I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Zero Tolerance for 

5 Electronics Theft Act’’ or the ‘‘ZTE Theft Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) The Federal Bureau of Investigation (FBI) 

2 has determined that certain foreign actors pose a se3 rious threat to the telecommunications supply chain. 

4 (2) Through cyber espionage and other delib5 erate acts, billions of dollars in trade secrets, intel6 lectual property, and technology are stolen each year 

7 from the Federal Government, corporations, and 

8 academic institutions. 

9 (3) The People’s Republic of China (China) is 

10 one of the two largest participants in cyber espio11 nage. 

12 (4) A 2012 report by the Permanent Select 

13 Committee on Intelligence of the House of Rep14 resentatives found that China exerts cyber espionage 

15 capabilities through telecommunications components 

16 and systems marketed directly to businesses and 

17 other entities in the United States. 

18 (5) A 2018 report by the Office of the United 

19 States Trade Representative found that Chinese gov20 ernment-owned entities were responsible for a sub21 stantial number of patent infringements. 

22 (6) ZTE Corporation, based in China, dem23 onstrates the risks associated with doing business in 

24 countries sanctioned by the United States and pro25 vides a model, as well as advocates for, the use of 


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1 shell companies to subvert the export control laws of 

2 the United States, explicitly stating that ‘‘[t]he big3 gest advantage of [this model] is that it is more ef4 fective, [because it’s] harder for the U.S. Govern5 ment to trace it or investigate the real flow of the 

6 controlled commodities.’’. 

7 (7) United States businesses provide an esti8 mated 25 to 30 percent of the components used in 

9 products of ZTE Corporation, including smart10 phones. 

11 (8) The FBI determined that ZTE Corporation 

12 sold banned technology to Iran and used the meth13 ods discussed in paragraph (6) to mask its trans14 action history in an effort to undermine investiga15 tions of the Department of Commerce. 

16 (9) Since 2008, ZTE Corporation has been the 

17 defendant, counterclaimant, or respondent in 722 

18 court actions. 

19 (10) On March 23, 2017, the Department of 

20 Justice stated that ‘‘ZTE Corporation has agreed to 

21 enter a guilty plea and to pay a $430,488,798 pen22 alty to the United States for conspiring to violate 

23 the International Emergency Economic Powers Act 

24 by illegally shipping U.S.-origin items to Iran, obVerDate Sep 11 2014 04:41 May 31, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2841.IH H2841

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1 structing justice and making a material false state2 ment.’’. 

3 (11) ZTE Corporation has also previously 

4 reached settlement agreements with the Bureau of 

5 Industry and Security of the Department of Com6 merce and the Office of Foreign Assets Control of 

7 the Department of the Treasury. 

8 (12) The Bureau of Industry and Security sub9 sequently found ZTE Corporation in violation of the 

10 settlement agreement with the Bureau due to— 

11 (A) falsification of reports and correspond12 ence with the Bureau; and 

13 (B) failure to discipline all individuals 

14 named in the settlement agreement. 

15 (13) On March 13, 2018, the Bureau of Indus16 try and Security notified ZTE Corporation that the 

17 agency would activate a conditionally suspended de18 nial order, due to the determination by the agency 

19 that ZTE Corporation had continuously made false 

20 statements to the United States Government. 

21 (14) On June 7, 2018, Secretary of Commerce 

22 Wilbur Ross announced that ZTE Corporation— 

23 (A) agreed to additional penalties and com24 pliance measures which would supplant a prior 

25 order of the Bureau; and 


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1 (B) would be removed from the Depart2 ment of Commerce’s Denied Persons List, a list 

3 of individuals and entities that have been de4 nied export privileges. 

5 SEC. 3. SENSE OF CONGRESS. 

6 It is the sense of Congress that— 

7 (1) ZTE Corporation poses a significant risk to 

8 the economy and national security of the United 

9 States; and 

10 (2) ZTE Corporation engages and will continue 

11 to engage in the theft of intellectual property to the 

12 detriment of businesses in the United States. 

13 SEC. 4. INJUNCTION. 

14 Section 283 of title 35, United States Code, is 

15 amended— 

16 (1) by striking ‘‘The several courts’’ and insert17 ing the following: 

18 ‘‘(a) IN GENERAL.—The several courts’’; and 

19 (2) by adding at the end the following: 

20 ‘‘(b) SPECIAL RULE.— 

21 ‘‘(1) PRELIMINARY INJUNCTION IN CERTAIN

22 CASES.—Notwithstanding any other provision of law, 

23 when a covered entity is a party to a civil action for 

24 patent infringement brought under this title, an op25 posing party, if seeking a preliminary injunction 


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1 against such covered entity, need not demonstrate 

2 that irreparable harm would result from the failure 

3 to grant such injunction. 

4 ‘‘(2) COVERED ENTITY DEFINED.—In this sub5 section, the term ‘covered entity’ means an entity (or 

6 subsidiary or affiliate thereof) that— 

7 ‘‘(A) is providing or producing tele8 communications, software, or electronics equip9 ment; 

10 ‘‘(B) has a headquarters or a principal 

11 place of business located in a region adminis12 tered or governed by the People’s Republic of 

13 China (excluding Taiwan); 

14 ‘‘(C) was, on or after March 8, 2016, de15 nied export privileges; and 

16 ‘‘(D) was, subsequent to such denial, re17 moved by the Secretary of Commerce from the 

18 List of Denied Persons maintained by the Bu19 reau of Industry and Security of the Depart20 ment of Commerce upon the restoration of such 

21 privileges.’’. 

22 SEC. 5. EXPORT PRIVILEGES ELIGIBILITY. 

23 (a) IN GENERAL.—Beginning on and after the date 

24 that is 180 days after the date of enactment of this Act, 


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1 a covered entity may only be eligible for export privileges 

2 if such covered entity— 

3 (1) certifies to the Attorney General that such 

4 covered entity— 

5 (A) with respect to patents in use by the 

6 covered entity, has entered into license agree7 ments with the United States persons that own 

8 such patents; 

9 (B) will abide by the laws of the United 

10 States; and 

11 (C) will not engage in cyber espionage, or 

12 the theft or misappropriation of intellectual 

13 property or trade secrets, on behalf of them14 selves or a state actor; and 

15 (2) maintains an export eligibility account in 

16 accordance with subsection (b). 

17 (b) EXPORT ELIGIBILITY ACCOUNTS.— 

18 (1) ESTABLISHMENT.—The Secretary of the 

19 Treasury, at the request of a covered entity, shall es20 tablish and manage an export eligibility account for 

21 the covered entity in accordance with this sub22 section. 

23 (2) ACCOUNT BALANCE.—To establish eligi24 bility for export privileges under subsection (a), an 

25 account established under paragraph (1) shall— 


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1 (A) at the time such account is established, 

2 include an amount equal to $2,500,000,000 

3 provided by the covered entity; 

4 (B) have a balance accessible only— 

5 (i) by the Secretary of the Treasury 

6 for payments described in paragraph (3); 

7 and 

8 (ii) by the covered entity— 

9 (I) upon closure of the account; 

10 and 

11 (II) for purposes of making de12 posits to maintain the account in ac13 cordance with subparagraph (C); and 

14 (C) at all times after establishment, in15 clude a minimum of $600,000,000. 

16 (3) USE OF ACCOUNT.—Amounts in an account 

17 established under paragraph (1) may be used by the 

18 Secretary of the Treasury for payments— 

19 (A) made to a United States person; and 

20 (B) that— 

21 (i) relate to final judgments in a pat22 ent infringement action against the appli23 cable covered entity (including interest, at24 torney’s fees, and any other costs specified 

25 in such judgments); and 


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1 (ii) the covered entity failed to make. 

2 (4) CERTIFICATION.—The Attorney General, in 

3 consultation with the Secretary of the Treasury and 

4 the Secretary of Commerce, shall review and certify 

5 the account status of covered entities for purposes of 

6 eligibility for export privileges at least once every 7 

7 years. 

8 (5) NOTIFICATION.—The Attorney General 

9 shall notify United States Customs and Border Pro10 tection and the Bureau of Industry and Security of 

11 the Department of Commerce of the identities of 

12 covered entities without an account providing eligi13 bility for export privileges. 

14 (c) DEFINITIONS.—In this section: 

15 (1) COVERED ENTITY.—The term ‘‘covered en16 tity’’ means an entity (or subsidiary or affiliate 

17 thereof) that— 

18 (A) is providing or producing telecommuni19 cations, software, or electronics equipment; 

20 (B) has a headquarters or a principal place 

21 of business located in a region administered or 

22 governed by the People’s Republic of China (ex23 cluding Taiwan); 

24 (C) was, on or after March 8, 2016, denied 

25 export privileges; and 


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1 (D) was, subsequent to such denial, re2 moved by the Secretary of Commerce from the 

3 List of Denied Persons maintained by the Bu4 reau of Industry and Security of the Depart5 ment of Commerce upon the restoration of such 

6 privileges. 

7 (2) EXPORT PRIVILEGES.—The term ‘‘export 

8 privileges’’ means, with respect to items subject to 

9 the Export Administration Regulations (as codified 

10 in subchapter C of chapter VII of title 15, Code of 

11 Federal Regulations, or any successor regulations)— 

12 (A) the ability to engage in export and re13 export transactions involving such items; and 

14 (B) the access to such items. 

15 (3) UNITED STATES PERSON.—The term 

16 ‘‘United States person’’ means— 

17 (A) a United States citizen or national; 

18 (B) an alien lawfully present in the United 

19 States who has lawful status under the immi20 gration laws (as such term is defined in section 

21 101(a) of the Immigration and Nationality 

22 Act); 

23 (C) a partnership, corporation, or other 

24 legal entity organized under the laws of the 

25 United States; or 


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1 (D) a partnership, corporation, or other 

2 legal entity that is organized under the laws of 

3 a foreign country and is controlled by entities 

4 described in subparagraph (C) or a United 

5 States citizen. 

Æ 


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