Universities, like commercial enterprises, need systems to prevent
the loss of intellectual property and compliance missteps. In this
QAD Precision Report we look at how universities can address these
In April 2019, the Japanese government announced plans it would
formulate guidelines for universities
that collaborate with foreign companies on joint research
projects to prevent technology drain.
Technology drain can happen when an organization — or a university —
does not protect their intellectual property (IP). This can occur
because an organization fails to patent research, as well as through
theft, negligence or by accident. University IP can include research
papers, computer code, samples, living tissues and cells, prototypes,
teaching materials and so forth.
Furthermore, if a university works with a foreign partner and
violates compliance regulations, the institution could face penalties
by the domestic government and the government of its partner. A
university research project that uses materials or technologies
supplied by overseas researchers, institutions, companies or
government bodies, must comply with foreign as well as domestic export
controls and licensing requirements.
Japan — like many countries and political entities, including the
United States, China and the European Union — already has export
controls in place for military applications, sensitive technologies
and dual-use goods. These laws apply to universities as well as
private enterprises. However, while companies and government bodies
have systems in place to mitigate compliance violations, universities
often lack integrated and institute-wide controls.
Separate laboratories, schools, faculties and departments at
universities are often responsible for managing their own research
information. If they lack knowledge around confidentiality and export
rules — and if the university does not have clear processes in place —
researchers may violate export controls or fail to protect valuable IP.
Partnerships between universities and companies, government bodies or
foreign academics can be fruitful. Nonetheless, these collaborations
also bring challenges and risks. Therefore, universities must put
systems in place to prevent compliance missteps and protect IP.
Japan is certainly not the only country that wishes to protect the IP
resulting from university research projects. The US and China have
both increased regulation for universities engaging in research with
foreign partners, particularly on dual use and military technologies.
It is unsurprising that governments wish to prevent military and dual
use goods falling into the hands of criminals, terrorists or foreign
governments. However, there are other goods, technologies and research
that universities may wish to restrict in order to protect IP and
prevent technology drain. Lack of clear processes, institute-wide
controls, and knowledge around export controls can all contribute to
When most of us think of an “export” we imagine the physical shipment
of goods from one country to another, generally for commercial
purposes. This is an export, but the term is broader than that. The
following five examples are all exports.
The shipment or transfer of physical items overseas
Carrying information to a foreign country on a laptop, external
drive, USB device or similar
Electronic transfer of information via email or text message, or
by uploading data to a foreign server and so forth
Providing access to software, databases and so forth to foreign nationals
Telephone or other communications
As you can see from the above, sharing information across borders is
legally the same as transferring physical goods. In the United States,
a “deemed export” is the sharing of information or technology with a
foreign national who is also in the US. In such a case, the
information or goods may not have left US soil, but since the
recipient is a foreign national, US authorities regard this as an
export. As a result, publishing sensitive university research or
discussing it at a conference could also be a violation of export controls.
Laws regarding dual use goods restrict the export of items or
technologies that have both commercial and military applications.
Examples include chemicals, electronics, navigation or propulsion
systems, lasers, sensors and nuclear power technologies. Exporters —
including universities — may need authorization or a license before
they can ship certain dual use goods. By issuing licences, governments
are able to track the movement of these goods.
Depending on where they are, who they collaborate with, and the
nature of their research, universities may need to comply with dual
use restrictions set out by a number of different government bodies.
For example, in the US, the Export Administration Regulations (EAR)
controls the export of commercial and dual use items. In addition to
EAR, the International Traffic in Arms Regulations (ITAR) control the
manufacture, export, import and so forth of military goods and technologies.
The European Union has similar controls. Regulation (EC) No 428/2009
governs the EU’s export controls. The regulation creates a common list
of technologies that are subject to control. EU member states may
control additional items in certain circumstances, subject to European
Parliament approval. Similarly, Japan’s Foreign Exchange and Foreign
Trade Act oversees Japanese import and export controls, including dual
Violations of these laws can result in significant penalties. A
university based in the EU and collaborating with a US company would
therefore be subject to both EU and US export controls.
Most fundamental research is not subject to export controls. In the
US, this is known as the Fundamental Research Exclusion (FRE).
Fundamental research is basic and applied research, the results of
which are to be published and shared in the public domain with the
scientific community. Technical data that is the result of fundamental
research is not subject to export controls. For FRE to apply, the
Be undertaking fundamental research
Intend to publish
Is not subject to publication or other access restrictions (such
as by signing a non-disclosure agreement or requiring approval by sponsors
FRE only applies to publishable results — not to inventions or
equipment. However, certain research, such as in STEM fields (science,
technology, engineering and mathematics) may overlap with export
FRE does not apply if a university or a research signs a
non-disclosure agreement or accepts other restrictions from a sponsor,
such a government body or commercial enterprise. This is proprietary
research. Proprietary research is generally restricted for commercial
or national security reasons.
Universities need to take steps to ensure that researchers and staff
do not violate export controls or allow sensitive IP to fall into
The IP that universities create can be both intellectually and
financially valuable. By obtaining patents on their research and
licensing these for use in commercial applications, universities have
a valuable avenue to increase their revenues. However, in order to do
this, universities and their researchers — including graduate students
— need to protect this research.
Students may not realize that their research has commercial
potential. They also need to know how to protect IP. If students and
researchers publish data or release prototypes of inventions,
universities may not be able to realize the gains from the commercial
potential of this IP.
The first step in any compliance program is education. Any
organization, whether educational, commercial or governmental, needs
to ensure that personnel are aware of export regulations and the
penalties for violations.
University researchers — many of whom are graduate students — must
understand the importance of protecting their work. Students,
particularly in STEM fields, need to be aware that disclosing
sensitive information, in person or electronically, may violate export regulations.
The vast majority
of data breaches are unintentional. These include accidentally
emailing or posting confidential information to the wrong recipient;
careless handling of data; weak passwords or loss of devices with
Any organization that has access to confidential information or IP
needs a clear security policy. The policy should clearly explain the
rules and regulations governing data handling. All staff should be
familiar with procedures and they should be strictly enforced.
Universities can also take steps to ensure that their systems are
secure and that data cannot be copied onto external drives or accessed
by outside actors.
If university personnel ship samples, research materials and
sensitive data to colleagues — whether locally or internationally —
compliance screening is crucial.
Universities should introduce institution-wide controls to integrate
automated compliance checks with shipping. As a result, all shipments
are screened before they are cleared for transportation.
Automated compliance screening will ensure that research materials
are not been sent to sanctioned countries or denied parties.
Government and international bodies publish lists of individuals,
entities and groups with whom it is illegal to trade. These denied
party lists (DPLs) are subject to thousands of changes every year. It
is, therefore, extremely challenging to screen shipments manually and
still remain compliant.
An automated compliance solution will vet every shipment to ensure it
can proceed. This includes DPL screening, determining end use,
validating the country of destination and ensuring that any special
documentation or actions are included. As a result, researchers and
university staff will perform due diligence, and create an electronic
audit trail to ensure the university has audit-ready records.
A comprehensive integrated solution will ensure that all your
shipments are compliant with export controls, that all relevant
transportation documentation is included, and enforce best practices
across the institution.
If researchers are shipping samples that are time-sensitive,
delicate, hazardous or require special handling, they must ensure that
their packages are compliant with a carrier’s requirements. If not,
these shipments may be delayed, lost or destroyed.
Furthermore, if researchers are sending international shipments they
will need knowledge of import tariffs, packaging specifications,
customs rules and compliance regulations. Desktop shipping solutions
simplify this process and ensure that university rules, carrier
specifications and export regulations are all met before a package can
be released to a carrier.
Desktop shipping also allows university staff to seamlessly switch
between carriers. In addition, desktop shipping software automates
carrier compliant labeling, generates the appropriate shipping
documentation for global destinations and manages denied party
screening — all while using standardized procedures in line with the
university’s specific shipping rules. Universities can thus use a
single integrated system for compliance checks and shipping. This
saves time as there is no need to alternate between systems, and
prevents keystroke errors from having to re-enter information.
A university shipping solution must be able to handle the
complexities of the research chain. Universities ship highly diverse
contents, including living cells, common or experimental drugs and
solvents, specimens, text books and research data. As universities
work with increasing numbers of foreign partners, and as the
regulatory environment becomes ever more tightly controlled,
universities must improve their shipping processes, meet all export
controls and protect their hard won IP.
QAD Precision (Precision Software), a division of QAD Inc., provides
trade management, transportation
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carrier shipping software solutions from a single, integrated
platform. Preeminent industry leaders in every region of the world
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