Officials at the U.S. Patent and Technology Office (USPTO) recently began reminding the domestic patent community that foreign filing licenses do not let applicants outsource the preparation of U.S. patent applications to overseas firms. The USPTO emphasized that foreign filing license only lets the applicant file already completed patent applications in foreign patent offices, and that's only after the U.S.-filed application clears a national security review. Foreign filing licenses do not let inventors, companies or individuals send technical data overseas for firms to prepare a USPTO patent applications.

This does not mean applicants for U.S. medical device or other inventions cannot use potentially cost-effective, offshore services. (Offshore preparers charge $10 to $50 per billable hour compared to the U.S. rate of $200 to $1,000 per hour.) However, the USPTO recommends that before applicants send material abroad, they determine whether they must get clearances from U.S. agencies.

Obtaining clearances means complying with U.S. export laws and regulations, including Export Administration Regulations (EARs) administered by the Bureau of Industry and Security (BIS). EARs control export of certain products and technologies and may require applicants get a license, depending on product, technology, and foreign country involved. Technology is broadly defined under EARs to include information needed to develop, manufacture, or use a controlled product, and it can be in the form of information or assistance. Information includes blueprints, plans, diagrams, models, formulae, tables, designs and specifications, and manuals media such as disk, tape, and read-only memories. Assistance can be instructions, skills training, working knowledge, or consulting.

Reading EARs to determine if you can legally send technology abroad without an export license for a firm to prepare a patent can be complicated. The first hurdle is figuring out if a technology falls under one of 10 categories of items controlled under EARs. Controlled items may require an export license, depending on the receiving country. EARS discuss how to classify technologies and determine if a license is needed to export them to destination countries (Parts 774 Commerce Control List (CCL) and 738, supplement 1 Commerce Country Chart (Country Chart) of the EARs CCL and Country Chart are accessible through the “Exporter Resources” window of the BIS Web site (bis.doc.gov).

Simply put, cross-referencing the CCL classification against the Country Chart, lets patent applicants see whether the technical data that describes how to make and use an invention needs an export license. For instance, an engineer in Kansas may have developed a stainless-steel valve particularly useful in biological pumps. The valve could fall under classification number 2A292 (“Pipings, fittings and valves made of … stainless steel) Category 2 of the CCL. There are three reasons why BIS controls the export of valves classified under that particular heading. They are nuclear proliferation (NP) concerns, chemical and biological weapons concerns (CB), and anti-terrorism concerns (AT). If the engineer wanted to use a firm in India to write the U.S. valve application and BIS officials had put an “X” in any of the corresponding NP, CB, or AT columns of the Country Chart, then the engineer needs to get an export license before sending materials to India. It gets more complicated considering the nature of medical devices in the BIS technology listing. These include broad terms such as surgical clips, liquid disinfectant soap, vital-signs monitors, stents, and others, which can make it difficult to accurately classify potential patentable inventions.

However, there are exceptions. Publicly available information and technologies do not fall under EARs. Thus, sending patents, published patent applications, scientific papers, educational materials, or fundamental research documents to India, would not necessarily require a BIS-issued export license. (Any material the material is already publicly available or published are generally free from BIS regulations.) Classifying what is publicly available can be difficult because under EARs, it includes materials that will be published as well as those already published. And the BIS definition of “publication” includes the submission of scientific papers to foreign editors with the understanding that the papers will be made publicly available if favorably received. (See EAR Part 734.7(4)(iii).) On the other hand, releasing information from a corporate sponsor to university researchers where research results undergo prepublication review, is subject to the EAR.

Without the right expertise, inventors and companies can inadvertently misclassify technical information and material subject to export controls, or misinterpret a regulation. Even worse, sending the materials needed for a patent application without trying to comply with EARs can lead to serious civil and criminal penalties. For example, one U.S. company was fined $560,000 to settle charges it violated EARs when it exported programmable logic devices and related technology to China without required export licenses. In July 2008, another firm was fined $500,000 and put under two years of supervised probation for exporting high-speed fiber-optic telecommunications technology to Iran without seeking an EARs-compliant license.

An added issue is that people can violate U.S. export regulations even if their proprietary technical data never leaves U.S. soil. Under BIS deemed-export rules, sending or giving technical information to a foreign national working, conducting research, or studying in the U.S. is considered the same as transmitting that information abroad. Unless the foreign employee or student is a legal resident (i.e., they have a Green Card), an export license could be required before that person can read or use that materials (or even talk about such materials or technologies), even if they are in the office next door or a lab down the hall.

Export regulations can be difficult even for experts to follow, let alone sole inventors or medical start-up companies relying on overseas firms to help draft and establish their U.S. patent portfolios. Recognizing that, BIS lets those thinking of exporting technology request an Advisory Opinion that should help determine whether or not their data requires an export license. (Procedures for enlisting BIS assistance are in Part 748.3 of EARs.) Even if an EARs-compliant export license is found unnecessary, other export and national security regulations — which are beyond the scope of this article — might apply. These include the International Traffic in Arms Regulations administered by the Directorate of Defense Trade Controls, or various regulations administered by the Office of Foreign Assets Control.

It is important that U.S. company officials and inventors seek advice on export controls before sending unpublished, proprietary patent application materials abroad, or to foreign workers in the U.S. This is particularly important if they plan on outsourcing patent searches or other patent preparation tasks as well engaging in international collaborations, research contracts, and licensing agreements, and establishing foreign-hiring practices.

Remember, according to the USPTO, foreign filing licenses don't shield U.S. patent applicants from liability or obligations under U.S. export control regulations.