A recent 60 minutes report about an ill-conceived criminal case against Xiaoxing Xi, the chair of Temple University’s physics department, carries important lessons for individuals who operate in the high-tech space, along with universities and other government contractors.  The US Attorney for the Eastern District of Pennsylvania brought criminal charges against Dr. Xi, alleging that he unlawfully transferred controlled technology when he shared designs for a piece of equipment with scientists in China.  The government alleged that the designs related to a “pocket heater,” which is used in semiconductor research.  In fact, the designs related to something else entirely.  But it wasn’t until Dr. Xi was put through an ordeal of arrest, questioning and criminal defense, with the personal and professional consequences that go along with it, that the government appears to have looked carefully at the technical aspects of the case.

This serves as an important lesson for scientists and others working in areas of emerging and sensitive technology, particularly when dealing with government contracts.  Dr. Xi said that he was actually required by his US government contract to collaborate and share information with colleagues in China – the very activity that led to criminal charges being filed against him by another arm of the same US government.  It is important to understand that operating in academia, and even under a US government contract, does not insulate you from the risk of liability under export controls and sanctions law.  Although Dr. Xi’s case was a misfire for the EDPA prosecutors, it should still serve as a lesson to think carefully about what the restrictions are on technology transfer and collaboration with non-US nationals.  These details should be worked out at the beginning of the government contracting process, and monitored with a compliance focus throughout the course of work.  Unfortunately, too few government contracting officers have an adequate understanding of export controls and sanctions laws.  But keeping good records, getting competent compliance advice, and erring on the side of caution when it comes to sensitive technology transfer are good rules of thumb.

This case shows that the government will pursue enforcement of sanctions and export controls laws aggressively where it suspects that violations have occurred, even in cases involving prominent individuals working for benign institutions like universities.  Most importantly, it demonstrates how complex this area of law can be, with potentially devastating consequences for missteps.  If you can document a strong effort to comply with the law, you’ll be in a much better position when your early morning visitor flashes a badge.