A recent study by the Department of Commerce’s Bureau of Industry and Security (“BIS”) found that a significant percentage of computer and networking products contained some form of encryption.  According to James Hughes of Sun Microsystems, encryption is pervasive in nearly all new electronics products.  See http://tac.bis.doc.gov/2008/110508istacmin.htm.  For example, more and more consumer devices now contain built-in hardware encryption accelerators.  Encryption is even found in such basic computer commodities as storage products.  

For software, computer and electronics companies producing such products, this can be a major concern since U.S. export laws apply to any product containing encryption capabilities.  Under the export laws and regulations, “export” is defined fairly broadly, encompassing not just shipments of products out of the country, but also any release of technology to a foreign national within the United States (termed “deemed exports”).  As such, an “export” may occur through such innocuous activities as giving tours of laboratories or granting access to controlled items to employees who are foreign nationals.  For a brief discussion of the export laws, see http://www.allenmlee.com/Export%20controls.html.    

Companies dealing with encryption should be wary of inadvertently violating the export laws with regard to products containing encryption.

Allen M. Lee  Mr. Lee’s practice focuses on business, corporate and intellectual property matters, including the creation, protection and exploitation of intellectual property assets.  He counsels clients on business formation, general corporate matters, trademark, copyright, trade secret, patent, licensing, internet and domain name issues, among other things.  For more information contact: Allen M. Lee, a Professional Law Corporation, Tel: (650) 254-0758, Fax: (650) 967-1851, Email: allen@allenmlee.com, Internet: www.allenmlee.com.