ITAR and eDiscovery – Supporting International Corporations

eDiscovery service providers must take many steps to ensure the security of sensitive information for many contractual, ethical, and regulatory reasons.

An often-overlooked body of law that can applicable to eDiscovery is the International Traffic in Arms Regulations, or Code of Federal Regulations, Title 22, Part 122, which requires exporters of certain services, intellectual property, and goods to register with the U.S. government.  Without going into tremendous detail, this article seeks to provide a simplified understanding of these regulations, and their potential impact on international litigation.

First a brief summary of the law.

Essentially ITAR applies to U.S. “persons” who seek to export certain items covered by the United States Munitions List to “foreign persons”.  A person can be an individual, company, or other entity, and a U.S. person can even be a political asylee or non-citizen nonresident.  An “export” can be (obviously) actually moving the item to a person or company in another country, but it also may occur when a U.S. person passes the item to a foreign person within the physical boundaries of the United States.

The items covered by ITAR are enumerated by the United States Munitions List, and this list covers several general categories:

  1. Firearms, Close Assault Weapons and Combat Shotguns
  2. Guns and Armament
  3. Ammunition/Ordnance
  4. Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines
  5. Explosives and Energetic Materials, Propellants, Incendiary Agents, and their Constituents
  6. Vessels of War and Special Naval Equipment
  7. Tanks and Military Vehicles
  8. Aircraft and Associated Equipment
  9. Military Training Equipment
  10. Personal protective equipment
  11. Military Electronics
  12. Fire Control, Range Finder, Optical and Guidance and Control Equipment
  13. Auxiliary Military Equipment
  14. Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment
  15. Spacecraft Systems and Associated Equipment
  16. Nuclear Weapons, Design and Testing Related Items
  17. Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated
  18. Directed Energy Weapons
  19. [Reserved] in the regulation
  20. Submersible Vessels, Oceanographic and Associated Equipment
  21. Miscellaneous Articles

Before a U.S. person engages in any of the above activity, they must seek authorization from the United States government, and this license may take form in several types of documents. Among them are foreign military sales authorizations, export licenses, a Warehouse and Distribution Agreement, a Technical Assistance agreement, or a Manufacturing License Agreement.

There are exceptions to the above, such as information that is broadly available to public as general marketing, or general system descriptions, but these exceptions should be viewed with extreme caution.

Applicability to American Trade Abroad

Pretty clearly, if a contractor like Marvel’s fictional Stark Industries sent an Iron Man suit over to Armenia, for instance, to help protect the borders from insurgents, Stark Industries would have to apply for a export license of some kind.  In this case, it would probably be a Foreign Military Sales authorization.2014-08-08 11_25_40-iron man - Google Search

A little bit less obviously, companies dealing in encryption technology and satellite radio have had to answer to the State Department for export activities.  Even biotechnology as it relates to potentially dangerous genetic engineering or radioactive isotopes used in imaging could fall under the above categories.  It’s possible that even the manufacture of certain farm equipment has been considered a covered munition if it shares design specifications with armored troop transports made by the same company.

There has been political momentum in Congress since 2012 toward reassessing and narrowing the scope of the munitions list (“USML”), particularly with respect to satellite communications, due to the dampening effect upon trade and demonstrable market share losses that some American companies have suffered abroad.  The Congressional movement has not yet resulted in changes to the Code.

Hey Uncle Sam, Leave Them Teachers Alone (*just kidding, don’t hurt me)

Rules and exceptions that could fall under the scope of ITAR should be treated with extreme cautiion, as even college professors and others with a more detailed understanding of certain technical systems have been sued by the State Department in the past for “exporting” information to foreign nationals — such as during lectures in their classrooms.  I think back to my college class on atomic physics and suddenly realize how closely our professor cut the line – just kidding, Charlie.

eDiscovery, Litigation, and ITAR

Data and document evidence relating to the USML categories can quite often be found in document collections where a client is a firm that works on biotech, engineering, arms or has dealings with U.S. government agencies because there may be classified documents or proprietary intellectual property that concerns a USML category.

Staying Compliant

At a minimum, the federal government requests an ITAR compliance program that should include a manual that articulates the company’s policy on (and commitment to) compliance with defense trade laws and regulations, and which outlines the procedures for dealing with licensing and compliance matters.  Such a manual should also include the identification and duties of empowered and responsible persons, and procedures on record keeping and internal auditing.

For the company itself, training on these rules and enforcing the compliance policies is necessary to show compliance in the event of a federal audit.

References:

http://en.wikipedia.org/wiki/United_States_Munitions_List

http://en.wikipedia.org/wiki/ITAR

http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=65e9dbe9009a6da233cd6af205e953ff&ty=HTML&h=L&n=22y1.0.1.13.59&r=PART

http://www.gpo.gov/fdsys/pkg/STATUTE-90/pdf/STATUTE-90-Pg729.pdf

http://ironman.wikia.com/wiki/Tony_Stark_(film)

 

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