Title: ZTE Theft Act
Policy area: Foreign Trade and International Finance

Summary:
Zero Tolerance for Electronics Theft Act or the ZTE Theft Act
This bill requires certain telecommunications, software, or electronics companies headquartered in China that had previously been denied export privileges to certify to the Department of Justice that it will abide by all U.S. laws, not engage in cyber espionage, and not infringe intellectual property, to be eligible for such privileges. It also requires such a company to establish with the Department of the Treasury a $2.5 billion account to pay any patent infringement judgments against it.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7036 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 7036

  To amend title 35, United States Code, with respect to actions for 
              patent infringement, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 5, 2018

  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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