Dear ERAI Members and Colleagues,

What a first quarter we have had so far! Little did any of us imagine that life would be altered for so many of us in such a short amount of time. It seems unbelievable that, despite our high-tech lives, Nature, in the form of a microscopic coronavirus, has been able to bring much of the world’s economy to a grinding halt, leaving many organizations and individuals in turmoil.

While it seems that quarantine efforts may be helping to contain the spread of the virus, we still don’t fully comprehend the financial ramifications this pandemic will have, not only on our industry, but on a global scale. I can only hope that the impact remains small with relatively minor product line delays but realize that many smaller businesses are having an extremely difficult time successfully maintaining operations while keeping employee safety in mind. Please know that our staff is here to assist you in any way that we can, so please do not hesitate to give us a call or send us an email, even if you’re not an ERAI Member.

We have been fortunate at ERAI to have a flexible business model that has enabled all of our staff to continue providing services from the safety of our homes. All of us at ERAI would like to thank each and every one of you and your family members that are still working diligently to keep our businesses, economy and general well-being up and running, especially the hard effort and sacrifices that are being made daily by healthcare employees, IT networking staff, logistics workers, and all other “essential” private and government employees that keep our homes and businesses powered, our families safe and our countries running.

Anne-Liese Heinichen

2019 ERAI Reported Parts Statistics

By: Damir Akhoundov

The Semiconductor Industry Association (SIA), representing U.S. companies involved in semiconductor manufacturing, design, and research, announced that the global semiconductor industry posted sales totaling $412.1 billion in 2019, a decrease of 12.1 percent compared to the 2018 total of $477.9 billion unlike the past 2 previous years’ growth trend. The number of nonconforming parts reported to ERAI in 2019 increased 18% in comparison to the previous year. After following the semiconductor sales trend closely for 12 years, we can observe that for the last 3 years, the correlation seems to have been inverted.

The types of electronic parts reported in 2019 also varied from the general set of parts reported over the last 10 years. Below you can see the combined graphs of the types of parts reported in 2019 versus those reported over the last 5 and 10 years respectively. We can see the growth trend for capacitors, which we started to observe in 2018, has continued with capacitors firmly taking the top spot of the most reported part type in 2019, outpacing all ICs. From 2007-2017, capacitors constituted less than 3% of overall reported parts; however, in 2019, capacitors represented 17.34 % of reported parts, an increase from 14.1% in 2018.

The plots of the most commonly counterfeited components indicate two marked spikes in reported parts types. Capacitors, which we previously mentioned and Microprocessor ICs, which had a marked drop in 2018, now occupy the second spot constituting 12.05% of all reported parts in 2019.

When examining the counterfeited brands of parts reported in 2019, we saw that for the first time in many years, Xilinx is no longer the most commonly targeted manufacturer brand. The most targeted brand for 2019 was Murata Manufacturing, which once again correlates to the capacitor shortages faced by the industry in 2018-2019.

The next data set we examined was the geographic location of the suspect parts’ suppliers in cases where the supplier information was made available to ERAI. Consistent with past findings, the majority (46.9%) of part suppliers were located in the US. The volume of named Chinese suppliers increased from 22.09% in 2018 to 33.09% in 2019. Therefore, a total of 66.91% of parts reported to ERAI for being nonconforming, suspect counterfeit or counterfeit were sold by companies not located in China. These findings continue to be alarming and support the notion that a policy of simply not sourcing parts from China-based companies is not a sufficient strategy to avoid suspect/counterfeit parts.

We further analyzed if any of the parts reported to ERAI in 2019 were also reported by ERAI in previous years. The results indicated that the majority of the parts reported in 2019 (83.60%) were parts that were never previously reported to ERAI, constituting an increase over the previous year when 74.03% of parts were never previously reported. Only 9% of parts were reported once previously and 7.4% were reported more than once before. This once again could be related to the spike of the counterfeit capacitors entering the market.

As always, we would like to thank those organizations that routinely share data with ERAI. If you have any questions or would like to see any statistical data that has not been covered in this report, please contact Damir Akhoundov at damir@erai.com.

Shop Safe Act of 2020

On March 2, 2020, H.R. 6058, or the Shop Safe Act of 2020, was introduced in the US House of Representatives, which would hold e-commerce companies such as Amazon and eBay liable for counterfeit goods sold on their website platforms.

The legislation would require that the e-commerce platform demonstrate that "reasonable steps" were taken to prevent the sale, distribution or advertisement of items containing counterfeit marks. These ten steps include:
  • Verification through government sources the identity, principal place of business and contact information of the seller,
  • Require the seller to verify and attest to the authenticity of the goods,
  • Contractually require sellers not to use a counterfeit mark and consent to jurisdiction of United States courts for any claims,
  • Display the identity and contact information of the seller on the platform as well as the country of origin of the goods and the location from which the goods will be shipped,
  • Permit sellers to only use images that they own or have permission to use that accurately depict the goods for sale,
  • Implement “proactive technological measures for screening goods before displaying the goods to the public” to prevent the use of a counterfeit mark,
  • Ensure a timely process to remove listings that "reasonably could be determined to have used a counterfeit mark",
  • Terminate any seller with more than 3 instances of counterfeit mark violations,
  • Screen third-party sellers to ensure sellers that have been previously terminated do not rejoin the platform under a different alias,
  • And provide the seller’s identity and contact information to relevant law enforcement and the owner of the counterfeit trademark upon request.
Earlier court decisions have previously not held e-commerce platforms liable for counterfeit product sold by third parties on their websites as it has been viewed that the platform provides a service and was not itself selling product directly to the consumer. The legislation is under review by the House.

Read the proposed legislation:

Trump Administration Combating Online Sale of Counterfeit Goods

On January 24, 2020, the Department of Homeland Security (DHS) published a report pursuant to President Trump’s April 3, 2019 Memorandum on Combating Trafficking in Counterfeit and Pirated Goods which mandated various federal departments and agencies to direct coordinated efforts to combat the trafficking of counterfeit and pirated goods. The report focuses on the online trade of counterfeit goods which threaten public safety and endanger national security which, despite private efforts, continues to increase in variety and volume.

The report outlines a set of eleven actions that DHS and other federal agencies can immediately implement to address the threat posed by counterfeit and pirated goods purchased on third-party ecommerce platforms. Additionally, the report proposes ten best practices for the private sector that DHS believes should be implemented quickly by the ecommerce platforms and third-party marketplaces.

Eleven immediate actions and recommendations were identified for government agencies:
  1. Ensure Entities with Financial Interests in Imports Bear Responsibility
    This would treat warehouses as the party responsible for goods not sold to a specific customer at the time of import, require formal entry for high-risk shipments and provide guidance about customs violations actionable under the False Claims Act.
  2. Increase Scrutiny of Section 321 Environment
    Currently Section 321 of the Tariff Act of 1930 permits items with a value of $800 or less imported by one person on one day to be admitted free of duty and taxes, meaning these shipments are often not subject to formal customs procedures or more rigorous data requirements which allow these low-value shipments to enter the US without a bill of lading or manifest. Under this recommendation, a pilot program would institute a new data collection process identifying the seller and value of the imported goods.
  3. Suspend and Debar Repeat Offenders; Act Against Non-Compliant International Posts
    Currently entities added to debarment lists cannot sell to the federal government, but can still import goods into the US. An amendment would bar suspended entities from participating in the Importer of Record Program and require carriers and hubs to verify that their customers are not on the debarred/suspended list.
  4. Apply Civil Fines, Penalties and Injunctive Actions for Violative Imported Products
    Use existing regulations to pursue civil fines and penalties against third party marketplaces that assist in the import of counterfeit goods.
  5. Leverage Advance Electronic Data for Mail Mode
    Use USPS advanced electronic data (AED) to target counterfeit product.
  6. Anti-Counterfeiting Consortium to Identify Online Nefarious Actors (ACTION) Plan
    Enable the sharing of data on third party violators involved in counterfeit trafficking in ACTION (Anti-Counterfeiting Consortium to Identify Online Nefarious Actors).
  7. Analyze Enforcement Resources
    CBP would analyze if collected fees are sufficient to reimburse costs associated with the inspection, processing and collection of duties and taxes for imports.
  8. Create Modernized E-Commerce Enforcement Framework
    CBP would create a framework for incorporating data provided by ecommerce entities to identify and manage risks in their supply chains.
  9. Assess Contributory Trademark Infringement Liability for Platforms
    The Department of Commerce would asses liability pursuant to recent litigation in which ecommerce platforms were not found liable for the sale of counterfeit goods on their platforms.
  10. Re-Examine the Legal Framework Surrounding Non-Resident Importers
    DHS would analyze the legal framework for goods entering the US with a resident agent as it is difficult to compel non-resident importers to pay penalties.
  11. Establish a National Consumer Awareness Campaign
    All applicable government agencies would be involved in a national consumer-focused campaign highlighting government efforts.
Ten Best Practices for E-Commerce Platforms and Third-Party Marketplaces were also included:
  1. Comprehensive "Terms of Service" Agreements
    Platforms should require sellers to sign comprehensive agreements and include clear repercussions for counterfeit violations.
  2. Significantly Enhanced Vetting of Third-Party Sellers
    Uniform vetting processes should be established including checks on whether a seller was previously banned for selling counterfeit goods.
  3. Limitations on High Risk Products
    Ban, or severely limit, the sale of products that are more vulnerable to counterfeiting or pose a higher risk to public safety.
  4. Efficient Notice and Takedown Procedures
    Platforms, not IPR holders, should have clearly defined criteria for removing violators.
  5. Enhanced Post-Discovery Actions
    Platforms should improve post-discovery notifications to consumers, IPR holders, other platforms and law enforcement.
  6. Indemnity Requirements for Foreign Sellers
    Security should be provided for foreign product sold by sellers outside of the US not subject to US jurisdiction and remove liability for ecommerce platforms for counterfeit product that caused harm.
  7. Clear Transactions Through Banks that Comply with U.S. Enforcement Requests
    Platforms should clear transactions through banks that comply with US enforcement requests.
  8. Pre-Sale Identification of Third-Party Sellers
    Platforms should clearly provide the identity of third-party sellers to customers.
  9. Establish Marketplace Seller IDs
    Require sellers to provide underlying business names to enhance transparency.
  10. Clearly Identifiable Country of Origin Disclosures
    Require sellers to provide clear country of origin identification.
It should be noted that while the report does not address electronic components directly, the report acknowledges the risks to national security posed by counterfeit electronic components. “One of the greatest threats counterfeits pose to national security is their entry into the supply chain of America’s defense industrial base…[which] includes both private sector contractors and government agencies, particularly the Department of Defense.” DHS identifies “companies from China are the primary producers of counterfeit electronics” and cites a 2018 BIS study that identified imported counterfeit semiconductors for use in defense manufacturing and operations. “The problem of counterfeit chips has become so pervasive”, states the report, “that the Department of Defense has referred to it as an ‘invasion.’”

This DHS report was released a week before President Trump signed an executive order aimed at preventing the online sale of foreign-made counterfeit products to Americans. The order, signed on January 31, 2020, directs Customs and Border Protection (CBP) to take specific steps to limit the flow of counterfeits sold in the US through ecommerce platforms.

The President asked DHS to “consider appropriate measures” to prevent companies that sell items from abroad from shipping counterfeit goods which harm US citizens, cost American jobs and harm the US economy. He ordered DHS to establish criteria to identify entities that were debarred or suspended by CBP to be ineligible to obtain an importer of record number and create processes to identify companies with high rates of counterfeit shipments to face more cumbersome inspections.

The effect that these government initiatives will have on ecommerce platforms remains to be seen, but it is clear that not only the courts, but the government as well, have clearly understood the need for action to curb the influx of counterfeit goods in the US.

Read the Department of Homeland Security’s "Combating Trafficking in Counterfeit and Pirated Goods" Report:
https://www.dhs.gov/sites/default/files/publications/20_0124_ plcy_counterfeit-pirated- goods-report_01.pdf

Read President’s Trump Executive Order:
https://www.whitehouse.gov/presidential-actions/ensuring - safe - lawful - e - commerce - us - consumers - businesses - government - supply - chains - intellectual - property - rights/

Join ERAI, Counterfeit Part Avoidance, Detection, Disposition and Reporting Follow ERAI on Twitter(@ERAI_Inc) Like ERAI on Facebook Follow ERAI on Slideshare www.erai.com

NASA Proposes FARS Amendment to Mitigate Counterfeit Parts

On January 7, 2020, NASA published a proposal to amend the NASA Federal Regulation Supplement. Arising from the 2012 Committee on Armed Services counterfeit electronic parts in the DoD supply chain investigation, this revision proposes to add new verbiage to the regulations requiring contractors to source electronic parts directly from manufacturers, their authorized sources or select suppliers. The objective of the rule is to implement section 823 of the NASA Transition Authorization Act of 2017 which required NASA to revise the NASA Supplement to the Federal Acquisition Regulation to “improve the detection and avoidance of counterfeit electronic parts in the supply chain.”

For parts currently in production, the rule would mean that “covered contractors and subcontractors at all tiers” would be required to purchase parts for use in safety or mission critical applications from three sources, reflecting similar language covered in under DFARS 252.246-7007 and 252246-7008:
  1. the original component manufacturer,
  2. an OCM-authorized source or
  3. suppliers who "obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers."
It should be noted that unlike the FAR regulations, NASA has determined it is in their “best interest” to apply the rule to the purchase of commercial, commercially available off the shelf (COTS) items and to contracts at or below the simplified acquisition threshold of $250,000.

For parts not currently in production, or if the contractor does not purchase the parts as described above, the parts must be purchased from a NASA-identified or contractor-approved supplier. If the parts are sourced from a contractor-approved supplier, the contractor will then “assume responsibility and be required to inspect, test, and validate the authentication of the parts” and is required to obtain traceability information and provide it to the contracting officer upon request. Selection of a contractor-approved supplier will be subject to review and audit by the contracting officer as well.

Although the rule does not include a GIDEP reporting requirement, a requirement is included to notify the contracting officer when the contractor "becomes aware, or has reason to suspect, that any end item, component, part of material contained in supplies purchased by NASA, or purchased by covered contractor for or delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part."

Additionally, the rule establishes that costs related to suspect counterfeit and counterfeit parts, or “any corrective action that may be required to remedy the use or inclusion of such parts” is unallowable unless a specific set of criteria is met.

All organizations supplying product to NASA and/or their contractors are encouraged to closely monitor the proposed rule to ensure your company and products meet the latest NASA requirements.

Read the proposed rule at:

Post-Pandemic Preparation: Be Ready for the Government Contract

By Brett W. Johnson, Partner, Snell & Wilmer, L.L.P.

Reprinted with permission from Snell & Wilmer, L.L.P. March 18, 2020 Legal Alert at https://www.swlaw.com/publications/legal-alerts/2663

March 18, 2020

As of the last report, the United States Treasury Department is proposing a $1 trillion stimulus package to spur economic stability during the COVID-19 crisis. This is on top of what state and local governments are proposing or have already instituted. As such, there are many opportunities for government contracts. Many companies that would have never considered bidding a federal, state or local government contract a few years ago should consider seeking out these opportunities.

There is a roadmap as to what companies can expect regarding potential stimulus packages. There will be significant opportunities with every governmental agency. In addition to direct state contract opportunities, states will also likely be provided federal funding to support state programs, such as in transportation, economic support, communication, healthcare and economic incentive grant programs.

A major problem many companies will face is being prepared for when the opportunity arises—whether it is as a prime or sub-contractor. Companies that are prepared for the opportunity will be in the best position to concentrate on the actual bid process rather than being bogged down with preliminary administrative hurdles that must be accomplished before ever being allowed to bid. As is well known, timing is everything in government contract opportunities.

The first step is that the company must perform a self-evaluation. Since it is required anyway, the best place to start this evaluation process is to register with the System for Award Management (SAM.gov). As part of the registration process, the company will need to determine its North American Industry Classification System (NAICS) Code and have a DUNs number provided by Dun & Bradstreet. It is important to note that a company may have multiple NAICS Codes and should not get relegated to only one. The company will also need to complete several certification representations and provide accounting data, which is a requirement of the SAM process. The company will also be required to reference intermediary and ultimate parent company control. All of the companies will need Commercial and Government Entity (CAGE) Codes, which may be a little more time consuming to obtain if the parent company is a foreign entity.

As part of the self-evaluation, the company must have an understanding of whether it qualifies for any preferences or set-asides. These are usually tied to socio-economic programs for small businesses and qualifying size determinations are aligned with the company’s NAICS Code. For those companies that meet the threshold for being considered a small business concern, they may also qualify for socio-economic status based on who owns the company (51 percent ownership by a woman, minority or veteran) and where the company is located (HUBZone). The U.S. Small Business Administration (SBA) is a great resource about such socio-economic programs. Further, each state has its own agency dedicated to assisting small businesses, so this is another resource to find opportunities.

It is expected that a great majority of the stimulus package will be directed at small businesses. Therefore, if a company does not meet one of these requirements, it might think about teaming up with a small business concern that does meet the criteria to bid on a contract opportunity. The relationship between the two companies can be formalized in various legal forms – joint venture agreements, teaming agreements or strategic partnership arrangements. This is a strictly regulated area, and a full understanding of the applicable laws is necessary if a construction company decides to enter into a legal relationship with a small business concern as part of its business plan.

Once a company completes the SAM process, it must make sure that it is able to handle the multitude of requirements that the federal government places on a business that is awarded a government contract. These requirements include, but are not limited to, labor standards, reporting requirements, sub-contracting plans, accounting issues and business ethics. These requirements, which are not usually required on private commercial contracts, include many that construction companies have previously wanted to avoid. Now, because of the pandemic crisis, many companies will have no choice to ensure competitive stability in their industry. Companies must understand that these requirements are part of the federal government contract and cannot be ignored.

During this self-evaluation process and possible small business selection process, a company should be regularly searching for federal contracting opportunities. Unless an exception applies, almost all opportunities for federal contracting must be posted on the Federal Business Opportunities new website at “Contract Opportunities” (beta.sam.gov). Each agency also usually regularly posts solicitations for opportunities on its own website and sometimes before the solicitation makes it to the central website.

In addition, a construction company’s services may meet the criteria to be placed on the U.S. General Services Administration (GSA) “schedule” to expedite and receive notice of opportunities that a construction company might not otherwise consider. In the previous American Recovery and Reinvestment Act of 2009, which is likely to be the template for the stimulus, the government created a special website to show how funds had been allocated and to further transparency. When this occurs, it will be a great source of opportunities, specifically in regard to subcontract opportunities, and should not be ignored. Finally, each state and municipality usually has their own web portal that showcases opportunities and track procurement solicitations. These separately require registration. Thus, it is important to pre-register to ensure an understanding of all potential opportunities.

It is important that companies take the bidding process seriously. A “cookie cutter” response that does not address the solicitation requirement will not be well received, especially in today’s environment where the competition is strong (but not impossible to overcome). The bid process is an art form and companies would be wise to seek out assistance in their preparation.

If a company responds to a solicitation with a bid and loses the award, the process is not necessarily over. The solicitation, bid and award process is extremely strict and heavily regulated. If a company believes that the governmental entity should have awarded it the contract, then a bid protest may be warranted through several different forums – the agency that made the award, the Government Accountability Office (GAO) or the various federal judicial courts, depending on the circumstances. The state and municipal governments have similar forums for relief.

A point of caution: there are significant laws that dictate how a company can negotiate with the government. First, there is the Truth in Negotiation Act that requires truthful and candid negotiations with governmental entities. There is also the Procurement Integrity Act and specific ethical regulations related to contact with solicitation officers and access to source selection information. Finally, there are conflict of interest requirements that should be addressed. The failure to adhere to these laws can have significant liabilities pursuant to the False Claims Act or other laws. Marketing and business development departments should be provided training about these requirements and avoid unnecessary pitfalls.

A company that decides to do business with the government will be presented with many opportunities. It is up to the company to prepare in advance and constantly seek out the solicitation offers. However, it is important that any company that decides to do business with the government understands that it is subject to multiple requirements that it would not normally be subject to under a commercial contract. These requirements cannot be ignored. Rather, these regulations must be understood and followed. Over the next several months, there will be significant government contract opportunities and companies should prepare now.

©2020 Snell & Wilmer. All rights reserved. The purpose of this publication is to provide readers with information on current topics of general interest and nothing herein shall be construed to create, offer, or memorialize the existence of an attorney-client relationship. The content should not be considered legal advice or opinion, because it may not apply to the specific facts of a particular matter. As guidance in areas is constantly changing and evolving, you should consider checking for updated guidance, or consult with legal counsel, before making any decisions.

A: ANYONE. Membership to ERAI is not required.

We have made the process as simple as possible by offering two ways to report parts:

1. Report a part online at: http://www.erai.com/SubmitHighRiskPart
2. Or even simpler, email your report to reportparts@erai.com

We require: 1) the part information, manufacturer, part number, date code, lot code; 2) a text description of the non-conformance or findings and; 3) digital images that support the findings.

Ideally, you can send all archived data you have and make reporting future cases routine by including a report to ERAI in your existing inspection process.

Please note that you can report parts anonymously. We will not include your company name on an alert. You do not have to report the supplier that shipped you counterfeit devices unless you choose to. The major benefit to the industry at large is knowing there is a suspect counterfeit part out there.

COVID-19 and Force Majeure

The coronavirus pandemic has interrupted business operations and limited organizations’ abilities to fulfill contractual requirements. Stinson, LLP, a nation-wide legal firm, has written an informative white paper discussing how force majeure provisions can address the impact posed by COVID-19 on your company’s contractual obligations.

Read the white paper at:

As always, please consult your organization’s legal counsel.

From the ERAI Files: Trust but Verify

Always verify a distributor’s authorized status with the Original Component Manufacturer

Recently an organization received an unsolicited email from a Hong Kong-based distributor advertising stock for parts manufactured by Yageo and Walsin. The email stated the organization was an authorized distributor for both brands; however, neither OCM identified the distributor as an authorized distributor on either of their websites. The same distributor claimed to be an authorized AVX distributor and prominently displayed an AVX Certificate of Distribution letter on their website. ERAI was able to confirm with AVX that the letter was fake.

Organizations that make false claims regarding their authorized status, memberships, certifications or quality processes should be considered extremely high risk. Many original component manufacturers provide a list of authorized distributors on their websites. Buyers are advised to always verify an organization’s authorized status directly with the manufacturer.

If a distributor says that they are authorized but do not appear on the OCM’s website as an authorized distributor, please notify ERAI.

Always verify that trade references are legitimate

A distributor located in Shenzhen recently applied for ERAI membership. As part of the ERAI membership application requirements, the distributor provided a VAT license and VAT invoices which were subsequently verified showing the distributor was a legitimately registered company in China. The distributor was legally registered in Hong Kong as well.

The distributor was also asked to provide trade references for ERAI to verify the organization’s trading history with their suppliers and customers. All of the references provided were companies located in China. When contacted, ERAI received IDENTICAL email responses from three companies, all of whom indicated the exact same verbatim reply to different questions, including the use of all capital letters for one response but not for others (“YES” for one question “No” for another), the same length of time having done business (“Three years”), credit terms (“Net 30days” with no space between 30 and days), and a high balance (“100K usd”). All three responses were received within a time span of 45 minutes from three separate corporate emails between 1:45 and 2:18 PM US Eastern indicating that the three individuals would have had to send their responses between 1:45 and 2:18 am local time in China.

While the three emails appeared to originate from different legitimate corporate email addresses, it was clear that the responses were orchestrated by one individual. The company was denied membership to ERAI.

Marjan Caby Added to Denied Person's List

In October of 2016, Ali Caby, Arash Caby and Marjan Caby were charged with exporting prohibited articles to Syria through their Miami-based company, AW-Tronics, LLC. The Cabys allegedly devised a scheme to export dual-use goods with both civilian and military applications by listing the destination of the products as “USA” while then exporting the devices to their Bulgaria office where they were forwarded to Syrian Arab Airlines, a government-run airline allegedly transporting weapons and ammunition to Hezbollah and the Iranian Revolutionary Guards.

Ali Caby, aka Alex Caby, was convicted on December 19, 2017 of conspiracy to violate the IEEPA and to defraud the United States and was sentenced to 24 months’ imprisonment and two years of supervised release. He was forcefully removed from the United States and handed over to Bulgarian authorities on March 22, 2019. Co-defendant Arash Caby, aka Axel Caby, was sentenced to 24 months’ imprisonment, two years of supervised release and a $10,000 fine. He was released from federal prison on August 16, 2019. For her role, Marjan Caby was sentenced to one year and one day imprisonment, a $100.00 assessment fee and 2 years of supervised release with financial disclosure requirements, a no new debt restriction, self-employment restriction and substance abuse treatment requirements. She was released from federal prison on October 18, 2018.

On January 17, 2020, the Bureau of Industry and Security, U.S. Department of Commerce entered into a Settlement Agreement with Marjan Caby. Per the terms of the agreement, effective immediately and in summary:
  1. Marjan Caby, or anyone acting on her behalf, is prohibited from exporting to or exporting from the United States any commodity, software or technology that is subject to the Export Administration Regulations. This includes applying for, obtaining or using an export license; negotiating, ordering, selling or other similar transactions of items exported from or to the US subject to the Regulations; and/or benefitting in any way from a transaction involving an exported item subject to the Regulations.
  2. No person, whether directly or indirectly, may:
    1. Export on behalf of the Denied Person any item subject to the Regulations.
    2. Facilitate the acquisition or attempted acquisition of an item subject to the Regulations that has been or will be exported from the US, including financial support.
    3. Take any actions to acquire from or facilitate the acquisition of an item from the Denied Person exported from the US subject to the Regulations.
    4. Obtain from the Denied Person an item subject to the regulations knowing it is intended to be exported.
    5. Engage in any transaction to service (install, maintain, repair, modify, or test) an item subject to the Regulations that has been or will be exported which is owned, possessed or controlled by the Denied Person.
  3. Any licenses issued to Marjan Caby are revoked.
  4. Any persons, companies or business organizations related to Marjan Caby by affiliation, ownership, control or position may also be subject to the provisions.
  5. Marjan Caby may not make any public statements denying the allegations in the Charging Letter of the Order.
Marjan Caby will remain on the Denied Persons List until January 16, 2024.

Please note: Ali Caby, aka Alex Caby, was added to the Denied Persons List on October 30, 2019 and will remain on the list until October 28, 2025. Arash Caby, aka Axel Caby, was added on November 6, 2019 and will remain until November 4, 2025.

For more information, please view the Order Relating to Marjan Caby published in the Federal Register at https://www.federalregister.gov/documents/2020/01/24/2020-01177/order-relating-to-marjan-caby.

White Paper Reviews

TAME: Trusted and Assured MicroElectronics

Why you should read it: The TAME Forum provides a platform for experts to discuss solutions for protecting the electronics supply chain by developing tools, technologies and practices to design vulnerability free-microelectronics throughout their lifecycle and tackle security and assurance issues for legacy and active parts. This working groups report summarizes three committees’ efforts over 18 months.

ERAI Insight: Chapter One of the report covers Hardware Assurance and Weakness Collaboration and Sharing (HAWCS). This section discusses hardware weaknesses and vulnerabilities and focuses on “issues and technologies for effective sharing of information about the identification and prevention of hardware vulnerabilities”. Chapter Two of the report covers Design for Security which encompasses security challenges such as trust issues in the supply chain and insufficient software-only protections. The third chapter, Microelectronics Security and Trust – Grand Challenges, addresses security and trust issues faced during the device design and development process, manufacturing and system integration and distribution and deployment through the device’s end of life.

Click here to open

The Impact of the Coronavirus (COVID-19) Epidemic on Electronics Manufacturers

Why you should read it: The impact of the COVID-19 coronavirus on worldwide commerce is still unknown. The electronics industry, in particular, will be heavily affected by the recent Chinese-government enforced factory shutdowns, travel restrictions and shipping disruptions. IPC surveyed its members to understand more about the short- and long-term effects anticipated by the electronics manufacturing industry; what manufacturers were being told by their suppliers with respect to delays, what the manufacturers themselves anticipate the delays will be; and how the manufacturers were making adjustments as a result.

ERAI Insight: Similar to the Fukushima incident, unforeseen events such as natural disasters and pandemics can have a large impact on the electronics supply chain. IPC’s survey found that roughly 65% of those surveyed had been told by their suppliers that there would be shipment delays. 84% of manufacturers surveyed were concerned about the impacts that the virus will have on their operations, with a majority of individuals expecting shipment delays of at least five weeks. IPC then performed a follow up survey in early March. The report found that nearly 40% of respondents felt worse about the impact of the virus on their businesses over the previous month. On a positive note, according to the follow up survey, only 69% reported being told by their suppliers that there would be delays due to the virus (three weeks on average) and most respondents expect business to resume to normal levels by July 2020.

Click here to open

Articles You Cannot Afford to Miss

Trump Administration Pressed Dutch Government to Cancel China Chip-Equipment Sale, Sources Say

Amazon to Ramp up Counterfeit Reporting to Law Enforcement

Bergen Co. Reaches $525K Settlement Over Counterfeit Parts Claim

US-China Trade Deal Covers Online Counterfeit Sales, Fake Meds

Applied Materials Gives Bullish Outlook on Chip Industry Uptick

USDOC Renews Huawei’s TGL for 45 Days

William Barr Thinks China is Stealing American Technology. Can the U.S. Halt the Exchange of Knowledge?

The United States has a Colossal e-Waste Problem. This is Why

Secure Networks Act Passes Senate

A New Bill Could Make E-commerce Companies Liable for Counterfeits Sold on their Platforms

Impact of Coronavirus on Distributors of Electronic Components

Component Makers Don’t Expect a Q2 Recovery From Covid-19

International Trade and Disruption of Supply Chains: Risk Management in the Pandemic Age

Post-Pandemic Preparation: Be Ready for the Government Contract

Cybersecurity Risks Increasing During COVID-19 Pandemic