Innovation and Trends

• A Long-Awaited Effort to Clarify Regulation of Digital Assets and Cryptocurrency—Unpacking the Biden Administration’s New Executive Order

  03.11/Alert

  On March 9, 2022, President Biden issued an Executive Order to articulate U.S. government principles and interests regarding digital assets, and to implement a process to develop future policy. Digital assets have taken the world by storm in recent years. They include cryptocurrencies, tokenized share offerings, non-fungible tokens (NFTs), blockchain real estate rights, decentralized finance (DeFi) and various evolving metaverse assets, with new market actors ranging from miners, to wallets, to digital asset platforms, and decentralized autonomous organizations (DAO).

• Unpacking the Government’s Cryptocurrency Regulatory and Enforcement Agenda

  11.30/Alert

• Southern California’s New Indirect Source Rule for Warehousing Operations Tests Jurisdictional Waters

  06.29/Alert

  Rule 2305, a first-of-its-kind air district rule, will impose new costs on warehouses and the Southern California supply chain, potentially testing legal boundaries of local authority to regulate “indirect sources” of emissions.

• FCC Revises Equipment Authorization Rules

  06.22/Alert

  On June 17, 2021 the FCC approved a Report and Order modifying its equipment authorization program for radiofrequency devices. The Order updates the Commission’s marketing and importation rules in order to minimize obstacles to the development and deployment of new products while continuing to ensure that radiofrequency equipment remains compliant with Commission requirements.

• Biden Administration Updates Framework for China-Related Investment Prohibitions and Expands the Scope of Restricted Chinese Companies

  06.15/Alert

  Summary of the E.O.

  On June 3, 2021, President Biden signed E.O. 14032 that alters the framework for restrictions on the purchase or sale of publicly traded securities of Chinese companies designated for military affiliations, but ultimately re-affirms the previous restrictions under E.O. 13959. These restrictions will continue to be applied to 31 entities previously sanctioned as well as 28 newly added companies. On the same day, the Department of Defense (DOD) independently released its annual list of Chinese military companies pursuant to recently enacted legislation.

• Boom in the Medical Spa Industry Amid Regulatory Uncertainty Creates Perfect Storm

  06.01/Alert

  The medical spa (medspa) industry in the United States is booming. In 2010, there were about 1,600 medspas operating in the United States generating about $1.1 billion in revenue (about $700,000 per medspa on average). By 2018, these numbers increased to over 5,000 medspas generating about $7 billion-$8 billion in revenue (about $1.4 million per medspa on average). The number is expected to grow to over 10,000 medspas by 2023 with about $18 billion-$20.7 billion in revenue. Since 2010, year over year revenue growth has consistently been in the double digits, with 2011 registering nearly 40 percent growth and 2017 registering nearly 50 percent growth. The 2018 profit margin for medspas was 29 percent.

• Congressional SPACtivity Continues: Draft Legislation Proposes to Eliminate Safe Harbor Protection for Projections in SPAC Transactions

  05.28/Alert

  As previously noted in Pillsbury’s earlier article, one factor that has contributed to the rise in SPACtivity has been the availability to SPACs of certain features unavailable to companies going public through traditional IPOs, most notably the Private Securities Litigation Reform Act (PSLRA) safe harbor for forward-looking statements. On May 21, 2021, the U.S. House Committee on Financial Services released draft legislation to amend the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act) to exclude all SPACs from the safe harbor. Section 27A of the Securities Act and Section 21E of the Exchange Act currently exclude from the safe harbor forward-looking statements made “… in connection with an offering of securities by a blank check company…” Rule 419 under the Securities Act defines a “blank check company” as “…a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person… ” and is “ … issuing penny stock ...” As the vast majority of SPACs do not issue penny stock or are structured to avoid treatment as a “blank check company” as defined in Rule 419, de-SPAC transactions have generally been viewed as eligible for the PSLRA safe harbor. The draft legislation proposes to delete the term “blank check company,” replacing it with the phrase “… a development stage company that … has indicated that its business plan is to acquire or merge with an unidentified company, entity, or person…” without reference to whether or not the company issues penny stock. As a SPAC is formed for the purpose of acquiring or merging with an unidentified entity, the proposed amendments would likely make the PSLRA safe harbor unavailable for forward-looking statements, such as projections, included in documents soliciting stockholder approval of de-SPAC transactions.

• DoD Issues Proposed Rule on Enhanced Debriefing Procedures

  05.24/Alert

  The Department of Defense (DoD) recently issued a proposed rule to implement Section 818 of the FY18 NDAA. Under Section 818, Congress required the DoD to issue new regulations in the Defense Acquisition Regulation Supplement (DFARS) on the procedures for enhanced debriefing rules within six months. 

• China Publishes New Draft Regulations on Data Security Management of Automobile Operators to Protect Privacy

  05.20/Alert

  On May 12, 2021, the Cyberspace Administration of China (CAC) published the Several Regulations on the Management of Automobile Data Security (Draft for Comment) (Draft Regulations). The Draft Regulations are open for public comment until June 11, 2021.  According to the CAC’s statement, due to growing concerns over personal data security and privacy protection in the People’s Republic of China (PRC), the Draft Regulations aim to strengthen protection of personal information and important data in automobile-related activities, as well as safeguard national security and the public interest. Below is our summary of the highlights of the Draft Regulations.

• Congress Moves to Repeal OCC’s “True Lender” Rule

  05.20/Alert

  On May 11, 2021, the Senate voted to repeal a Trump Administration regulation that defines which party is the “true lender” in partnerships between banks and non-banks, including financial technology and other non-bank lending companies. The Senate resolution now heads to the House of Representatives, which is expected to pass the resolution. President Biden has signaled his support for the repeal and will likely enact the repeal following a vote in the House. The repeal of this rule could create regulatory uncertainty for fintechs and other non-bank lenders that were relying on the rule.

• ASBCA Confirms the “Goldilocks Principle” in Government Contract Appeals

  05.05/Alert

  Contractors must ensure that they do not appeal a contracting officer’s decision too early or too late lest they find that the courts and board have no jurisdiction. Yet, the government continues to issue directions that provide no certainty on the issue and, indeed, serve only to muddle the question of what constitutes an appealable final decision. Last month, the Armed Services Board of Contract Appeals (ASBCA or Board) issued a decision in the appeal of Northrop Grumman Corporation, ASBCA No. 62189, dismissing the appeal for lack of jurisdiction and highlighted what these authors will refer to as “the Goldilocks Principle” for when contractors can appeal a contracting officer’s decision that certain costs are not allowable. Frustratingly, the Government often issues unclear decisions that can leave contractors wondering whether the timing for appeal is too early, too late or just right.

• Data Privacy Fines and Damages “Double Jeopardy”: UK Supreme Court Hears Google “Class Action”

  04.29/Alert

  This week sees a key hearing before the UK Supreme Court in the case of Lloyd v Google, an event long awaited by those familiar with data protection law proceedings in Europe.

• President Biden Issues an Executive Order Increasing the Minimum Wage for Many Employees of Federal Contractors to $15.00

  04.28/Alert

  On April 27, 2021, President Biden signed an Executive Order raising the minimum wage paid by Federal contractors and subcontractors to $15.00 per hour, beginning on January 30, 2022. The Federal minimum wage currently is $10.95 per hour for all workers on Federal construction and service contracts, based on President Obama’s 2014 Executive Order 13658, which had raised that minimum wage to $10.10 per hour and provided for adjustment for inflation. These Executive Orders do not change the current minimum wage of $7.25 under the Fair Labor Standards Act (FLSA) applicable to non-exempt employees who do not work for government contractors, and to employees of government contractors who do not work on or in connection with Federal construction and service contracts.

• COVID-19 Business Interruption Losses: Time is of the Essence to Pursue Coverage

  02.12/Alert

  The United States declared a national emergency in response to COVID-19 on March 13, 2020, and states quickly followed with stay-at-home orders that impacted businesses and institutions nationwide. More than 10 months have passed since the COVID-19 pandemic emerged in the United States and the prevalence of the virus has had significant impacts, not only with respect to the number of people infected and lives lost, but also to the widespread physical damages and economic losses suffered by businesses.

• Federal Support for Defense Uses of Advanced Nuclear

  02.03/Alert

  Summary of the EO

  On January 12, 2021, former President Trump issued an EO on Promoting Small Modular Reactors for National Defense and Space Exploration. The EO directs the Department of Energy (DOE), Department of Defense (DOD), and NASA to take actions to coordinate their nuclear-related activities, move forward with certain ongoing nuclear projects and promote advanced reactor and small modular reactor (SMR) technologies. The purpose of the EO is to take steps to revitalize the U.S. nuclear sector, reinvigorate the U.S. space exploration program, develop diverse energy options for national defense needs and advance U.S. technological supremacy and leadership.

• Congressional and Government Investigations in 2021: What to Expect from the Biden-Harris Administration and How to Prepare

  01.27/Alert

  Government investigations pose many risk management challenges. They are unpredictable, political and often public. If handled incorrectly, they can last for many years, spiral into multiple Congressional, criminal, and/or regulatory investigations at the state and federal levels, and generate serious reputational harm. Potential targets can take proactive steps to mitigate their risks.

• New York Guidance on Listing Digital Assets

  01.07/Alert

  On December 11, 2019, DFS published a proposal to create a public list of approved virtual currencies and a self-certification methodology for holders of NY Bitlicenses and New York trust companies approved to engaged in a virtual currency business (together, VC Licensees) to offer to New York consumers virtual currencies without the need for additional approvals of the DFS.

• CFTC Writes the Book on Enforcement

  05.16/Alert

  Wednesday, May 8, 2019 was an important day for the Commodity Futures Trading Commission (CFTC or “Commission”). First, the CFTC’s Division of Enforcement (DOE) published an Enforcement Manual, providing market participants for the first time ever with one-stop-shop guidance on the Commission’s enforcement procedures. Second, CFTC Chairman J. Christopher Giancarlo testified before the Senate Committee on Appropriations about the Commission’s 2020 budget request. Both events confirm what many have come to suspect over the last year: as part of its efforts to ensure that the U.S. derivatives market remains “the world’s best regulated,” enforcement will continue as one of the Commission’s top priorities going forward.

• The Qualified Opportunity Zone Program: Thoughts on the Long-Awaited Treasury Guidance

  11.14/Alert

  Section 13823 of the Tax Cuts and Jobs Act, P.L. No. 115-97 (2017) added Sections 1400Z-1 and 1400Z-2 to the Internal Revenue Code of 1986, as amended (the “Code”). These provisions created the Qualified Opportunity Zone (“QOZ”) program that has recently generated such a wave of media attention that one might surmise President Trump had sent an angry late-night tweet about it.

• Pillsbury's Post-Election Outlook

  11.07/Alert

  The 2018 Midterm Election played out as most poll forecasters speculated. Although several races have yet to be decided, Republicans have retained control of the Senate, but lost at least 29 seats, allowing the Democrats to wrest back control of the House for the first time since 2010.

• 2018 Election Night Guide

  11.02/Article

  Pillsbury’s Political Law and Public Policy groups break down the need-to-know numbers for this year’s election. Pillsbury’s biennial Election Night Guide examines the potential outcomes for the 2018 Congressional and Governor’s races. Our Public Policy team is also preparing a post-election guide that will be useful in navigating potential changes in Congress.

• The Fiscal Year 2019 NDAA Imposes Government-Wide Limitations on the Use of Lowest-Price Technically Acceptable Procurements

  08.29/Alert

  Introduction
  The annual Department of Defense (DoD) authorization bill has long been used to impose government-wide procurement reforms that extend beyond the DoD. The recently enacted National Defense Authorization Act (NDAA) continues this tradition, by restricting civilian agencies’ use of the much-derided lowest price, technically acceptable (LPTA) procurement process, instead of the more fulsome best value trade-off process. The new NDAA now imposes limitations on the use of LPTA procurements that were previously imposed on the DoD and applies those limitations government-wide.

• Real Property Transfers Ripe for Blockchain Disruption: Laws in the U.S. Must Follow the Technology

  04.17/Article

  When we consider the core goal of the real property recordation system in the United States—assuring owners that they are gaining clear title to a particular parcel of real property—the benefits of a blockchain-based system are so glaring that movement in this direction seems inevitable.

• Blockchain Variations: Sidechains, Slidechains and the Potential of the Fork

  04.09/Blog

  As an ever-increasing numbers of blockchain-based patent applications seek issuance, savvy inventors and practitioners continue probing for patent-eligible space. Performance-related refinements to blockchain technology may provide that safe harbor.

• Artificial Intelligence: A Grayish Area for Insurance Coverage

  04.02/Blog

  Companies that depend on artificial intelligence need to carefully evaluate potential scenarios that could affect their business and make sure they are insured accordingly.

• Blockchain and the Legal Landscape

  03.26/Video

  In this video, Pillsbury partner Mercedes Tunstall discusses some of the important legal issues to consider when exploring a blockchain solution.

• Oh No, Mr. Robot Just Hacked Our Smart Building…

  03.26/Blog

  Despite some very real-world examples, such as a 2017 breach of Dallas' emergency siren system, there seems to be little recognition of the security risk that connected buildings and smart cities entail.

• Gibraltar’s Financial Services Regulator Adopts First-Ever Purpose-Built Blockchain Regulations

  02.06/Alert

  Firms in Gibraltar which use distributed ledger technology to store or transmit value belonging to others must now be appropriately licensed. What other countries might follow suit?

• Cloud Computing by EU Financial Institutions Gets a New Rule Book

  01.23/Alert

  EU Financial institutions take note: the European Banking Authority’s new cloud computing guidance takes effect July 1, 2018.

• The SEC’s Shutdown of the Munchee ICO

  01.02/Alert

  The SEC’s recent shutdown of Munchee Inc.’s planned initial coin offering illustrates just how murky the related securities law can be. To see an offering through—and ensure compliance with the Securities Act—businesses exploring an ICO should consider its Rule 506(c) and Regulation A provisions.

• The Algorithm Did It: The Evolving Legal Landscape of the Internet’s Favorite Tool

  12.19/Blog

  There are no shortage of practical, legal considerations for businesses that employ algorithms.

• Are Smart Contracts Smart Enough for the Insurance Industry?

  11.20/Blog

  Smart contracts may be the way of the future but when it comes to insurance policies, are they smart enough?

• Legal issues in Additive Manufacturing Technology – peeling back the layers

  11.13/Blog

  As a result of dropping costs and advancing technologies, 3D printing and other forms of additive manufacturing (AM) have experienced rapid growth. A clearer regulatory framework seems sure to follow.

• Initial Coin Offerings (ICOs): The Current State of Play

  11.08/Alert

  ICOs represent a new and innovative way for companies to raise capital but sponsors still need to ensure regulatory compliance. Here's what you need to know.

• Global In-House Centers in India, v 2.0

  10.19/Alert

  Recent years have seen a resurgence of interest in Global In-House Centers (GICs) in India across a wide range of industries, including transportation, telecom, media, manufacturing, medical devices, oil & gas, aerospace, retail and hospitality. Despite India’s attractive low-cost talent pool, ultimate success with GICs depends on careful planning and execution—including committing necessary resources and understanding the country’s unique requirements.

• ARC Dispute May Mean Further Delay in Needed Drone Regulation

  10.19/Blog

  The Unmanned Aircraft Systems Identification and Tracking Aviation Rulemaking Committee has failed to reach consensus on issues described as fundamental for operations over people and operations beyond the visual line-of-sight (BVLOS). The UAS industry is growing rapidly but If users are to capitalize on this opportunity, the FAA will need to get serious about catching up.

• Singer v. Newton: Making Sense of Federal Preemption and Drone Regulation

  09.29/Blog

  A recent federal court decision limits state and local governments’ ability to regulate drones in areas preempted by federal law. The Massachusetts Federal District Court held that local regulations may not conflict with FAA regulations regarding registration, permitted flight or restricting flight within navigable airspace.

• Keeping up with Cayla: Concerns over Interactive Toys Spur an FTC Update of COPPA Guidelines

  07.24/Alert

  Consumer groups have filed a complaint alleging that My Friend Cayla, an internet-connected doll, violates the Children’s Online Privacy Protection Act (COPPA) by facilitating the collection of children’s communications and uploading them for commercial use without verifiable parental consent. The Federal Trade Commission’s June 2017 update to COPPA added internet-connected toys, children’s products that collect personal information, and voice-activated devices to the products and services covered.

• The Safe DRONE Act of 2017: The Newest Drone Bill on the Block

  06.29/Blog

  In June 2017, U.S. Senators introduced the Safe DRONE Act of 2017, one of a number of bills aimed at addressing the regulatory needs of the unmanned aircraft systems (UAS) industry. Current federal efforts focus on keeping up with technological advancements and creating a uniform framework for UAS-related laws.

• Recognition of Smart Contracts

  06.01/Alert

  New laws and other legal developments are clearing the way for the use of smart contracts in the United States.

• How Does a Freeze in Federal Hiring Affect Patent Examination Timelines?

  03.13/Blog

  While such a hiring freeze may not have an immediate impact on patent application pendency and/or examination quality, due to the relatively high attrition rate of the patent examining corps, the examination timeline and quality may be affected in the future. In particular, technologies having greater upfront value, including internet-based technologies and platforms, and clients relying on patent portfolios for valuation will be most acutely impacted