Protecting American Innovation and Development Act of 2021

II 117TH CONGRESS 1ST SESSION S. 39 To ensure the continued strength and leadership of the United States in the research and development of key technologies for future wireless telecommunications standards and infrastructure by providing additional authority for sanctions against certain foreign entities that pose a threat to national security, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 25, 2021 Mr. INHOFE introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To ensure the continued strength and leadership of the United States in the research and development of key technologies for future wireless telecommunications standards and infrastructure by providing additional au- thority for sanctions against certain foreign entities that pose a threat to national security, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Protecting American 4 Innovation and Development Act of 2021’’. 5 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 2 •S 39 IS SEC. 2. ADDRESSING THREATS TO NATIONAL SECURITY 1 WITH RESPECT TO WIRELESS COMMUNICA- 2 TIONS RESEARCH AND DEVELOPMENT. 3 Chapter 4 of title II of the Trade Expansion Act of 4 1962 (19 U.S.C. 1862 et seq.) is amended by adding at 5 the end the following: 6 ‘‘SEC. 234. STATEMENT OF POLICY. 7 ‘‘It is the policy of the United States— 8 ‘‘(1) to ensure the continued strength and lead- 9 ership of the United States with respect to the re- 10 search and development of key technologies for fu- 11 ture wireless telecommunications standards and in- 12 frastructure; 13 ‘‘(2) that the national security of the United 14 States requires the United States to maintain its 15 leadership in the research and development of key 16 technologies for future wireless telecommunications 17 standards and infrastructure; and 18 ‘‘(3) that the national security and foreign pol- 19 icy of the United States requires that the importa- 20 tion of items that use, without a license, a claimed 21 invention protected by a patent that is essential for 22 the implementation of a wireless communications 23 standard and is held by a United States person, be 24 controlled to ensure the achievement of the policies 25 described in paragraphs (1) and (2). 26 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 3 •S 39 IS ‘‘SEC. 235. LIST OF FOREIGN ENTITIES THAT THREATEN NA- 1 TIONAL SECURITY WITH RESPECT TO WIRE- 2 LESS COMMUNICATIONS RESEARCH AND DE- 3 VELOPMENT. 4 ‘‘(a) IN GENERAL.—The Secretary of Commerce (in 5 this section referred to as the ‘Secretary’) shall establish 6 and maintain a list of each foreign entity that the Sec- 7 retary determines— 8 ‘‘(1)(A) uses, without a license, a claimed in- 9 vention protected by a patent that is essential for 10 the implementation of a wireless communications 11 standard and is held by a covered person; and 12 ‘‘(B) is a person of concern or has as its ulti- 13 mate parent a person of concern; or 14 ‘‘(2) is a successor to an entity described in 15 paragraph (1). 16 ‘‘(b) WATCH LIST.— 17 ‘‘(1) IN GENERAL.—The Secretary shall estab- 18 lish and maintain a watch list of each foreign enti- 19 ty— 20 ‘‘(A)(i) that is a person of concern or has 21 as its ultimate parent a person of concern; and 22 ‘‘(ii) with respect to which a covered per- 23 son has made the demonstration described in 24 paragraph (2) in a petition submitted to the 25 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 4 •S 39 IS Secretary for the inclusion of the entity on the 1 list; or 2 ‘‘(B) that is a successor to an entity de- 3 scribed in subparagraph (A). 4 ‘‘(2) DEMONSTRATION DESCRIBED.— 5 ‘‘(A) IN GENERAL.—A covered person has 6 made a demonstration described in this para- 7 graph if the person has reasonably dem- 8 onstrated to the Secretary that— 9 ‘‘(i) the person owns at least one un- 10 expired patent that is essential for the im- 11 plementation of a wireless communications 12 standard; 13 ‘‘(ii) a foreign entity that is a person 14 of concern, or has as its ultimate parent a 15 person of concern, has been, for a period 16 of more than 180 days, selling wireless 17 communications devices in or into the 18 United States, directly or indirectly, that 19 are claimed, labeled, marketed, or adver- 20 tised as complying with that standard; 21 ‘‘(iii) the covered person has offered 22 to the foreign entity or any of its affili- 23 ates— 24 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 5 •S 39 IS ‘‘(I) a license to the person’s 1 portfolio of patents that are essential 2 to that standard; or 3 ‘‘(II) to enter into binding arbi- 4 tration to resolve the terms of such a 5 license; and 6 ‘‘(iv) the foreign entity has not exe- 7 cuted a license agreement or an agreement 8 to enter into such arbitration, as the case 9 may be, by the date that is 180 days after 10 the covered person made such an offer. 11 ‘‘(B) DEMONSTRATION OF ESSEN- 12 TIALITY.—A covered person may demonstrate 13 under subparagraph (A)(i) that the person 14 owns at least one unexpired patent that is es- 15 sential for the implementation of a wireless 16 communications standard by providing to the 17 Secretary any of the following: 18 ‘‘(i) A decision by a court or arbitral 19 tribunal that a patent owned by the person 20 is essential for the implementation of that 21 standard. 22 ‘‘(ii) A determination by an inde- 23 pendent patent evaluator not hired by the 24 person that a patent owned by the person 25 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 6 •S 39 IS is essential for the implementation of that 1 standard. 2 ‘‘(iii) A showing that wireless commu- 3 nications device manufacturers together 4 accounting for a significant portion of the 5 United States or world market for such de- 6 vices have entered into agreements for li- 7 censes to the person’s portfolio of patents 8 that are essential for the implementation 9 of that standard. 10 ‘‘(iv) A showing that the person has 11 previously granted licenses to the foreign 12 entity described in subparagraph (A)(ii) or 13 any of its affiliates with respect to a rea- 14 sonably similar portfolio of the person’s 15 patents that are essential for the imple- 16 mentation of that standard. 17 ‘‘(C) ACCOUNTING OF WIRELESS COMMU- 18 NICATIONS DEVICE MARKET.—A showing de- 19 scribed in subparagraph (B)(iii) may be made 20 either by including or excluding wireless com- 21 munications device manufacturers that are per- 22 sons of concern. 23 ‘‘(3) PROCEDURES.— 24 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 7 •S 39 IS ‘‘(A) ADDING A FOREIGN ENTITY TO THE 1 WATCH LIST.— 2 ‘‘(i) IN GENERAL.—The Secretary 3 may add a foreign entity to the watch list 4 under paragraph (1) only after notice and 5 opportunity for an agency hearing on the 6 record in accordance with (except as pro- 7 vided in clause (ii)) sections 554 through 8 557 of title 5, United States Code. 9 ‘‘(ii) MATTERS CONSIDERED AT HEAR- 10 ING.—An agency hearing conducted under 11 clause (i)— 12 ‘‘(I) shall be limited to consider- 13 ation of— 14 ‘‘(aa) whether the dem- 15 onstration described in paragraph 16 (2) has been reasonably made; 17 and 18 ‘‘(bb) the amount of bond to 19 be required in accordance with 20 section 236; and 21 ‘‘(II) may not include the presen- 22 tation or consideration of legal or eq- 23 uitable defenses or counterclaims. 24 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 8 •S 39 IS ‘‘(B) ADMINISTRATIVE PROCEDURE.—Ex- 1 cept as provided in subparagraph (A), the func- 2 tions exercised under this section and section 3 236 shall not be subject to sections 551, 553 4 through 559, or 701 through 706 of title 5, 5 United States Code. 6 ‘‘(c) MOVEMENT BETWEEN LISTS.—A foreign entity 7 on the watch list required by subsection (b)(1) may be 8 moved to the list required by subsection (a), pursuant to 9 procedures established by the Secretary, on or after the 10 date that is one year after being included on the watch 11 list if the foreign entity is not able to reasonably dem- 12 onstrate that it has entered into a patent license agree- 13 ment or a binding arbitration agreement with each covered 14 person that has made the demonstration described in sub- 15 section (b)(2) with respect to the entity. 16 ‘‘(d) REMOVAL FROM LISTS.—A foreign entity on the 17 list required by subsection (a) or on the watch list required 18 by subsection (b)(1) may petition the Secretary to be re- 19 moved from that list on the basis that the conditions that 20 led to the inclusion of the foreign entity on the list no 21 longer exist. The burden of proof shall be on the foreign 22 entity. 23 ‘‘(e) DEFINITIONS.—In this section: 24 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 9 •S 39 IS ‘‘(1) AFFILIATE.—The term ‘affiliate’, with re- 1 spect to an entity, means any entity that owns or 2 controls, is owned or controlled by, or is under com- 3 mon ownership or control with, the entity. 4 ‘‘(2) COUNTRY OF CONCERN.—The term ‘coun- 5 try of concern’ means a country with respect to 6 which the Secretary determines that— 7 ‘‘(A) persons in the country persistently 8 use, without obtaining a license, patents— 9 ‘‘(i) essential to the implementation of 10 wireless communications standards; and 11 ‘‘(ii) held by a covered person; and 12 ‘‘(B) that use of patents poses a threat 13 to— 14 ‘‘(i) the ability of the United States to 15 maintain a wireless communications re- 16 search and development infrastructure; 17 and 18 ‘‘(ii) the national security of the 19 United States, pursuant to the policy set 20 forth in section 234. 21 ‘‘(3) COVERED PERSON.—The term ‘covered 22 person’ means— 23 ‘‘(A) a covered United States person; or 24 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 10 •S 39 IS ‘‘(B) an affiliate of a covered United 1 States person— 2 ‘‘(i) headquartered in, or organized 3 under the laws of, a country that is a 4 member of the European Union or the 5 North Atlantic Treaty Organization; and 6 ‘‘(ii) engaged in wireless communica- 7 tions research and development. 8 ‘‘(4) COVERED UNITED STATES PERSON.—The 9 term ‘covered United States person’ means a United 10 States person engaged in wireless communications 11 research and development in the United States. 12 ‘‘(5) PERSON OF CONCERN.—The term ‘person 13 of concern’ means a person that is— 14 ‘‘(A) an individual who is a citizen or na- 15 tional (as defined in section 101(a) of the Im- 16 migration and Nationality Act (8 U.S.C. 17 1101(a))) of a country of concern; or 18 ‘‘(B) an entity that is headquartered in, or 19 organized under the laws of, a country of con- 20 cern. 21 ‘‘(6) UNITED STATES PERSON.—The term 22 ‘United States person’ means— 23 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 11 •S 39 IS ‘‘(A) an individual who is a United States 1 citizen or an alien lawfully admitted for perma- 2 nent residence to the United States; 3 ‘‘(B) an entity organized under the laws of 4 the United States or any jurisdiction within the 5 United States, including a foreign branch of 6 such an entity; or 7 ‘‘(C) any person in the United States. 8 ‘‘(7) WIRELESS COMMUNICATIONS STAND- 9 ARD.—The term ‘wireless communications standard’ 10 means— 11 ‘‘(A) a cellular wireless telecommunications 12 standard, including such a standard promul- 13 gated by the 3rd Generation Partnership 14 Project (commonly known as ‘3GPP’) or the 15 3rd Generation Partnership Project 2 (com- 16 monly known as ‘3GPP2’); or 17 ‘‘(B) a wireless local area network stand- 18 ard, including such a standard designated as 19 IEEE 802.11 as developed by the Institute of 20 Electrical and Electronics Engineers (commonly 21 known as the ‘IEEE’). 22 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 12 •S 39 IS ‘‘SEC. 236. IMPORT SANCTIONS WITH RESPECT TO CERTAIN 1 FOREIGN ENTITIES THAT THREATEN NA- 2 TIONAL SECURITY. 3 ‘‘(a) IN GENERAL.—Any foreign entity on the list re- 4 quired by section 235(a) may be subject to such controls 5 on the importing of goods or technology into the United 6 States as the President may prescribe. 7 ‘‘(b) ENTRY UNDER BOND.— 8 ‘‘(1) IN GENERAL.—Unless otherwise prescribed 9 by the President, a product described in paragraph 10 (2) may not enter the United States except under 11 bond prescribed by the Secretary of Commerce in an 12 amount determined by the Secretary to be sufficient 13 to protect from injury a covered United States per- 14 son that made the demonstration described in sec- 15 tion 235(b)(2) with respect to the entity that has 16 been selling the product directly or indirectly in or 17 into the United States. 18 ‘‘(2) PRODUCTS DESCRIBED.—A product de- 19 scribed in this paragraph is a wireless communica- 20 tions device— 21 ‘‘(A) produced or sold by— 22 ‘‘(i) a foreign entity on the watch list 23 required by section 235(b); 24 ‘‘(ii) a successor of such an entity; or 25 VerDate Sep 11 2014 04:10 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S39.IS S39 kjohnson on DSK79L0C42PROD with BILLS 13 •S 39 IS ‘‘(iii) an affiliate of an entity de- 1 scribed in clause (i) or (ii); and 2 ‘‘(B) that is claimed, labeled, marketed, or 3 advertised as complying with a wireless commu- 4 nications standard that was the basis for the in- 5 clusion of the foreign entity on the watch list. 6 ‘‘(c) FORFEITURE OF BOND.— 7 ‘‘(1) IN GENERAL.—If a foreign entity on the 8 watch list required by section 235(b) is moved to the 9 list required by section 235(a) and becomes subject 10 to controls under subsection (a), a bond paid under 11 subsection (b) shall be forfeited to a covered [Text truncated for display. 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