Companies anxiously awaiting the release of “emerging technology” export control rules now have an initial interim rule indicating how the Department of Commerce Bureau of Industry and Security (BIS) is likely to proceed. Specifically, the interim rule related to software for training AI appears to be a narrowly tailored rule covering a specific type of AI software related to specific national security concerns involving geospatial imagery. While there are some questions on the scope of what is covered by “geospatial imagery,” comments on the rule due on March 6 will allow industry to provide input and hopefully obtain formal clarification once the final rule is issued. Additionally, the interim rule highlights that the new “emerging technology” rules will not be a “one and done” but rather a rolling series of rules on specific technologies warranting control.
The interim rule issued on January 6, specifically controls the following software under Export Control Classification Number (ECCN) 0D521:
Geospatial imagery “software” “specially designed” for training a Deep Convolutional Neural Network to automate the analysis of geospatial imagery and point clouds,[1] and has all of the following characteristics:
- 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.
Software meeting the above criteria is subject to Regional Stability (RS) controls and subject to a license requirement for all destinations, except Canada. There is no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under §740.11(b)(2)(ii).
Note that the 0Y521 series of ECCNs is a temporary holding classification that only lasts for one year from the date a final rule is published (i.e., this designation will expire on January 6, 2021), unless the classification is reissued or the item is reassigned to a new ECCN. If neither occurs and the classification expires, the item will become EAR99. As required, the U.S. Government will be proposing that these items become subject to multilateral controls through the Wassenaar Arrangement.
Importantly, this interim final rule appears to illustrate the Commerce Department’s intent to implement controls on “emerging technologies” through a series of rolling interim final rules that identify specific criteria rather than capturing broad categories of technology such as “AI software.” Potentially impacted members of industry have an opportunity to comment until March 6, 2020. Key questions include how broadly the Commerce Department interprets the term “geospatial imagery” and whether this may be limited to “top-down” imaging from satellites, drones, or other aircraft.
[1] According to the interim final rule, a point cloud (also known as a digital surface model) is a collection of data points defined by a given coordinate system.