the USML. Defense Distributed may have released ITAR-controlled technical data without the required prior authorization from the Directorate of Defense Trade Controls (DDTC), a violation of the ITAR.
Technical data regulated under the ITAR refers to information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles, including information in the form of blueprints, drawings, photographs, plans, instructions or documentation. For a complete definition of technical data, see 120.10 of the ITAR. Pursuant to 127.1 of the ITAR, it is unlawful to export any defense article or technical data for which a license or written approval is required without first obtaining the required authorization from the DDTC. Please note that disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad, is considered an export under 120.17 of the ITAR.
The Department believes Defense Distributed may not have established the proper jurisdiction of the subject technical data. To resolve this matter officially, we request that Defense Distributed submit Commodity Jurisdiction (CJ) determination requests for the following selection of data files available on DEFCAD.org, and any other technical data for which Defense Distributed is unable to determine proper jurisdiction:
1.    Defense Distributed Liberator pistol
2.    .22 electric
3.    125mm BK-14M high-explosive anti-tank warhead
4.    5.56/.223 muzzle brake
5.    Springfield XD-40 tactical slide assembly
6.    Sound Moderator – slip on
7.    “The Dirty Diane” 1/2-28 to 3/4-16 STP S3600 oil filter silencer adapter
8.    12 gauge to .22 CB sub-caliber insert
9.    Voltlock electronic black powder system
10.    VZ-58 sight
DTCC/END requests that Defense Distributed submits its CJ requests within three weeks of the receipt of this letter and notify this office of the final CJ determinations. All CJ requests must be submitted electronically through an online application using the DS-4076 Commodity Jurisdiction Request Form. The form, guidance for submitting CJ requests, and other relevant information such as a copy of the ITAR can be found on DDTC’s website at http://www.pmddtc.state.gov.
Until the Department provides Defense Distributed with the final CJ determinations, Defense Distributed should treat the above technical data as ITAR-controlled. This means that all such data should be removed from public access immediately. Defense Distributed should also review the remainder of the data made public on its website to determine whether any additional data may be similarly controlled and proceed according to ITAR requirements.
Additionally, DTCC/END requests information about the procedures Defense Distributed follows to determine the classification of its technical data, to include aforementioned technical data files. We ask that you provide your procedures for determining proper jurisdiction of technical data within 30 days of the date of this letter to Ms. Bridget Van Buren, Compliance Specialist, Enforcement Division, at the address below.

Office of Defense Trade Controls Compliance
PM/DTCC, SA-1, Room L132
2401 E Street, NW
Washington, DC 20522
Phone 202-663-3323
We appreciate your full cooperation in this matter. Please note our reference number in any future correspondence.
Sincerely,
Glenn E. Smith
Chief, Enforcement Division

Chinese National in US Jailed for Six Years for Exporting ITAR Data

Tuesday, June 18th, 2013 by Brooke Driver

By: Brooke Driver

On March 25, 2013, Chinese national and former employee of L-3 Communications Holdings Dr. Sixing Liu paid a high price for stealing thousands of computer files that detailed the performance and design of US guidance systems for missiles, rockets and unmanned drones. Certainly this action alone would be enough to merit heavy consequences from the US government; however, Liu did not stop at simply stealing the files, but shared them at universities and government-organized conferences in his home country, apparently hoping to increase his chances of getting hired by a Chinese company.

Paul Fishman, the US attorney assigned to the case, believes that Liu’s nearly six-year prison sentence and conviction on 9 of the 11 counts against him (including possession of stolen trade secrets, violating the Arms Export Control Act and lying to federal agents) were well-deserved: “Instead of the accolades he sought from China, Sixing Liu today received the appropriate reward for his threat to our national security: 70 months in prison.” Unlike Fishman, Liu’s attorney, James Tunick, disagrees with the severity of the sentence, maintaining that the former L-3 employee “made a mistake by having these files on his computer,” but that “he surely did not intend to harm the interests of the United States.”

So, how can we avoid Liu’s fate?

  • Remember that certain files on personal computers require permits in order to be transported, so that laptop you take on an international flight to get some work done, and (let’s be honest) play Angry Birds is considered an export.
  • Action takes precedent over intention. You may not have purposefully violated export laws, but you will–all the same–be punished for those violations.

In other words, knowledge is your best protection.