Jeff Amerine, PMPTechnology Licensing Officer

Adjunct Instructor, EntrepreneurshipUniversity of Arkansas

Advisor, Innovate Arkansasjamerine@uark.edu

Introductions Technology Commercialization Overview Export Control: Why it matters Q&A

University of Arkansas Technology Licensing Office◦ Access to 100+ technologies developed at the UA◦ Team of business and intellectual property professionals◦ Mission:

Commercialize world-class research to build a sustainable knowledge-based economy to benefit Arkansas and the world.

◦ http://www.uark.edu/ua/tlo/index.html

Innovation Center535 Research Center Blvd

Academic

BusinessLegal

◦Patents

◦Trademarks

◦Copyrights

◦Trade Secrets

TM

©

“But they should not lose sight of innovation: managers know that

the future of their businesses depend on it, and government leaders

understand that the long-term growth prospects of cities and

nations are tied to it. Even—perhaps especially—in times of economic

turbulence, innovation remains the most important differentiator

separating economic winners from also-rans.”

André Andonian, Christoph Loos, and Luiz Pires

Building an innovation nation, Mckinsey & Company

Ideation Innovation CommercializationEconomicGrowth

Time

◦ Sustained Economic Growth = Continuous Innovation Cycle

Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

Prerequisites

◦ Physical Infrastructure ◦ Rule of Law◦ Government Stability◦ Focus: World-class

Technology Sector◦ Innovation Culture

Innovation Hot Spring

•Small, fast growing hub•Reliant on a few firms•Narrowly focused

Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

Source: Building an innovation nation, André Andonian, Christoph Loos, and Luiz Pires , Mckinsey & Company

http://whatmatters.mckinseydigital.com/flash/innovation_clusters/

Fayetteville, Arkansas

Interactive “Innovation Heat Map” View:

Innovation-based economies will prosper

Pace of innovation accelerates and product lifecycles shorten even further

Capital and talent migrate toward innovative regions with high quality of life

Institutional unemployment occurs in stagnate regions

Government, business, and individuals compete globally based on their “innovation quotient (IQ)”*

Regional workforce education must be visionary, agile, and proactive in curriculum development, recruitment, and retention

* Source: Mochari, I., (2002) The Innovation Factor: What's Your Innovation Quotient?, Inc. Magazine Online.

Innovation will be the key strategic global differentiator

McKinsey’s “Innovation Heat Map” shows challenges and opportunity for Arkansas

Green, sustainable technologies will drive the next economic boom

Economic growth requires early-stage funding to bridge the “Valleys of Death” in the innovation to commercialization process

Regional workforce education must be visionary, agile, and proactive in curriculum development, recruitment, and retention

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U.S. government has stepped up enforcement

Universities are vulnerable◦ Relatively easy target for the government◦ Many schools don’t have the robust export control

management of the private sector

◦ The Reece Roth case supports this increased activity, particularly since the appeals court has upheld the 4 year prison sentence

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An export is any oral, written, electronic or visual disclosure, shipment, transfer, or transmission of commodities, technology, information, technical data, assistance, or software codes to◦ Anyone outside the U.S. including a U.S. citizen◦ A “foreign national” whether in the U.S. (a

“deemed” export) or abroad◦ A foreign embassy or affiliate

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Export controls also cover transfer of goods and technology within the U.S. (transfer outside the U.S. is deemed to apply when a non-qualified foreign national receives the information in the U.S.)◦ Applies to technology transfers under EAR ◦ Applies to technical data and defense services under

ITAR◦ Unless the fundamental research exclusion applies,

a university’s transfer of controlled technology to a non-permanent resident foreign national in the U.S. may be controlled or prohibited (your students!)

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Situations that can trigger a deemed export problem include:

◦ Employees who are foreign nationals involved in specific research, development, and manufacturing activities subject to controls

◦ Foreign students or scholars conducting research◦ Laboratory tours◦ Face-to-face◦ Telephone◦ Email◦ Fax◦ Sharing of computer files◦ Visual inspections

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A foreign national is any person who is NOT a:

U.S. citizen U.S. lawful permanent resident (“a green

card holder”) Person granted asylum Person granted refugee status

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Projects that involve the actual export or “deemed” export of any goods, technology, or related technical data that is either:◦ “Dual use” (commercial in nature with possible

military applications)◦ Inherently military in nature

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Commercialization in the following areas frequently require export controls: ◦ engineering, space sciences, computer sciences,

biomedical research (especially with lasers), research with encrypted software, research with controlled chemicals, biological agents, toxins

Tech transfer / licensing conducted with certain foreign countries or where “defense services” (e.g., “how to” activities) are provided

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Physical transfer of items of equipment outside the U.S.

Participation of foreign national faculty, students or staff in restricted research

Presentations of previously unpublished research at conferences with foreign national

Visits to your laboratory by foreign nationals

Non-disclosure agreements

Material transfer agreements

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U.S. Export controls (ITAR, EAR)◦ Cover any item in U.S. trade (goods, technology,

information)◦ U.S. origin items, wherever located◦ Exclude patents and patent applications, artistic or

nontechnical publications◦ Exclude technology in the public domain

Exports of most high technology and military items, as well as associated technologies and certain items of commercial importance require U.S. export authorization (either license or applicable exemption)

Violations of EAR:-- Civil penalties per violation up to the greater of

$250,000 or twice the amount of the transaction that is the basis of the violation

-- Criminal fines of up to $1 million and/or 20 years imprisonment

-- Denial of Export Privileges

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Violations of Arms Export Control Act (AECA) or ITAR:--Civil Penalties of Up to $500,000 per violation-- Criminal fines of up to $1 million and/or 20 years

imprisonment-- AECA Debarment

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Professor John Roth, University of Tennessee ◦ Sentenced to 48 months ◦ Violated the Arms Export Control Act ◦ Illegally exported technical information relating to

UAVs.◦ Roth gave ITAR technical data to a Chinese and an

Iranian student ◦ His laptop and flash drive were confiscated

The university export control officer warned Roth

Interesting article; indictment, and trial brief: http://www.patentbaristas.com/archives/2009/09/17/professor-gets-4-years-in-prison-for-exporting-technical-information-on-

uavs/

*The Violation: On January 14, 2003, Dr. Thomas Campbell Butler, M.D., a professor at Texas TechUniversity in Lubbock, Texas reported to the FBI that thirty vials of a potentially deadly plague bacteria,Yersinia pestis (the causative agent of human plague), were missing and presumed stolen from his research lab. The report sparked a bio-terrorism alert in west Texas.

On January 15, 2003, Dr. Butler was arrested. Among the numerous charges of which Dr. Butler was found guilty at trial, two were export control related: making false, fraudulent and fictitious statements regarding the exports to federal agents and making an unauthorized export to Tanzania.

Dr. Thomas Butler

*”Don’t let this happen to you. Real Life Examples of Export Control and Anti-boycott Violations”, U.S. Dept. of Commerce, Bureau of Industry and Security Export Enforcement, April 2005

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Fundamental Research Public Domain Educational Institution activities Full-time employment (ITAR only)

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Applies to: Unrestricted publicly available technology and software arising during or resulting from – or NSDD 189 says the “conduct” of – fundamental research undertaken in the U.S. at accredited academic institutions.

Where the resulting information is ordinarily published and

shared broadly (EAR 734.3, ITAR 120.11).

Protects most campus-based research at U.S. universities from export controls.

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Allows U.S. universities to include foreign faculty, students, visitors in research involving creation of controlled information on campus in the U.S. without a license

Once created in fundamental research, the information may be transferred abroad without restriction once it is in the public domain

Fundamental research information is public in nature and is excluded (not just exempted) from controls

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The University accepts any contract clause that: Forbids the participation of foreign nationals; Gives the sponsor/licensee a right to approve publications

resulting from the research; or Otherwise operates to restrict participation in research

and/or access to and disclosure of research results.

“Side deals” between an inventor and a Licensee

Startups involving the inventor

BIS - http://www.bis.doc.govBIS - http://www.bis.doc.gov

◦ EAR database – Commerce Control ListEAR database – Commerce Control Listhttp://www.access.gpo.gov/bis/ear/ear_data.htmlhttp://www.access.gpo.gov/bis/ear/ear_data.html

ITAR - ITAR - http://www.pmddtc.state.gov/regulations_laws/itar.htmlhttp://www.pmddtc.state.gov/regulations_laws/itar.html

OFAC - OFAC - http://www.treas.gov/offices/enforcement/ofac/http://www.treas.gov/offices/enforcement/ofac/

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Intellectual property and technology are the jewels of the global economic arms race.

The US government is dead serious about protecting our assets.

When in doubt, ask for help.

Non-compliance due to ignorance is not a defense.

Technology Commercialization & Export Control

Jeff Amerine, PMPTechnology Licensing Officer

Adjunct Instructor, EntrepreneurshipUniversity of Arkansas

Advisor, Innovate Arkansasjamerine@uark.edu

“Techpreneurship Blog”http://blog.innovatearkansas.org