From: Michael Froomkin <froomkin@law.miami.edu>
Date: Fri, 13 Oct 95 10:35:55 PDT
To: Vincent Cate <vince@offshore.com.ai>
Subject: Re: Anguilla Cypherpunks Meeting
In-Reply-To: <Pine.3.89.9510131128.A6667-0100000@offshore.com.ai>
Message-ID: <Pine.SUN.3.91.951013132317.480E-100000@viper.law.miami.edu>
MIME-Version: 1.0
Content-Type: text/plain


On Fri, 13 Oct 1995, Vincent Cate wrote:

For your personal situation you *must* get competent legal advice.  
I.E. pay someone who makes it a point to stay more current in this stuff 
than I do.  I recommend Lee Tien, for example, or Ken Bass.  I bet Lee is 
less expensive :>.  This note is NOT legal advice, and may not be 
competent since it is research-free.  It would not be wise to make any 
important decisions on the basis of this note.

As a general matter, however, if you are a US person and give crypto to a 
foreign person (be it a real person or a corporation), then as a 
technical legal matter you are in violation of the ITAR. 

US law doesn't ordinarily cover non-us corporations abroad (but see some
anti-trust and money laundering rules), but the ITAR will cover any US
person (ie citizen or green card holder) who works for them or transacts
with them. 

Off the top of my head, I don't know whether the acquisition of totally
foreign-created crypto by a foreign corporation managed, owned or
controlled by a US person becomes an ITAR-controlled "export" when that 
crypto is sold to a non-us person.  I would, however, want a good legal 
opinion before I exposed myself to the risk as I could sure make a good 
argument that the ITAR reached that far.  All of this is without 
prejudice to the issue of whether the ITAR are constitutional...

As for the specific fact situation you describe below, which I understand
to be a little different from the one described above, I'm afraid you
would have to discuss this in some detail with a lawyer; I'm sorry I can't
be more help. 

> 
> On Fri, 13 Oct 1995, Michael Froomkin wrote:
> > On Thu, 12 Oct 1995, Vincent Cate wrote:
> > > If while you are outside the USA you want to write some software that uses
> > > encryption and sell it worldwide, let me know.  I could put you up while
> > > you wrote it and my company could sell it for share of the selling price. 
> > > Let me know what you are thinking of and how long you think it would take. 
> > 
> > Of course if you are a US person (citizen or green card holder) this is 
> > just as much a violation of the ITAR than if you did it from inside the US...
> 
> Yes, I am still a US citizen, so far. 
> 
> The corporation I work for is a legal entity of Anguilla.  I would not
> personally be selling it, the corporation would.  Do you think that is ok? 
> 
> What if I had a couple Anguillian friends form a corporation for this
> purpose (buying encryption software written in Anguilla and selling it
> internationally)?  No trouble yet, right?  What if the people who come and
> write it are US citizens?  
> 
> I don't see how US law can cover corporations in other countries.
> 
> PS - it is good to CC me (as you did) as I only get cypherpunks-lite, and
> so may not see a message, or it may be delayed. 
> 

A. Michael Froomkin        | +1 (305) 284-4285; +1 (305) 284-6506 (fax)
Associate Professor of Law | 
U. Miami School of Law     | froomkin@law.miami.edu
P.O. Box 248087            | http://www.law.miami.edu/~froomkin
Coral Gables, FL 33124 USA | New address, but it's still just as hot here.