The following article provides a comprehensive guide on how to protect your organization's proprietary information and avoid violating U.S. law. It emphasizes the importance of understanding the legal implications of transferring technical information, especially in a global business environment. The article also highlights the potential risks of industrial espionage and offers practical solutions to mitigate these risks.
Recently, one of our international clients contacted us in a state of distress, concerned about a potential violation of U.S. law. They had transferred technical information to a European joint venture partner and were worried about the legal implications. After a brief discussion, it was clear that they had indeed violated the law. This situation underscores the risks of operating in a global environment, especially when guided by ill-informed advice, even from reputable corporations. The penalties for such violations can be severe, with fines reaching up to $100,000 per occurrence for civil infractions.
Many business executives are unaware that export control laws apply to a wide range of products and technical information, not just military armaments. Commercial software, including common office programs, and other seemingly innocuous items with potential dual-use are often subject to these laws.
In addition to legal risks, businesses must also be wary of the loss of proprietary advantage due to industrial espionage. A recent report from the U.K. equated the intelligence threat from France with that of Russia, not for military secrets, but for industrial espionage. Many companies mistakenly believe that these threats are only relevant to military or high-tech industries. However, businesses across various sectors are at risk, often without realizing it until it's too late.
While these problems are serious, there are practical solutions that don't require paranoia or inhibiting business openness. Here's a simple five-point policy that can effectively protect your organization:
Education: All employees and independent contractors should be briefed on the importance of not disseminating any technical or commercial information outside the organization, except on a need-to-know basis. This includes everyone from the CEO to the maintenance staff. Additionally, management, marketing, technical, and contracts personnel should be thoroughly briefed on government technical data export regulations.
Point of Contact: Appoint a single point of contact (POC) who must approve the export of any documentation. This includes data released in hard copy, fax, electronically, verbally, and by visit.
Offshore Policy: Implement a written policy regarding the exchange of technical data between the organization's U.S. and any offshore company owned or representative offices and personnel.
Data Handling Policy: Establish a written policy regarding employees taking technical and business data, both hard copy and electronic, home or downloading it remotely to work on after hours.
Travel Policy: Formulate a written policy regarding what types of technical and business data may be carried on laptop computers and/or downloaded when outside of the country.
By implementing these policies, your organization can begin to guard against export law violations and loss of competition-sensitive data.
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