Gesmer Updegrove LLP Files Comments and Recommendations With Department of Commerce

by Lee Gesmer on August 18, 2020

Gesmer Updegrove LLP Files Comments and Recommendations With Department of Commerce

[This post is adapted from Andrew Updegrove’s August 5, 2020 post]

Since May of 2019, standards setting organizations (SSOs) and U.S. companies have been struggling with the blowback from the decision by the U.S. Department of Commerce (DoC) to add Huawei and scores of its affiliated companies to the “Entity List” maintained by the U.S. Bureau of Industry and Security. In June of 2020, the DoC released a long-awaited “Interim Final Rule,” providing a safe harbor for U.S. companies and Huawei et al. to work together on standards. The DoC set a deadline of August 17, 2020 for interested parties to submit recommendations to improve the Interim Final Rule. 

In response to DoC’s request for recommendations Gesmer Updegrove LLP prepared a detailed comment letter which it has submitted on behalf of itself, multiple clients and other SSOs. 

The concerns addressed in these comments arise from the fact that U.S. law prevents U.S. companies from disclosing a broad range of technology to companies on the Entity List, as usually occurs during standards development. Those who disclose covered technology in violation of the rules may incur criminal liability.

Although the Interim Final Rule provides a safe harbor, it has various limitations, including that it only applies to Huawei and its affiliates and not other companies on the Entity List, and only benefits SSOs that qualify as  “Voluntary Consensus Standards Bodies” (VCSB) under a preexisting rule called OMB Circular A-119. Unfortunately, most information and communications technology (ICT) SSOs don’t meet that test. Of those, some will not want to make the changes needed to meet the new test, while others that do will be saddled with additional processes and delays, most of which are not necessary to achieve the policy goals behind the Entity List restrictions.

The  detailed comments are contained in the letter, reproduced in full below. They include recommendations that urge the DoC to:

  • Create a standards-specific exception that is based on prevailing norms of ICT  SSO best practices rather than the more stringent VCSB rules that the government itself is not rigidly bound by under OMB Circular A-119. Ideally, the eventual rule would simply state that U.S. companies may safely participate in any SSO formed with the intention of creating global standards and which admits all interested parties as members on a non-discriminatory basis. Failing that, providing an SSO-specific exception referencing only the Openness and Consensus elements of the VCSB definition, tailored to ICT SSO realities, would provide a next-best solution.
  • Clarify that additional collaborative activities commonly associated with standards development and necessary to achieve market needs are also included within the exception. These activities include the creation of reference implementations, participating in and sharing the results of conformance testing, and related activities that help foster adoption, implementation, and improvement of ‎standards conducted by, or under the auspices, of an SSO.
  • Include all industry participants that at any time are included in the Entity List, and not just Huawei and its affiliates.

You may find further background regarding the Huawei situation and the Interim Final Rule here. Here is the comments letter submitted to the Department of Commerce:

 

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