Innovation and Trends
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Pentagon Unveils $984 Million Loan Program to Promote Critical Technologies10.18/Alert
On September 27, the Department of Defense (DoD) published a Notice of Funding Availability to accelerate the commercialization of technologies critical to U.S. national security and defense. DoD’s Office of Strategic Capital (OSC) will carry out this program in line with its mission to “attract and scale private capital” to critical technologies. The program will provide direct loans ranging from $10 million to $150 million for eligible entities investing in technologies that benefit DoD but are not limited to DoD operations.
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Is the Federal Circuit Breathing Life Back Into False Patent Marking Claims?10.09/Alert
On October 3, 2024, the Federal Circuit issued a decision in Crocs, Inc. v. Effervescent, Inc. holding that a cause of action arises under Section 43(a)(1)(B) of the Lanham Act “where a party falsely claims that it possesses a patent on a product feature and advertises that product feature in a manner that causes consumers to be misled about the nature, characteristics, or qualities of its product.”
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From AI Doomers to E/Accs: How SB 1047 and the 38 AI Laws in California Are Shaping Future AI Law09.26/Alert
The California legislature sent 38 AI bills to the Governor’s office as the 2024 legislation session came to a close, eight of which have already been signed, regulating everything from deepfake nudes and AI-generated celebrity clones to election tampering. Governor Newsom has until September 30 to sign the rest, including California Senate Bill 1047, known as the Safe and Secure Innovation for Frontier Artificial Intelligence Models Act. SB 1047 is one of the first significant regulations of artificial intelligence in the United States that, if signed, would place liability on the developers of AI models.
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Department of Commerce Releases Five Products to Help Guide AI Development08.16/Alert
Less than a year after the publication of the Executive Oder (EO) on the Safe, Secure, and Trustworthy Development of AI, the Department of Commerce has finalized three pieces of guidance to fulfill its obligations under the EO. In addition, the recently created AI Safety Institute (AISI) has provided draft guidance to help AI developers mitigate risk of dual-use foundation models. AISI is soliciting comments on this proposal, which are due by September 9. The National Institute of Standards and Technology (NIST) has released open-source software that can be used to test AI systems responses to adversarial attacks.
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FCC Attempts to Regulate Artificial Intelligence in Political Advertising Through New Disclosure Requirements08.01/Alert
The Federal Communications Commission (FCC) last week released a highly anticipated Notice of Proposed Rulemaking (NPRM) seeking comment on proposed disclosure requirements for political ads containing AI-generated content. The item was adopted earlier this month by a 3 – 2 party-line vote, nearly two months after FCC Chairwoman Rosenworcel first announced its circulation among the commissioners for consideration.
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Preclusion Confusion: Federal Circuit Decision in ZyXEL Communications v. UNM Rainforest Sparks Uncertainty at the PTAB07.30/Alert
The Federal Circuit’s decision in ZyXEL Communications Corp. v. UNM Rainforest Innovations (Appeal Nos. 2022-2220, 2022-2250, July 24, 2024) starts out as a garden variety appeal from an inter partes review proceeding (“IPR”) before the Patent Trial & Appeal Board (“PTAB”). However, the opinion takes a final, unexpected turn by remanding to the PTAB to reconsider whether the new substitute claims are unpatentable in light of collateral estoppel and an additional prior art combination that the petitioner never even raised.
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Discovery Dilemma: An Update on the Legal Battle Between The New York Times and OpenAI07.29/Alert
OpenAI’s defense of the lawsuit brought by The New York Times (“The Times”) has sparked controversy relating to OpenAI’s discovery demand for access to reporter notes and other behind-the-scenes materials associated with millions of articles that appeared in The Times. These materials, the AI company argues, are crucial for assessing the copyrightability of The New York Times’ content, which content is being incorporated into OpenAI’s AI models.
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The EU’s AI Act: A Review of the World’s First Comprehensive Law on Artificial Intelligence and What This Means for EU and Non-EU Companies07.19/Alert
Regulation (EU) 2024/1689 (the AI Act) introduces a risk-based framework for regulating AI systems based on how those systems are used, along with a separate framework for regulating general-purpose AI models. Different obligations apply to various actors in the AI supply chain, including providers developing AI systems or GPAI models in the EU, deployers using AI systems in the EU, importers and distributors supplying AI systems into the EU, and product manufacturers incorporating AI systems into regulated products sold into the EU. The AI Act also applies to providers and deployers whose AI systems or their outputs are made available in the EU, regardless of their location, emphasizing its broad territorial scope and the need for global companies to align with its requirements.
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Landslide Election Victory for UK Labour Party Marks Seismic Shift in UK’s Political Terrain07.15/Alert
Following 14 years of Conservative Party rule in the UK, Sir Keir Starmer’s Labour Party has formed His Majesty’s Government with a widely anticipated and substantial election victory at the ballot box on July 4, 2024, marking a seismic shift in the UK’s political terrain. There is now much speculation as to those areas on which Sir Keir Starmer will look to focus, and the earliest concrete signal we will see on his priorities will be the King's Speech, scheduled for the morning of July 17, 2024, which will set out the government's legislative agenda for the coming parliament.
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Legal Riffs: Music Industry Alleges AI Is Out of Tune07.10/Alert
In late June, Universal Music Group (UMG) Records, Sony Music Entertainment, and other major record labels filed two complaints against two generative artificial intelligence (“gen AI”) music startups, Suno, Inc. (Suno) and Uncharted Labs, Inc. (Udio). The concurrently filed complaints allege that the gen AI technology produced by Suno directly infringes on copyrights owned by these record labels. The complaints allege that the AI models used by Suno and Udio were trained on copyrighted records and, when prompted, produced music that closely resembles the copyrighted materials. These complaints follow a series of lawsuits filed against numerous gen AI platforms which raise legal and policy questions about the use of copyrighted creative works to train AI systems on digital platforms, and, most notably, whether such use of protected works constitutes fair use or copyright infringement.
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Treasury Department and IRS Issue Final Regulations on the Electric Vehicle Credits Under Section 30D of the Internal Revenue Code05.21/Alert
As modified by the Inflation Reduction Act of 2022, section 30D of the Internal Revenue Code of 1986, as amended (Code), provides for a tax credit of up to $7,500 for a new clean vehicle if certain requirements are met. The modified tax credit is divided between $3,750 in respect of battery components, and an additional $3,750 in respect of critical minerals. Eligibility for each part of the tax credit depends on the ability to satisfy domestic source requirements that have been met with some controversy due to difficulties in implementation and monitoring over time.
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Revving Up: Eight States in Gear with Low-Carbon Fuel Standard Legislation04.17/Alert
State low-carbon fuels programs are powerful drivers for the adoption of various low-carbon fuels, particularly renewable natural gas (RNG), renewable diesel and sustainable aviation fuel (SAF). For well over a decade, California has implemented its Low-Carbon Fuel Standard (LCFS), which was wildly successful in incentivizing the use and production of RNG, renewable diesel and SAF. In recent years, Oregon and Washington followed suit, and while these programs have a much smaller net impact on the demand for low-carbon fuels due to the respective sizes of those states, they have provided additional outlets for low-carbon fuels.
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AI and the “G” in ESG01.25/Alert
We recently waved goodbye to 2023, and we remember many things from last year (besides Taylor Swift), including two important letters—A.I. These two letters arguably received more attention than any others, ranging from companies developing and implementing breakthrough AI technology, to government regulators expressing caution and high school students becoming best friends with ChatGPT. As AI expands into virtually every industry—whether cutting edge technology and financial companies or “old school” industries, such as construction and transportation—another letter merits our attention: the letter G.
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The Impact of Artificial Intelligence on Vulnerable Populations in the Workforce11.08/Alert
Charting Expectations for AI
The rapid pace of artificial intelligence (AI) development is exceeding expectations, making it difficult to predict the exact next wave of AI progress. Even with these challenges, several studies considering how AI impacts the workforce are finding consistent patterns in their forecasts. Studies find AI will affect a wide spectrum of jobs but emphasize the impact on lower-wage professionals. AI brings more opportunity but may not bring opportunity equally to all employment sectors. While the future workforce is uncertain, studies provide guidance on how companies working with AI can take precautionary measures now to help protect their workforce from AI-generated harms while also preparing their employees to benefit from AI’s potential for streamlining work and providing greater efficiencies in the office. -
President Biden Issues Long-Awaited Executive Order on Safe, Secure and Trustworthy Artificial Intelligence11.01/Alert
On October 30, President Biden issued the long-awaited Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (AI), the first order to navigate AI’s impact across sectors and to help agencies and consumers harness the benefits of AI while mitigating risks.
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Expansion of Global Capability Centers Requires Anticorruption Compliance Planning10.27/Alert
In its Vision 2030 report, EY India projects that the number of global capability centers (GCCs) in India will increase from approximately 1,600 GCCs in 2023 to 2,400 GCCs in 2030, with the market size of GCCs increasing from about $43 billion to over $100 billion during this period. This dramatic increase forecasted by EY India is not surprising. GCCs provide a number of attractive benefits, including access to a very large pool of highly skilled IT resources in India, the ability to leverage this talent to build internal teams that can deliver on strategic digital initiatives with speed and agility, the opportunity to tap into India’s robust startup ecosystem, and the potential savings associated with lower labor rates and other costs of doing business in India.
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The Legal Impact of AI on Associations10.19/Alert
There has been a rush of news and debate around Artificial Intelligence (AI) since the launch of ChatGPT in late 2022. AI is nothing new; you likely interact with it every day via spellcheck, virtual assistants and email spam filters. Generative AI, however, and its mass adoption for both personal and professional use, is a more recent phenomenon, and you may not have considered the legal implications and potential impact on your association.
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Department of Defense Designates Eight Technology Hubs to Create “Lab to Fab” Pathways for Microelectronics Researchers10.05/Alert
On September 20, the Department of Defense (DoD) announced nearly $240 million dollars to eight regional innovation hubs that will accelerate U.S. microelectronics manufacturing industry through the Microelectronics Commons, the Department’s newest program to accelerate product deployment from research to end commercialization. Companies working in the semiconductor industry should consider opportunities to partner and team with the established hubs that will be funding prototype projects key to the U.S. defense.
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Funding Application is Open for SMART Grant Program09.26/Alert
The SMART Grant Program
The Bipartisan Infrastructure Law (BIL) established the Strengthening Mobility and Revolutionizing Transportation (SMART) Grants Program, a competitive funding program for demonstration projects that improve transportation efficiency and safety. -
Recent Updates on Foreign Investment Restrictions and Export Controls Governing Semiconductors, Quantum Computing and Artificial Intelligence (AI)09.21/Alert
From August 27 to August 30, U.S. Secretary of Commerce Gina Raimondo visited China, marking the first trip to China by a U.S. commerce chief in five years. The trip, which came amid growing tensions between China and the United States, sought to open dialogue on crucial matters, including export controls, investment restrictions and national security. One reported success from Raimondo’s trip was the creation of a commercial working group which will meet twice a year at the vice minister level. While Raimondo stressed that this group will not “solve everything overnight,” it has been hailed as a welcome step towards transparency between either country.
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Provisions Relating to Digital Assets under the Financial Services and Markets Act 2023 Come into Force08.29/Alert
Effective August 29, 2023, the Financial Services and Markets Act 2023 (Commencement No. 1) Regulations (SI 2023/779) (FSMA 2023) explicitly brings digital assets within the regulatory perimeter, creates a new designated activities regime (DAR), introduces regulations for stablecoins used as a means of payment (Payment Stablecoins), and creates a framework to establish financial market infrastructure sandboxes.
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Administration Poised to Act on “Internet of Things” Devices08.25/Alert
The Federal Communications Commission (FCC or Commission) has issued a Notice of Proposed Rulemaking (NPRM) to create a labeling program for Internet of Things (IoT) devices with comments due September 25, 2023, and reply comments due October 10, 2023.
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AAM: Getting Cleared for Take-Off08.03/Alert
Following years of unprecedented disruption resulting from the COVID-19 pandemic, the aviation industry is experiencing a doubling down of efforts to bring next-generation transportation technologies to market. The world’s sense of climate urgency is also pushing the industry to demonstrate leadership in greening the world’s transportation networks. For many, Advanced Air Mobility (AAM) represents an exciting new frontier and sustainable path forward for the aviation industry, which still has its fair share of challenges ahead.
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Leading Generative AI Companies Commit to Voluntary White House Guidelines08.03/Alert
On July 21, 2023, the White House announced the voluntary commitment of seven companies to high-level principles concerning safety, security and public trust with respect to their generative artificial intelligence (AI) technologies. These voluntary principles will serve as a guidepost for the industry until Congress develops and passes legislation for AI development.
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Virtual Examination of I-9 Documentation Now Permitted for Employers Enrolled in E-Verify08.02/Alert
Federal immigration law requires that, within three days after an employee’s first day of employment, an employer must confirm an employee’s identity and work authorization by physically examining the employee’s proof of identity and employment authorization documents. Employers must then complete Section 2, “Employer Review and Verification,” of Form I-9. Since March 2020, due to the COVID-19 pandemic, the Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) had temporarily authorized employers to conduct virtual inspections of the documentation required to complete new employees’ Forms I-9. In May 2023, however, the DHS announced that the virtual inspection option would end on July 31, 2023, and in-person, physical examination requirements would resume on August 1, 2023. In addition, employers would be required to re-inspect any remotely inspected I-9 documents by August 30, 2023.
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China Finalizes Its First Administrative Measures Governing Generative AI07.26/Alert
On July 13, 2023, the Cyberspace Administration of China (CAC), China’s main regulator for cybersecurity and data privacy, issued its final version of the Interim Administrative Measures for Generative Artificial Intelligence Service (Generative AI Measures), which will come into effect on August 15, 2023. Compared to the draft regulations (Draft Regulations) published by the CAC in April for public comments, the Generative AI Measures have relaxed several requirements on the providers offering generative AI services and placed more emphasis on encouraging technological development and innovation.
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Contracting Models for Global Capability Centers in India07.19/Alert
Global Capability Centers (GCCs) located in India continue to evolve from labor arbitrage and cost savings initiatives to innovation centers for digital transformation, supporting cloud, mobile, data security, data analytics, AI, automation and other emerging technologies. Companies looking to establish a GCC in India (Companies) often engage a local or international service provider with in-country expertise, experience and professional connections (Facilitators) to facilitate setting up and operating the GCC.
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Upcoming EU Rules on Digital Operational Resilience07.19/Alert
The new DORA seeks to strengthen the resilience of financial entities against cyber threats posed by information and communication technologies (ICT). DORA’s scope is broad, applying to “financial entities,” such as credit, payment and e-money institutions, account information and crypto-asset service providers, investment firms, central securities depositories, managers of alternative investment funds, management companies, insurance and reinsurance undertakings, and credit rating agencies. Non-EU entities should assess their activities to identify whether they undertake covered activities within the EU and are in scope of DORA.
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Proposed Regulations for Transfer of Energy Credits under IRA07.11/Alert
On June 14, 2023, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released a Notice of Proposed Rulemaking setting forth Proposed Regulations §§ 1.6418-1 through 1.6418-5 (Proposed Regulations) governing the implementation of the new tax law allowing electing taxpayers to sell a variety of eligible clean energy tax credits to unrelated parties pursuant to section 6418 of the Internal Revenue Code (Code). It is anticipated that these new transferability provisions will enhance and simplify the ability of taxpayers to monetize clean energy tax credits, thereby providing such taxpayers with additional funding for their clean energy projects. The Proposed Regulations include a temporary but mandatory pre-filing information and registration process designed to prevent fraud, duplication and excessive or improper payments that may result from such transfers.
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Coinbase Contests the SEC’s Regulatory Authority over Crypto Exchanges, Staking07.05/Alert
Background – The SEC Complaint
On June 6, 2023, the Securities and Exchange Commission (SEC) charged Coinbase, Inc. and Coinbase Global, Inc. (Coinbase) with violations of the Securities Exchange Act of 1934 and the Securities Act of 1933. The SEC’s 101-page complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Coinbase operates as an unregistered national securities exchange, broker, and clearing agency. The SEC further alleges that Coinbase failed to register the offer and sale of its crypto asset staking-as-a-service program under Section 5 of the Securities Act, and that the Coinbase Wallet and Coinbase Prime constitute broker services under the federal securities laws. -
California Rolls Out Offshore Wind Permitting Roadmap06.15/Alert
On Friday, June 2, the California Energy Commission (CEC) hosted a workshop on permitting offshore wind energy facilities off the coast of California. The workshop came days after the CEC adopted a report entitled “Assembly Bill 525 Offshore Wind Energy Permitting Roadmap,” created in response to Assembly Bill 525, which established a goal for California to deploy up to 5,000 megawatts of offshore wind by 2030 and 25,000 megawatts by 2045. California aims to power 25 million homes with offshore wind by 2050. The report is the latest effort to bolster the development of California’s Offshore Wind Strategic Plan, which will be submitted to the legislature in 2023.
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White House Announces Plan to Boost AI Research and Deployment06.06/Alert
One of the most advanced technologies of our time is the rise of generative artificial intelligence (AI), a field that currently operates with minimal regulation. U.S. government officials, however, are stepping up their interest in generative AI technology, including assessing the opportunities while cautioning about potential risks. Government agencies are also beginning to seek public comment on these issues, where we expect to see increased activity in the coming months.
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AI Users Beware: Federal, State and Local Legislators and Regulators to Crack Down on AI-Related Employment Discrimination05.31/Alert
According to a 2022 survey from the Society for Human Resource Management, approximately one in four organizations use automation and/or AI to support employment-related activities, such as recruitment and hiring. AI tools used in employment decision-making include chatbots that guide applicants through the application process, algorithms that screen resumes and predict job performance, and even facial recognition tools used in interviews to evaluate a candidate’s attention span. For employers, these tools may offer an efficient and effective way to recruit promising talent, but federal, state and local governments are increasingly focused on the potential for discrimination.
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Congress Contemplates Creating a New Federal AI Regulatory Agency05.26/Alert
In a hearing of the Senate Judiciary Subcommittee on Privacy, Technology and the Law on May 16, multiple U.S. senators—including Senators Richard Durbin (D-IL), Lindsey Graham (R-SC), Peter Welch (D-VT) and Cory Booker (D-NJ)—supported the idea of a federal artificial intelligence (AI) agency to regulate the transformative technology.
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Outlook on AI and Civil Rights Law and Policy05.25/Alert
The Administration’s October 2022 launch of the AI Bill of Rights: A Vision for Protecting Our Civil Rights was the first step toward cementing equity and civil rights with respect to artificial intelligence (AI) as core values upon which the Administration has built a series of guidance documents and executive actions.
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IRS, Department of Treasury Release Guidance on Domestic Content Rules for Energy Projects05.15/Alert
On Friday (May 12, 2023), the Department of Treasury and the Internal Revenue Service (IRS) released Guidance for taxpayers seeking to take advantage of domestic content bonus credits associated with energy projects under the Inflation Reduction Act (IRA). Specifically, the Guidance sets out the requirements for using domestic steel, iron and manufactured products in order for a project to be eligible for the domestic content bonus credit amount. Projects that meet the domestic content requirement will be eligible to receive a 10 percent bonus under the production tax credit and up to a 10 percent bonus under the investment tax credit, provided that other requirements are also met.
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Joint Statement by Federal Agencies Marks Heightened Enforcement Attention on Potential Bias in AI Systems05.05/Alert
On April 25, 2023, the Consumer Financial Protection Bureau (CFPB), Department of Justice (DOJ) Civil Rights Division, the Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC) issued a joint statement affirming that they will be working collaboratively to enforce existing laws and regulations as applied to potential discrimination and bias in artificial intelligence (AI) systems. Companies that use AI and other automated systems should prepare for greater scrutiny from these agencies.
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Congressional Action on AI Takes Major Step Forward05.04/Alert
Congressional leaders are intensifying efforts to legislate and regulate artificial intelligence (AI) technology. On April 13, Senate Majority Leader Chuck Schumer (D-NY) publicly announced a framework on artificial intelligence (AI) regulation. The announcement came in response to the Chinese Communist Party’s release of their own AI regulatory framework. Schumer revealed his framework as part of the United States’ duty to “lead and shape the rules governing such a transformative technology” rather than allow China to “write the rules of the road.”
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U.S. Patent Trial and Appeal Board (PTAB) Considers Sweeping Reform to Address Discretionary Denials and Petitions Filed by Certain For-Profit Entities05.03/Alert
On April 21, 2023, the U.S. Patent and Trademarks Office (USPTO) published an advance notice of proposed rulemaking seeking comments on the proposed changes addressing the U.S. Patent Trial and Appeal Board’s (PTAB) authority under 35 U.S.C. §§ 314(a) and 325(d) to exercise its discretion in denying petitions for inter partes review (IPR) and post-grant review (PGR). The USPTO is specifically seeking public input on a number of changes under consideration for future rule changes. Those who regularly make use of the IPR and post-grant proceedings before the PTAB will want to carefully review the changes under consideration and provide comments by June 20, 2023, if they want to affect the USPTO’s final rule changes.
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“If You Don’t Make It There, You Can’t Make It Anywhere:” New York’s Zero Manufacturing Rate Requires New York Property04.27/Alert
A New York State Division of Tax Appeals (DTA) administrative law judge (ALJ) determined that Raytheon Company and affiliates (Raytheon) did not qualify for New York’s zero percent tax rate for manufacturers or the reduced tax rate for qualified emerging technology companies (QETCs). Raytheon’s primary contention in the litigation is that the zero percent manufacturing rate unconstitutionally discriminates against manufacturing activity outside New York. Specifically, Raytheon argued that the law as applied to its facts violated the U.S. Constitution, but the ALJ determined that Raytheon’s argument constituted a facial challenge to the statute that falls outside the DTA’s jurisdiction. Because the New York legislature included a poison pill in the session law that enacted the zero percent rate, the constitutional challenge could eliminate the zero percent manufacturing rate for all taxpayers.
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The Nuclear Regulatory Commission Unanimously Votes to Separate Fusion Energy Regulation from Nuclear Fission04.19/Alert
On April 14, 2023, in a unanimous vote, the Commissioners of the U.S. NRC directed that fusion energy devices will be regulated under the agency’s existing rules for use of byproduct materials in 10 C.F.R. Part 30, with only a limited-scope rulemaking. This approach separates the regulatory framework for fusion from the utilization facility framework applicable to nuclear fission energy and will allow the NRC to tailor its regulatory approach to the emerging fusion energy sector.
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Nuclear Energy Agency Announces Publication of the Small Modular Reactor Dashboard04.06/Alert
On March 13, 2023, the Organization for Economic Co-operation and Development (OECD) Nuclear Energy Agency (NEA) announced publication of the Small Modular Reactor Dashboard, a compilation of verified publicly available information on progress-to-date towards SMR first-of-a-kind (FOAK) deployment and commercialization. This information aims to help the public understand the pace of progress to commercial deployment of these technologies as governments consider available paths to achieve net zero by 2050.
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AI Warning: ChatGPT Blocked for Data Laws Breach04.04/Alert
Wherever you are located, you need to be mindful of various laws around the world that may apply to your development and use of AI. Recent laws proposed in Europe (e.g., the AI Act) have attracted a lot of attention, but it can often be a mistake to overlook other laws that can apply and are currently in force, such as the General Data Protection Regulation (GDPR). The Italian data regulator’s enforcement action against OpenAI and ChatGPT this past week reminded everyone that laws such as GDPR do indeed impact the creation, development and use of AI.
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Application Windows Opening for New Federal Funding03.31/Alert
On August 16, 2022, the passage of the Inflation Reduction Act (IRA) marked the establishment of a trifecta of bipartisan legislation aimed at improving U.S. economic competitiveness through innovation and domestic industrial productivity. In total, the IRA, the CHIPS and Science Act (CHIPS) and the Infrastructure Investment and Jobs Act (IIJA) provide about $2 trillion in federal funding, offering businesses and organizations a rare opportunity to apply for federal grants or take advantage of other federal incentive benefits. Many application windows for grants, loans and other incentives have opened since the passage of these landmark bills, with additional application periods opening across the first three quarters of 2023. Businesses should be assessing how available programs align with objectives and growth plans and preparing to meet critical eligibility and compliance obligations to obtain benefits. Though more details are still to come, below are considerations for companies seeking to benefit from new federal spending and incentive programs to support infrastructure projects, technology innovation, semiconductor manufacturing, and climate protection and clean energy initiatives.
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NRC Preliminary White Paper on Nuclear Fusion Indicates Paths for Regulatory Options09.19/Alert
A September 2022 Preliminary White Paper issued by U.S. Nuclear Regulatory Commission (NRC) Staff, “Licensing and Regulating Fusion Energy Systems,” indicates that the NRC is considering the option of regulating commercial fusion technologies via a risk-informed framework using 10 CFR Part 30.
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Inflation Reduction Act Revives Hope for Biden's Climate Agenda08.03/Alert
The far-reaching proposal would represent the largest legislative climate investment in U.S. history.
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Historic $280 Billion Investment in Domestic Semiconductor Manufacturing and STEM Research and Development to Be Signed into Law07.09/Alert
The legislation is the result of months of negotiations between Congressional Democrats and Republicans to support domestic semiconductor manufacturing and related research and workforce development efforts.
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A Long-Awaited Effort to Clarify Regulation of Digital Assets and Cryptocurrency—Unpacking the Biden Administration’s New Executive Order03.11/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).
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Southern California’s New Indirect Source Rule for Warehousing Operations Tests Jurisdictional Waters06.29/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.
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FCC Revises Equipment Authorization Rules06.22/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.
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Biden Administration Updates Framework for China-Related Investment Prohibitions and Expands the Scope of Restricted Chinese Companies06.15/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.
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Boom in the Medical Spa Industry Amid Regulatory Uncertainty Creates Perfect Storm06.01/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.
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Congressional SPACtivity Continues: Draft Legislation Proposes to Eliminate Safe Harbor Protection for Projections in SPAC Transactions05.28/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.
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DoD Issues Proposed Rule on Enhanced Debriefing Procedures05.24/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.
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China Publishes New Draft Regulations on Data Security Management of Automobile Operators to Protect Privacy05.20/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.
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Congress Moves to Repeal OCC’s “True Lender” Rule05.20/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.
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ASBCA Confirms the “Goldilocks Principle” in Government Contract Appeals05.05/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.
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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.
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President Biden Issues an Executive Order Increasing the Minimum Wage for Many Employees of Federal Contractors to $15.0004.28/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.
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COVID-19 Business Interruption Losses: Time is of the Essence to Pursue Coverage02.12/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.
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Federal Support for Defense Uses of Advanced Nuclear02.03/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.
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Congressional and Government Investigations in 2021: What to Expect from the Biden-Harris Administration and How to Prepare01.27/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.
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New York Guidance on Listing Digital Assets01.07/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.
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CFTC Writes the Book on Enforcement05.16/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.
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The Qualified Opportunity Zone Program: Thoughts on the Long-Awaited Treasury Guidance11.14/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.
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Pillsbury's Post-Election Outlook11.07/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.
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2018 Election Night Guide11.02/Article
Pillsbury’s Political Law and Government Law & Strategies 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.
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The Fiscal Year 2019 NDAA Imposes Government-Wide Limitations on the Use of Lowest-Price Technically Acceptable Procurements08.29/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 Technology04.17/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.
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Blockchain Variations: Sidechains, Slidechains and the Potential of the Fork04.09/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.
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Artificial Intelligence: A Grayish Area for Insurance Coverage04.02/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.
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Blockchain and the Legal Landscape03.26/Video
In this video, Pillsbury partner Mercedes Tunstall discusses some of the important legal issues to consider when exploring a blockchain solution.
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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.
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Gibraltar’s Financial Services Regulator Adopts First-Ever Purpose-Built Blockchain Regulations02.06/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?
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Cloud Computing by EU Financial Institutions Gets a New Rule Book01.23/Alert
EU Financial institutions take note: the European Banking Authority’s new cloud computing guidance takes effect July 1, 2018.
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The SEC’s Shutdown of the Munchee ICO01.02/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.
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The Algorithm Did It: The Evolving Legal Landscape of the Internet’s Favorite Tool12.19/Blog
There are no shortage of practical, legal considerations for businesses that employ algorithms.
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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?
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Legal issues in Additive Manufacturing Technology – peeling back the layers11.13/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.
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Initial Coin Offerings (ICOs): The Current State of Play11.08/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.
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Global In-House Centers in India, v 2.010.19/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.
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ARC Dispute May Mean Further Delay in Needed Drone Regulation10.19/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.
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Singer v. Newton: Making Sense of Federal Preemption and Drone Regulation09.29/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.
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Keeping up with Cayla: Concerns over Interactive Toys Spur an FTC Update of COPPA Guidelines07.24/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.
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The Safe DRONE Act of 2017: The Newest Drone Bill on the Block06.29/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.
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Recognition of Smart Contracts06.01/Alert
New laws and other legal developments are clearing the way for the use of smart contracts in the United States.
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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