export-controls 09 January 2020

First US controls placed on emerging tech

The US Bureau of Industry and Security (‘BIS’) has, early January, imposed export controls for the first time on an ‘emerging’ technology.

BIS amended its Export Administration Regulations (‘EAR’) on 6 January to include control of machine learning software used in training neural networks to automate the analysis of satellite images.

According to BIS, Export Control Classification Number (ECCN) 0D521 was given to software which fulfils the following criteria:

  • ‘Provides a graphical user interface that enables the user to identify objects (e.g., vehicles, houses, etc.) from within geospatial imagery and point clouds in order to extract positive and negative samples of an object of interest;
  • Reduces pixel variation by performing scale, color, and rotational normalization on the positive samples;
  • Trains a Deep Convolutional Neural Network to detect the object of interest from the positive and negative samples; and
  • Identifies objects in geospatial imagery using the trained Deep Convolutional Neural Network by matching the rotational pattern from the positive samples with the rotational pattern of objects in the geospatial imagery.’

A BIS licence is now needed to export or reexport such software from the US to any country other than Canada.

Law firms are advising companies which develop or use AI in geospatial applications to review the new rule. In addition, because the rule classifies the software as a ‘critical technology’ under CFIUS regulations, non-US companies aiming to invest in or acquire US firms involved with the software may need to request a CFIUS review.

Marwa Hassoun of law firm Arent Fox noted: ‘This new control may come as an unwelcome surprise to US companies that are involved with this specific type of AI, especially those that intended to raise future capital from a foreign source.’

The rule is open for comment until 6 March, but the controls take effect immediately.

See: https://www.govinfo.gov/content/pkg/FR-2020-01-06/pdf/2019-27649.pdf