Protecting American Innovation and Development Act of 2021
Bill: S.39 | Sponsor: Sen. Inhofe, James M. (R-OK)
Policy area: Foreign Trade and International Finance

Summary:
Protecting American Innovation and Development Act of 2021
This bill authorizes import controls against certain foreign persons that infringe patents belonging to a U.S. person that are essential to a wireless communications standard.
Specifically, the Department of Commerce must create a list of foreign entities that are citizens or nationals of a country of concern and that engage in the unlicensed use (i.e., infringement) of such essential wireless communications patents. A country of concern is a country wherein the persistent infringement of these patents poses a threat to (1) U.S. wireless communications research and development infrastructure, and (2) U.S. national security.
Any foreign entity on this list, as well as specified persons that raise a national security concern with respect to wireless communications technology, may be subject to import controls (for example, a foreign entity may be required to post a bond before importing into the United States any goods that potentially infringe the wireless patent in question).
Commerce must also establish a watch list of foreign entities from a country of concern that (1) are selling in the United States a product claiming to comply with a wireless standard, and (2) have not obtained a license (or taken certain actions to obtain that license) for patents essential to that wireless standard.
An entity on either list may petition Commerce to be removed from that list on the basis that the conditions that led to its inclusion no longer exist.

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.

    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 ``Protecting American Innovation and 
Development Act of 2021''.

SEC. 2. ADDRESSING THREATS TO NATIONAL SECURITY WITH RESPECT TO 
              WIRELESS COMMUNICATIONS RESEARCH AND DEVELOPMENT.

    Chapter 4 of title II of the Trade Expansion Act of 1962 (19 U.S.C. 
1862 et seq.) is amended by adding at the end the following:

``SEC. 234. STATEMENT OF POLICY.

    ``It is the policy of the United States--
            ``(1) to ensure the continued strength and leadership of 
        the United States with respect to the research and development 
        of key technologies for future wireless telecommunications 
        standards and infrastructure;
            ``(2) that the national security of the United States 
        requires the United States to maintain its leadership in the 
        research and development of key technologies for future 
        wireless telecommunications standards and infrastructure; and
            ``(3) that the national security and foreign policy of the 
        United States requires that the importation of items that use, 
        without a license, a claimed invention protected by a patent 
        that is essential for the implementation of a wireless 
        communications standard and is held by a United States person, 
        be controlled to ensure the achievement of the policies 
        described in paragraphs (1) and (2).

``SEC. 235. LIST OF FOREIGN ENTITIES THAT THREATEN NATIONAL SECURITY 
              WITH RESPECT TO WIRELESS COMMUNICATIONS RESEARCH AND 
              DEVELOPMENT.

    ``(a) In General.--The Secretary of Commerce (in this section 
referred to as the `Secretary') shall establish and maintain a list of 
each foreign entity that the Secretary determines--
            ``(1)(A) uses, without a license, a claimed invention 
        protected by a patent that is essential for the implementation 
        of a wireless communications standard and is held by a covered 
        person; and
            ``(B) is a person of concern or has as its ultimate parent 
        a person of concern; or
            ``(2) is a successor to an entity described in paragraph 
        (1).
    ``(b) Watch List.--
            ``(1) In general.--The Secretary shall establish and 
        maintain a watch list of each foreign entity--
                    ``(A)(i) that is a person of concern or has as its 
                ultimate parent a person of concern; and
                    ``(ii) with respect to which a covered person has 
                made the demonstration described in paragraph (2) in a 
                petition submitted to the Secretary for the inclusion 
                of the entity on the list; or
                    ``(B) that is a successor to an entity described in 
                subparagraph (A).
            ``(2) Demonstration described.--
                    ``(A) In general.--A covered person has made a 
                demonstration described in this paragraph if the person 
                has reasonably demonstrated to the Secretary that--
                            ``(i) the person owns at least one 
                        unexpired patent that is essential for the 
                        implementation of a wireless communications 
                        standard;
                            ``(ii) a foreign entity that is a person of 
                        concern, or has as its ultimate parent a person 
                        of concern, has been, for a period of more than 
                        180 days, selling wireless communications 
                        devices in or into the United States, directly 
                        or indirectly, that are claimed, labeled, 
                        marketed, or advertised as complying with that 
                        standard;
                            ``(iii) the covered person has offered to 
                        the foreign entity or any of its affiliates--
                                    ``(I) a license to the person's 
                                portfolio of patents that are essential 
                                to that standard; or
                                    ``(II) to enter into binding 
                                arbitration to resolve the terms of 
                                such a license; and
                            ``(iv) the foreign entity has not executed 
                        a license agreement or an agreement to enter 
                        into such arbitration, as the case may be, by 
                        the date that is 180 days after the covered 
                        person made such an offer.
                    ``(B) Demonstration of essentiality.--A covered 
                person may demonstrate under subparagraph (A)(i) that 
                the person owns at least one unexpired patent that is 
                essential for the implementation of a wireless 
                communications standard by providing to the Secretary 
                any of the following:
                            ``(i) A decision by a court or arbitral 
                        tribunal that a patent owned by the person is 
                        essential for the implementation of that 
                        standard.
                            ``(ii) A determination by an independent 
                        patent evaluator not hired by the person that a 
                        patent owned by the person is essential for the 
                        implementation of that standard.
                            ``(iii) A showing that wireless 
                        communications device manufacturers together 
                        accounting for a significant portion of the 
                        United States or world market for such devices 
                        have entered into agreements for licenses to 
                        the person's portfolio of patents that are 
                        essential for the implementation of that 
                        standard.
                            ``(iv) A showing that the person has 
                        previously granted licenses to the foreign 
                        entity described in subparagraph (A)(ii) or any 
                        of its affiliates with respect to a reasonably 
                        similar portfolio of the person's patents that 
                        are essential for the implementation of that 
                        standard.
                    ``(C) Accounting of wireless communications device 
                market.--A showing described in subparagraph (B)(iii) 
                may be made either by including or excluding wireless 
                communications device manufacturers that are persons of 
                concern.
            ``(3) Procedures.--
                    ``(A) Adding a foreign entity to the watch list.--
                            ``(i) In general.--The Secretary may add a 
                        foreign entity to the watch list under 
                        paragraph (1) only after notice and opportunity 
                        for an agency hearing on the record in 
                        accordance with (except as provided in clause 
                        (ii)) sections 554 through 557 of title 5, 
                        United States Code.
                            ``(ii) Matters considered at hearing.--An 
                        agency hearing conducted under clause (i)--
                                    ``(I) shall be limited to 
                                consideration of--
                                            ``(aa) whether the 
                                        demonstration described in 
                                        paragraph (2) has been 
                                        reasonably made; and
                                            ``(bb) the amount of bond 
                                        to be required in accordance 
                                        with section 236; and
                                    ``(II) may not include the 
                                presentation or consideration of legal 
                                or equitable defenses or counterclaims.
                    ``(B) Administrative procedure.--Except as provided 
                in subparagraph (A), the functions exercised under this 
                section and section 236 shall not be subject to 
                sections 551, 553 through 559, or 701 through 706 of 
                title 5, United States Code.
    ``(c) Movement Between Lists.--A foreign entity on the watch list 
required by subsection (b)(1) may be moved to the list required by 
subsection (a), pursuant to procedures established by the Secretary, on 
or after the date that is one year after being included on the watch 
list if the foreign entity is not able to reasonably demonstrate that 
it has entered into a patent license agreement or a binding arbitration 
agreement with each covered person that has made the demonstration 
described in subsection (b)(2) with respect to the entity.
    ``(d) Removal From Lists.--A foreign entity on the list required by 
subsection (a) or on the watch list required by subsection (b)(1) may 
petition the Secretary to be removed from that list on the basis that 
the conditions that led to the inclusion of the foreign entity on the 
list no longer exist. The burden of proof shall be on the foreign 
entity.
    ``(e) Definitions.--In this section:
            ``(1) Affiliate.--The term `affiliate', with respect to an 
        entity, means any entity that owns or controls, is owned or 
        controlled by, or is under common ownership or control with, 
        the entity.
            ``(2) Country of concern.--The term `country of concern' 
        means a country with respect to which the Secretary determines 
        that--
                    ``(A) persons in the country persistently use, 
                without obtaining a license, patents--
                            ``(i) essential to the implementation of 
                        wireless communications standards; and
                            ``(ii) held by a covered person; and
                    ``(B) that use of patents poses a threat to--
                            ``(i) the ability of the United States to 
                        maintain a wireless communications research and 
                        development infrastructure; and
                            ``(ii) the national security of the United 
                        States, pursuant to the policy set forth in 
                        section 234.
            ``(3) Covered person.--The term `covered person' means--
                    ``(A) a covered United States person; or
                    ``(B) an affiliate of a covered United States 
                person--
                            ``(i) headquartered in, or organized under 
                        the laws of, a country that is a member of the 
                        European Union or the North Atlantic Treaty 
                        Organization; and
                            ``(ii) engaged in wireless communications 
                        research and development.
            ``(4) Covered united states person.--The term `covered 
        United States person' means a United States person engaged in 
        wireless communications research and development in the United 
        States.
            ``(5) Person of concern.--The term `person of concern' 
        means a person that is--
                    ``(A) an individual who is a citizen or national 
                (as defined in section 101(a) of the Immigration and 
                Nationality Act (8 U.S.C. 1101(a))) of a country of 
                concern; or
                    ``(B) an entity that is headquartered in, or 
                organized under the laws of, a country of concern.
            ``(6) United states person.--The term `United States 
        person' means--
                    ``(A) an individual who is a United States citizen 
                or an alien lawfully admitted for permanent residence 
                to the United States;
                    ``(B) an entity organized under the laws of the 
                United States or any jurisdiction within the United 
                States, including a foreign branch of such an entity; 
                or
                    ``(C) any person in the United States.
            ``(7) Wireless communications standard.--The term `wireless 
        communications standard' means--
                    ``(A) a cellular wireless telecommunications 
                standard, including such a standard promulgated by the 
                3rd Generation Partnership Project (commonly known as 
                `3GPP') or the 3rd Generation Partnership Project 2 
                (commonly known as `3GPP2'); or
                    ``(B) a wireless local area network standard, 
                including such a standard designated as IEEE 802.11 as 
                developed by the Institute of Electrical and 
                Electronics Engineers (commonly known as the `IEEE').

``SEC. 236. IMPORT SANCTIONS WITH RESPECT TO CERTAIN FOREIGN ENTITIES 
              THAT THREATEN NATIONAL SECURITY.

    ``(a) In General.--Any foreign entity on the list required by 
section 235(a) may be subject to such controls on the importing of 
goods or technology into the United States as the President may 
prescribe.
    ``(b) Entry Under Bond.--
            ``(1) In general.--Unless otherwise prescribed by the 
        President, a product described in paragraph (2) may not enter 
        the United States except under bond prescribed by the Secretary 
        of Commerce in an amount determined by the Secretary to be 
        sufficient to protect from injury a covered United States 
        person that made the demonstration described in section 
        235(b)(2) with respect to the entity that has been selling the 
        product directly or indirectly in or into the United States.
            ``(2) Products described.--A product described in this 
        paragraph is a wireless communications device--
                    ``(A) produced or sold by--
                            ``(i) a foreign entity on the watch list 
                        required by section 235(b);
                            ``(ii) a successor of such an entity; or
                            ``(iii) an affiliate of an entity described 
                        in clause (i) or (ii); and
                    ``(B) that is claimed, labeled, marketed, or 
                advertised as complying with a wireless communications 
                standard that was the basis for the inclusion of the 
                foreign entity on the watch list.
    ``(c) Forfeiture of Bond.--
            ``(1) In general.--If a foreign entity on the watch list 
        required by section 235(b) is moved to the list required by 
        section 235(a) and becomes subject to controls under subsection 
        (a), a bond paid under subsection (b) shall be forfeited to a 
        covered United States person that made the demonstration 
        described in section 235(b)(2) with respect to the entity.
            ``(2) Terms and conditions.--The Secretary of Commerce 
        shall prescribe the procedures and any terms or conditions 
        under which bonds will be forfeited under paragraph (1).
    ``(d) Definitions.--In this section, the terms `affiliate' and 
`covered United States person' have the meanings given those terms in 
section 235(d).''.

SEC. 3. CONTROLS ON IMPORTS OF GOODS OR TECHNOLOGY AGAINST PERSONS THAT 
              RAISE NATIONAL SECURITY CONCERNS.

    Section 233 of the Trade Expansion Act of 1962 (19 U.S.C. 1864) is 
amended to read as follows:

``SEC. 233. IMPORT SANCTIONS FOR EXPORT VIOLATIONS.

    ``(a) In General.--A person described in subsection (b) may be 
subject to such controls on the importing of goods or technology into 
the United States as the President may prescribe.
    ``(b) Persons Described.--A person described in this subsection is 
a person that--
            ``(1) violates any national security export control imposed 
        under section 1755 of the Export Control Reform Act of 2018 (50 
        U.S.C. 4814) or any regulation, order, or license issued under 
        that section; or
            ``(2) raises a national security concern under--
                    ``(A) section 235 or any regulation, order, or 
                license issued under that section; or
                    ``(B) the Export Control Reform Act of 2018 (50 
                U.S.C. 4801 et seq.) or any regulation, order, or 
                license issued under that Act.''.
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