METI officially announce export control guidance of cloud computing

On June 21, 2013, Ministry of Economy, Trade and Industry (“METI”) in Japan announced the guidance of the interpretation how cloud computing is treated under export control context.  It is the amendment of the Notification No. 492 (locally called as “Ekimu Tsutatsu” its meaning is “Technology/Service Notification”).  This newly added rule will be effective on September 1^st, 2013. 

Following is the summary of this cloud computing guidance in the Notification.  The guidance provide the definition and interpretation how METI consider cloud computing service and what scenario would be treated as technology transfer.

1. New definition of words are added as follows to help the interpretation of cloud computing.
   “Provide (the technology or service)” is defined as “to make it available so that others can make use of”.
   
   
2. “Interpretation of cloud computing”

(1)  In the service to provide computer server for storage and use of information (“storage service”), there is a possibility that the information is stored in the server located in foreign country regardless of the intention of the service user.  Under the contract to make use of storage service, as long as the contract is limited to the information storage for the service beneficiary’s its own use, because such contract is not for transaction to provide technology from service user to service provider, it is in principle NOT regarded as technology transfer under export.

However, if the transaction is substantially to provide specific technology from user to service provider, it is regarded as technology transfer which may require export license.  For example, in case the user have contract with service provider with knowingly that the provider can inspect, acquire or use the stored specific technology, the contract is regarded as the transaction to provide the specific technology.  In addition, if the user find that the provider is actually inspecting, acquiring or using the technology only after the contract is concluded, but the user wish to continue the contract, the time of commencement of providing technology (in other words; when export license is required?) is the reasonable time required to delete information since the such fact is initially found.

Please be noted if the user make use of storage service in order to provide technology to third party, it is off course regarded as technology transfer transaction.

(2) Interpretation of the service the application software located in computer server can be used by others through Internet without downloading (so-called “SaaS”): 

SaaS is considered as the transaction to make service available others can make use of.  Therefore, it is regarded as transaction to provide, and if the technology is classified as controlled technology, the transaction requires export license.

However, please be noted if the software is mass market software, the export license is not required.  (The mass market requirements here are; Generally available to the public by being sold, without restriction, and Designed for installation by the user without further substantial support by the supplier.)

Please be noted the commencement of technology transfer is the time when the service provider make the software available for users.  If export license for the technology transfer is required, the applicant have to obtain the license before the service is available.

 

Comment:  In the past, it has never been announced how METI consider cloud computing under export control context.  The idea in the new Notification is consistent with current export control law and no significant change of direction is seen in its Notification.  We believe traders may have many “what-if” questions case by case, because the Notification shows only basic direction and interpretation.  According to METI, they announce further Q&A (*) relating to cloud computing on their web site to help traders’ understanding and to avoid excessive burden resulting from too rigid interpretation of the new Notification.

 

(*) METI Q&A is in Japanese only.  http://www.meti.go.jp/policy/anpo/qanda25.html

Q&A NO. 55 through 62 is for cloud computing.