Intel makes a tremendous effort to understand regulatory requirements, comprehend risks and threats, and implement the right amount of security based on those risks. Failure in any area can result in loss of IP or legal action from the BIS.

There are legal ramifications for compromising Intel's IP as such actions adversely impact Intel's strategic competitiveness or result in financial loss. Recovery from IP loss can take several years and within Intel's competitive environment significant or critical IP loss is not an acceptable risk.

The complexity of the regulatory environment mandates that questions be asked to determine if an export license is needed; e.g., what type of technology will be used, which restricted countries are involved, are DFNs a factor, will technology or products be re-exported, etc. Each one of the above may come with conditions or restrictions that have to be clearly understood and implemented.

Honest mistakes can and will be made, but the ones that are not reported can do the most damage. Export regulations are complex and often have "gray" areas that might be open to interpretation. By working very closely with the BIS and other government agencies Intel has avoided potential road blocks.

The consequences of a bad interpretation of an export regulation or for not adhering to conditions that are part of an export license, for example, can result in penalties to Intel and its employees.

The BIS breaks down Export Administration Regulations (EAR) violations into two categories: criminal and civil:

Criminal

For willful violations that involve a company and/or employees who deliberately are involved in covering up an EAR violation and do not report it, the consequences can be severe:

A corporation could be fined up to $1,000,000 or five times the value of the exports for each violation, depending on which is the greater.

An individual could be fined up to $250,000 or be imprisoned for up to ten years, or both, for each violation.

For knowing violations that involve a company and/or employees who are involved in an EAR violation but report the violation upon discovery, the consequences can also be severe:

A corporation could be fined up to $50,000 or five times the value of the exports for each violation, depending on which is the greater.

An individual could be fined up to $50,000 or five times the value of the exports, or can be imprisoned for up to five years, or both, for each violation.

Civil

For each violation of EARs companies and individuals can be penalized as follows:

They can be denied export privileges. This means all of the export privileges of a company or individual will be removed to prevent an imminent export control violation. These orders cut off not only the right to export from the US, but also the right to receive or participate in exports from the US.

They can be excluded from trade and/or a fine of up to $11,000 for each violation can be imposed.

Violations involving national security can result in fines of up to $120,000 for each violation.

To better illustrate the consequences, here are two examples of recent cases.

In September 2004, the BIS assessed a $560,000 administrative penalty against Lattice Semiconductor Corporation for sending extended range programmable logic devices and technical data to China and sharing restricted technology with Chinese foreign nationals in the US. The items and technology are controlled for national security reasons.

In April 2006, Boeing Corporation settled a long-running case with the State Department's Directorate of Defense Trade Controls for a sum of $15 million in penalties for violation of export laws involving gyro chips to China.

Export laws change from year to year and specific country-based restrictions can change numerous times during any given year: staying abreast of these changes is a necessity.

Intel is very assertive in maintaining the proper security to restrict and avoid inadvertent access to unauthorized technology by restricted country employees. Both Global Trade and Corporate Security take an active role to protect Intel's IP. Intel's expectation is that every employee shares in the responsibility of keeping Intel compliant with export regulations, internal security, and IP requirements at all times.