[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2841 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 2841
To amend title 35, United States Code, with respect to actions for
patent infringement, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 20, 2019
Mr. Chabot introduced the following bill; which was referred to the
Committee on the Judiciary, and in addition to the Committee on Foreign
Affairs, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title 35, United States Code, with respect to actions for
patent infringement, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Zero Tolerance for Electronics Theft
Act'' or the ``ZTE Theft Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The Federal Bureau of Investigation (FBI) has
determined that certain foreign actors pose a serious threat to
the telecommunications supply chain.
(2) Through cyber espionage and other deliberate acts,
billions of dollars in trade secrets, intellectual property,
and technology are stolen each year from the Federal
Government, corporations, and academic institutions.
(3) The People's Republic of China (China) is one of the
two largest participants in cyber espionage.
(4) A 2012 report by the Permanent Select Committee on
Intelligence of the House of Representatives found that China
exerts cyber espionage capabilities through telecommunications
components and systems marketed directly to businesses and
other entities in the United States.
(5) A 2018 report by the Office of the United States Trade
Representative found that Chinese government-owned entities
were responsible for a substantial number of patent
infringements.
(6) ZTE Corporation, based in China, demonstrates the risks
associated with doing business in countries sanctioned by the
United States and provides a model, as well as advocates for,
the use of shell companies to subvert the export control laws
of the United States, explicitly stating that ``[t]he biggest
advantage of [this model] is that it is more effective,
[because it's] harder for the U.S. Government to trace it or
investigate the real flow of the controlled commodities.''.
(7) United States businesses provide an estimated 25 to 30
percent of the components used in products of ZTE Corporation,
including smartphones.
(8) The FBI determined that ZTE Corporation sold banned
technology to Iran and used the methods discussed in paragraph
(6) to mask its transaction history in an effort to undermine
investigations of the Department of Commerce.
(9) Since 2008, ZTE Corporation has been the defendant,
counterclaimant, or respondent in 722 court actions.
(10) On March 23, 2017, the Department of Justice stated
that ``ZTE Corporation has agreed to enter a guilty plea and to
pay a $430,488,798 penalty to the United States for conspiring
to violate the International Emergency Economic Powers Act by
illegally shipping U.S.-origin items to Iran, obstructing
justice and making a material false statement.''.
(11) ZTE Corporation has also previously reached settlement
agreements with the Bureau of Industry and Security of the
Department of Commerce and the Office of Foreign Assets Control
of the Department of the Treasury.
(12) The Bureau of Industry and Security subsequently found
ZTE Corporation in violation of the settlement agreement with
the Bureau due to--
(A) falsification of reports and correspondence
with the Bureau; and
(B) failure to discipline all individuals named in
the settlement agreement.
(13) On March 13, 2018, the Bureau of Industry and Security
notified ZTE Corporation that the agency would activate a
conditionally suspended denial order, due to the determination
by the agency that ZTE Corporation had continuously made false
statements to the United States Government.
(14) On June 7, 2018, Secretary of Commerce Wilbur Ross
announced that ZTE Corporation--
(A) agreed to additional penalties and compliance
measures which would supplant a prior order of the
Bureau; and
(B) would be removed from the Department of
Commerce's Denied Persons List, a list of individuals
and entities that have been denied export privileges.
SEC. 3. SENSE OF CONGRESS.
It is the sense of Congress that--
(1) ZTE Corporation poses a significant risk to the economy
and national security of the United States; and
(2) ZTE Corporation engages and will continue to engage in
the theft of intellectual property to the detriment of
businesses in the United States.
SEC. 4. INJUNCTION.
Section 283 of title 35, United States Code, is amended--
(1) by striking ``The several courts'' and inserting the
following:
``(a) In General.--The several courts''; and
(2) by adding at the end the following:
``(b) Special Rule.--
``(1) Preliminary injunction in certain cases.--
Notwithstanding any other provision of law, when a covered
entity is a party to a civil action for patent infringement
brought under this title, an opposing party, if seeking a
preliminary injunction against such covered entity, need not
demonstrate that irreparable harm would result from the failure
to grant such injunction.
``(2) Covered entity defined.--In this subsection, the term
`covered entity' means an entity (or subsidiary or affiliate
thereof) that--
``(A) is providing or producing telecommunications,
software, or electronics equipment;
``(B) has a headquarters or a principal place of
business located in a region administered or governed
by the People's Republic of China (excluding Taiwan);
``(C) was, on or after March 8, 2016, denied export
privileges; and
``(D) was, subsequent to such denial, removed by
the Secretary of Commerce from the List of Denied
Persons maintained by the Bureau of Industry and
Security of the Department of Commerce upon the
restoration of such privileges.''.
SEC. 5. EXPORT PRIVILEGES ELIGIBILITY.
(a) In General.--Beginning on and after the date that is 180 days
after the date of enactment of this Act, a covered entity may only be
eligible for export privileges if such covered entity--
(1) certifies to the Attorney General that such covered
entity--
(A) with respect to patents in use by the covered
entity, has entered into license agreements with the
United States persons that own such patents;
(B) will abide by the laws of the United States;
and
(C) will not engage in cyber espionage, or the
theft or misappropriation of intellectual property or
trade secrets, on behalf of themselves or a state
actor; and
(2) maintains an export eligibility account in accordance
with subsection (b).
(b) Export Eligibility Accounts.--
(1) Establishment.--The Secretary of the Treasury, at the
request of a covered entity, shall establish and manage an
export eligibility account for the covered entity in accordance
with this subsection.
(2) Account balance.--To establish eligibility for export
privileges under subsection (a), an account established under
paragraph (1) shall--
(A) at the time such account is established,
include an amount equal to $2,500,000,000 provided by
the covered entity;
(B) have a balance accessible only--
(i) by the Secretary of the Treasury for
payments described in paragraph (3); and
(ii) by the covered entity--
(I) upon closure of the account;
and
(II) for purposes of making
deposits to maintain the account in
accordance with subparagraph (C); and
(C) at all times after establishment, include a
minimum of $600,000,000.
(3) Use of account.--Amounts in an account established
under paragraph (1) may be used by the Secretary of the
Treasury for payments--
(A) made to a United States person; and
(B) that--
(i) relate to final judgments in a patent
infringement action against the applicable
covered entity (including interest, attorney's
fees, and any other costs specified in such
judgments); and
(ii) the covered entity failed to make.
(4) Certification.--The Attorney General, in consultation
with the Secretary of the Treasury and the Secretary of
Commerce, shall review and certify the account status of
covered entities for purposes of eligibility for export
privileges at least once every 7 years.
(5) Notification.--The Attorney General shall notify United
States Customs and Border Protection and the Bureau of Industry
and Security of the Department of Commerce of the identities of
covered entities without an account providing eligibility for
export privileges.
(c) Definitions.--In this section:
(1) Covered entity.--The term ``covered entity'' means an
entity (or subsidiary or affiliate thereof) that--
(A) is providing or producing telecommunications,
software, or electronics equipment;
(B) has a headquarters or a principal place of
business located in a region administered or governed
by the People's Republic of China (excluding Taiwan);
(C) was, on or after March 8, 2016, denied export
privileges; and
(D) was, subsequent to such denial, removed by the
Secretary of Commerce from the List of Denied Persons
maintained by the Bureau of Industry and Security of
the Department of Commerce upon the restoration of such
privileges.
(2) Export privileges.--The term ``export privileges''
means, with respect to items subject to the Export
Administration Regulations (as codified in subchapter C of
chapter VII of title 15, Code of Federal Regulations, or any
successor regulations)--
(A) the ability to engage in export and reexport
transactions involving such items; and
(B) the access to such items.
(3) United states person.--The term ``United States
person'' means--
(A) a United States citizen or national;
(B) an alien lawfully present in the United States
who has lawful status under the immigration laws (as
such term is defined in section 101(a) of the
Immigration and Nationality Act);
(C) a partnership, corporation, or other legal
entity organized under the laws of the United States;
or
(D) a partnership, corporation, or other legal
entity that is organized under the laws of a foreign
country and is controlled by entities described in
subparagraph (C) or a United States citizen.
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