DC Circuit Rules White House CEQ Lacks Authority to Issue Binding NEPA Regulations

On November 11, 2024, in Marin Audubon Society v. Federal Aviation Administration, a divided panel of the U.S. Court of Appeals for the District of Columbia Circuit held that the White House Council on Environmental Quality (CEQ) lacks statutory authority to issue regulations implementing the National Environmental Policy Act (NEPA) that are binding upon federal agencies. The Court held that the CEQ regulations, which purport to govern how all federal agencies must implement NEPA, are beyond the scope of legal authority granted to CEQ by Congress.

FERC Rejects Interconnection Proposal for Nuclear-Powered Data Center Project

On November 1, 2024, the Federal Energy Regulatory Commission (FERC) issued an order rejecting PJM Interconnection’s amended interconnection services agreement (“amended ISA”) with Talen Energy subsidiary Susquehanna Nuclear LLC and PPL Electric Utilities Corporation. The amended ISA would have increased the amount of load sent from the Susquehanna nuclear plant to a co-located Amazon Web Services (AWS) data center from 300MW to 480MW. Co-located loads are defined as customer loads that share a physical site with generating units and can be directly served by those units rather than through the broader transmission system.

The Treasury Department Finalizes U.S. Outbound Investment Rules

On October 28, 2024, the U.S. Department of Treasury issued the long-awaited Final Rule implementing its outbound investment review framework. This follows prior stages of rulemaking, including an Advance Notice of Proposed Rulemaking (ANPRM) in August 2023 and a Notice of Proposed Rulemaking (NPRM) in June 2024, and formalizes a new governmental system to monitor and, when necessary, restrict investments in China that may be viewed as a national security risk.

China Issues New Export Control Regulations on Civil-Military Dual-Use Items

On October 19, 2024, the State Council of the People’s Republic of China (China or PRC) promulgated the Regulations on the Export Control of Dual-Use Items of China (Export Control Regulations), which will become effective on December 1, 2024.

Trump 2.0

Former President Donald J. Trump won the U.S. presidential election on November 5, prevailing in the key “battleground states” necessary to win the Electoral College.

Biden Administration Announces Research and Development Program to Accelerate Semiconductor Advanced Packaging

On October 18, the Biden Administration released a $1.6 billion Notice of Funding Opportunity (NOFO) funded by the CHIPS and Science Act to accelerate U.S. Semiconductor Advanced Research and Development (R&D) across five key R&D areas. Aligning with the Administration’s goal of investing in domestic manufacturing industries, the program is projected to provide $1.6 billion in funding across the five R&D areas.

Navigating the EU’s “NIS 2” Directive: Key Cybersecurity Compliance Points for Businesses Operating in the EU to Consider

As cybersecurity threats continue to evolve, the European Union has advanced its regulatory framework with the introduction of a new cyber law, Directive 2022/2555, commonly referred to as “NIS 2”. It replaces Directive 2016/1148 (NIS 1), aiming to address the fragmented cybersecurity landscape across the EU by creating a unified approach to risk management and response. While NIS 1 focused on essential sectors, such as energy and transport, NIS 2 expands its reach to a broader range of industries, reflecting the digitalization of the European economy and the increasing risks associated with cyber threats across sectors.

Small Business Administration Expands the “Rule of Two”

On October 25, 2024, the Small Business Administration (SBA) issued a proposed rule that would expand the applicability of the “Rule of Two.” Under the proposed rule, the Rule of Two would apply to orders issued under multiple award contracts, with certain exceptions.

New York Department of Financial Services’ New Enhanced Cybersecurity Requirements Effective November 1, 2024

On November 1, 2024, the next phase of several significant amendments to the New York Department of Financial Services’ (NYDFS) cybersecurity regulation take effect. These specific amendments, enacted in 2023, impact the scope of entities covered by the regulation and require covered entities to implement enhanced governance, business continuity and encryption standards.

Hurricanes Helene and Milton: Evaluating Business Interruption Claims Following a Large-Scale Disaster

Hurricanes Helene and Milton physically damaged large areas of the South, particularly in Florida, North and South Carolina, Georgia and Virginia. Businesses in the region are also certainly suffering long-lasting economic damage as they remain closed—and they will rightly want to secure business interruption coverage for those losses.

U.S. Department of Energy Announces $900 Million Funding Opportunity for Generation III+ Small Modular Reactors

On October 16, 2024, the U.S. Department of Energy (DOE) issued a $900 million funding initiative to support the deployment of Generation III+ Small Modular Reactors (Gen III+ SMRs). The application deadline is January 17, 2025, and entities well-positioned to collaborate with utilities and nuclear technology providers to demonstrate a clear path to deployment should consider this opportunity.

U.S. Bankruptcy Court Holds that State-Court Receivership Order Does Not Bar Managing Member from Seeking LLC Bankruptcy Relief

When disputes involving financially distressed real estate or other property cannot readily be resolved through foreclosure, deed-in-lieu, consensual out-of-court restructuring, or a cooperative bankruptcy filing, a lender/mortgagee (or other creditors or interest holders) can ask a court to appoint a receiver to take control of the property, its rents, and sometimes the borrower entity. Typical receivership orders often grant receivers broad authority to take actions with respect to property and receivership assets. The orders also typically grant broad injunctive relief barring creditors, managers, equity holders and others, from taking actions against the property.

The Department of Defense Issues Final Rule Establishing CMMC 2.0

On October 15, 2024, the Department of Defense (DoD) published a long-awaited final rule implementing the Cybersecurity Maturity Model Certification (CMMC) program 2.0. The final rule will take effect on December 16, 2024. Spanning 146 pages in the Federal Register, this rule finalizes DoD’s regulations concerning CMMC 2.0. This rule does not, however, revise the DoD Federal Acquisition Regulation Supplement (DFARS). As we previously reported, in August DoD issued a proposed rule revising the DFARS to implement CMMC 2.0 in solicitations and contracts (the DFARS rule). The comment period for that proposed rule closed on October 15, 2024. Once the DFARS rule is also finalized, the phased roll out of the CMMC program will begin.

From Anatomy to Action: Navigating Data Center Contracts

Our colleagues recently provided a comprehensive overview of the anatomy of a data center, which explored the structural, energy and real estate implications of these essential facilities.

Pentagon Unveils $984 Million Loan Program to Promote Critical Technologies

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.

The Challenge Organizations Face to Become DORA Compliant Is Not to Be Underestimated

Financial entities within the EU are required to submit registers of information detailing their contractual arrangements with providers of information and communication technology (ICT) services (ICT Providers) to the European Supervisory Authorities (ESAs) prior to DORA’s compliance deadline. Financial entities should now be engaging with their existing ICT Providers to prepare such registers of information to enable the ESAs to designate “critical” ICT Providers (CTPPs).

Lenders Beware: The Ponzi Scheme Presumption Can Trap an Unwitting Lender

The Ponzi scheme presumption applies when a bankruptcy trustee (or similarly situated plaintiff) establishes that a Ponzi scheme exists. As a matter of law, it allows the court to infer the Ponzi scheme perpetrator’s actual intent to hinder, delay or defraud creditors with respect to seemingly all payments made during the existence of the scheme. See, e.g., Johnson v. Neilson (In re Slatkin), 525 F.23 805, 814 (9th Cir. 2008). Even payments received from the perpetrator in good faith can be clawed back, though recipients should be entitled to retain payments applied to their principal or actual investment in the scheme.

District Court Finds Qui Tam Provisions of the False Claims Act Unconstitutional

In a groundbreaking decision issued on September 30, 2024, Judge Kathryn Mizelle of the U.S. District Court for the Middle District of Florida broke with decades of precedent and held that the qui tam provisions of the False Claims Act (FCA) are unconstitutional. See U.S. ex rel. Zafirov v. Florida Medical Assocs., LLC, No. 8:19-CV-01236-KKM-SPF, (M.D. Fla. Sept. 30, 2024).

The Beginning of the End for the USPTO’s After Final Consideration Pilot Program 2.0

On October 1, 2024, the U.S. Patent and Trademark Office (USPTO) announced the termination of the After Final Consideration Pilot Program 2.0 (AFCP 2.0), a program widely used by patent applicants since 2013. As the program enters its final extension period, patent applicants should be aware of key deadlines and explore alternative strategies for responding to final office actions. Initially set to expire on September 30, 2024, the AFCP 2.0 has been extended to December 14, 2024, after which no further participation requests will be accepted. The decision to end the program follows public resistance to a proposed fee structure aimed at offsetting its high administrative costs.

Corporate Transparency Act: Is Your Company Prepared to Meet the Deadline for Filing on January 1, 2025?

The federal Corporate Transparency Act (CTA) became effective on January 1, 2024, and set a deadline of January 1, 2025, for entities existing on the effective date to file an initial report. As we enter the fourth quarter of 2024, that deadline is fast approaching. Many entities have waited to see if the statute would be invalidated, the rules further clarified, or the deadline postponed, or have decided to wait until the deadline is at hand. It now may be time for entities formed or qualified to do business in the United States to determine if they are required to file and, if so, to determine who are the “beneficial owners” whose name and personal information needs to be collected, and to begin to collect this information.

New UK Trade Sanctions Enforcement Body Goes Live October 10, 2024

The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 (the Regulations) were published on September 12, 2024, and are effective from October 10, 2024. They grant the Office of Trade Sanctions Implementation (OTSI) new civil enforcement powers in respect of most UK trade sanctions, and the Department for Transport (DfT) corresponding powers in relation to aircraft and shipping sanctions. Businesses operating in the UK should expect substantially heightened trade sanctions enforcement risk, particularly as penalties for breaches of trade sanctions will be imposed on a strict liability basis. Certain parties in the financial, legal, shipping and aviation sectors will also be impacted by new mandatory reporting obligations.

Is the Federal Circuit Breathing Life Back Into False Patent Marking Claims?

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.”

DOJ Debuts Updates to Its Evaluation of Corporate Compliance Programs Aimed at the Responsible Use of Artificial Intelligence

On September 23, 2024, the U.S. Department of Justice (DOJ) Criminal Division released an updated version of its Evaluation of Corporate Compliance Programs (ECCP) guidance. DOJ first published the ECCP in 2017 to provide clear guidance on which factors federal prosecutors will consider when evaluating the strength of a corporation’s compliance programs in the context of an investigation or enforcement action. The ECCP instructs prosecutors on how to evaluate a company’s risk assessment mechanisms, to ensure that the company’s policies and procedures are responsive to the risks that it has identified and communicate those risks, and the established risk mitigations, to the corporation’s stakeholders, such as employees and vendors. The ECCP is a critical resource that companies should consider when developing compliance programs to avoid penalties associated with DOJ enforcement action.

Federal Court Issues Injunction to Prevent Presumptive Gender and Race Preferences for DOT Contracts Within Kentucky and Indiana

Bipartisan Legislation Presents Opportunity for Passing PFAS Laws

With appropriations settled until December 20, Congress now has one other piece of “must-pass” legislation to address: the National Defense Authorization Act (NDAA). The NDAA authorizes the activities of the Department of Defense (DoD) for the following fiscal year and the legislation has passed on a bipartisan basis for over 60 consecutive years. Because of the nature of the bill and its legacy as a successful, bipartisan movement, the NDAA has become critical for Congress to pass each year. However, the NDAA, as with other must-pass pieces of legislation, has also become a vehicle for attaching policy items that would not otherwise pass on their own, either because they are too controversial or not popular enough. As a result, the passage of the NDAA has become more controversial in the past few years as social programs and partisan priorities have been added to the negotiation process. One area of attention in recent years addresses DoD handling of PFAS chemicals. As the House and Senate versions of the NDAA have differing provisions concerning PFAS, this will prove to be another topic that the NDAA conferees will need to negotiate in the coming weeks. Below is an overview of the PFAS provisions that may or may not be included in the final bill.

No Comity Tonight

Upon recognition of a foreign insolvency proceeding under chapter 15 of the U.S. Bankruptcy Code, the foreign debtor may request additional assistance from the U.S. Bankruptcy Court under section 1507 or additional relief under section 1521. Such additional relief often includes requests to recognize and enforce in the United States specific orders entered by the foreign court. While such requests are freely granted, there are limits to the relief a foreign debtor may receive. For example, in In re Nexgenesis Holdings Ltda., No. 22-14043-BKC-LMI, 2024 WL 3616732 (Bankr. S.D. Fla. July 31, 2024) (In re Nexgenesis), the bankruptcy court denied the foreign representatives’ request for recognition of an asset freeze order because, among other reasons, it would be manifestly contrary to U.S. public policy to recognize the order, even though the Brazilian insolvency proceeding had been recognized as a foreign main proceeding under Chapter 15.

California Climate Disclosures Remain on Schedule

California is set to launch its first-in-the-nation mandatory climate disclosure framework next year as provided in the 2023 Climate Accountability Package, Senate Bills SB 253 and SB 261. (For more information on the Climate Accountability Package, see Pillsbury’s prior reporting here and here.) But the bills have not come without some lingering controversy over the ability of businesses to meet the aggressive January 1, 2026, deadline to report their carbon footprints and submit climate risk assessments to the California Air Resources Board (CARB), as well as CARB’s ability to adopt implementing regulations by this coming January 1. A proposal by California Governor Gavin Newsom to provide relief through two-year extensions for compliance arrived back in the form of a bill from the Legislature—SB 219—for his signature, but it was stripped of those extensions and only granted an additional six months for CARB to adopt regulations. On September 27, Newsom acquiesced and signed SB 219 into law. The development confirms the need for businesses to continue preparing for mandated climate disclosures by January 1, 2026, and to consider participating in the CARB rulemaking to emphasize the implementation concerns recognized by Newsom.

From AI Doomers to E/Accs: How SB 1047 and the 38 AI Laws in California Are Shaping Future AI Law

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.

California Employers Required to Have a Workplace Violence Prevention Plan

According to the Occupational Safety and Health Administration (OSHA), workplace violence affects nearly two million American workers annually. In 2021, 57 people died from acts of workplace violence in California.

Department of Justice Settles with Las Vegas Casino for $130 Million

The Department of Justice (DOJ), through the U.S. Attorney’s Office (USAO) for the Southern District of California, recently announced a non-prosecution agreement with a Las Vegas casino, which forfeited over $130 million under the agreement. The agreement settled criminal allegations that the casino conspired with unlicensed money transmitting businesses (MTBs) worldwide to transfer funds for its financial benefit. This announcement is the latest example of the DOJ’s expanding focus on alleged money-laundering activities involving MTBs and international transfers of funds, particularly transfers connected with mainland China and mainland Chinese-related criminal activity.

SBA Proposed Rule to Change How Recertification Affects Small Business IDIQs and Bring More Uniformity Across Various SBA Programs

On August 23, 2024, Small Business Administration (SBA) published a proposed rule making certain changes to the Historically Underutilized Business Zone (HUBZone) program, as well as other programs, to promote consistency in SBA’s rules across the various socioeconomic government contracting programs. While the proposed rule makes numerous changes to the SBA programs, small businesses will be particularly interested in the proposed changes to SBA’s recertification rule.

District Court Ruling Bars Federal Trade Commission Non-Compete Rule for the Near Term

The Federal Trade Commission (FTC) and the Non-Compete Clause Rule (Rule)
Under Section 5 of the FTC Act, “[t]he Commission is [] empowered and directed to prevent persons, partnerships, or corporations … from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a)(2). As such, Section 6 of the FTC Act, grants the FTC the power to “[f]rom time to time classify corporations and … to make rules and regulations for the purpose of carrying out the provisions” of the FTC Act.

FinCEN Finalizes Rule to Compel Reporting of Individuals and Beneficial Ownership of Entities Involved in Specified Transfers of Residential Real Estate

On August 28, 2024, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule (RRE Rule) creating a reporting regime for transfers of residential real estate. This RRE Rule, proposed in preliminary form on February 16, 2024, supplements FinCEN’s current General Targeting Order (GTO) program for reporting of such transactions but is quite different in approach and scope. Unlike the GTO, it applies on a nationwide basis and without a floor amount of consideration.

IRS Issues Proposed Regulations Regarding Updates to the Qualified Domestic Trust Regulations

The United States taxes a U.S. resident on their assets above a certain amount at death and non-residents on their U.S. assets. So, if someone dies owning assets worth more than their remaining lifetime exemption, a U.S. estate tax is typically due. Payment of this tax can often be delayed with the use of a Qualified Terminable Interest Property (QTIP) trust for the benefit of a surviving (U.S.) spouse. Additionally, spouses can transfer property to the other free of any transfer taxes, as transfers of property between spouses qualify for the unlimited marital deduction. Although transfers of property to a noncitizen spouse would not qualify for the marital deduction under Internal Revenue Code (IRC) Section 2056(d)(1), IRC Section 2056(d)(2)(A) provides an exception to the general rule. If the qualified domestic trust (QDOT) requirements under IRC Section 2056A are met, property that passes from a U.S. person to a noncitizen spouse in a QDOT qualifies for the marital deduction. An executor of the estate must elect QDOT treatment.

U.S. Government Intervenes in Georgia Tech Cybersecurity False Claims Case

On August 22, 2024, the U.S. Department of Justice (DOJ) filed a complaint as intervenor in a False Claims Act (FCA) lawsuit filed against Georgia Tech Research Corporation and the Board of Regents of the University System of Georgia (Georgia Tech). The case was originally filed against Georgia Tech under seal in July 2022 by two whistle-blowers, its former associate director of cybersecurity and a former principal information security engineer.

Important Delaware General Corporation Law Amendments Are Signed into Law amid Recent Delaware Chancery Court Decisions

Significant amendments to the Delaware General Corporation Law (DGCL) were signed into law by Governor John Carney on July 17, 2024 (SB 313). These amendments were initially introduced in March 2024 in response to three controversial Delaware Court of Chancery rulings, Moelis, Activision and Crispo, which called into question the validity of several well-established and commonly used market practices. SB 313 went into effect on August 1, 2024, and applies retroactively to all contracts and agreements made by a corporation (including merger and consolidation agreements) and all agreements, instruments or documents approved by a board of directors. However, SB 313 will not apply to or affect any civil action or proceeding completed or pending on or before August 1, 2024.

OSHA’s First Federal Heat Standard for Outdoor and Indoor Work

On July 2, 2024, the Occupational Safety and Health Administration (OSHA) issued a proposed rule for Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings. If finalized, the proposed Section 1910.148 would be OSHA’s first federal heat standard. It would apply to all employers conducting outdoor and indoor work in all general industry, construction, maritime and agriculture sectors where OSHA has jurisdiction.

Technology Transfer Agreements: Latest Developments in California

In 1993, the California Legislature amended Revenue and Taxation Code (RTC) sections 6011 and 6012 to exclude from California sales and use tax amounts charged for intangible personal property transferred with a technology transfer agreement (TTA) if the TTA separately stated a reasonable price for the tangible personal property (TPP). Nine years later, the State Board of Equalization (SBE) adopted Regulation 1507, Technology Transfer Agreements, to implement and interpret the TTA statutes and to incorporate the California Supreme Court’s holding in Preston v. State Board of Equalization, 25 Cal.4th 197 (2001). Subsequent litigation over the next 13 years in Nortel Networks, Inc. v. State Board of Equalization, 191 Cal.App.4th 1259 (2011) and Lucent Technologies, Inc. v. State Board of Equalization, 241 Cal.App.4th 19 (2015), invalidated portions of Regulation 1507, as well as Regulation 1502 (Computers, Programs and Data Processing). In the nine years since the Lucent decision, the SBE and its successor, the California Department of Tax and Fee Administration (CDTFA), have been engaged in a seemingly endless regulation project. There finally appears to be some meaningful movement. But first, a little background.

Bankruptcy Court Splits the Baby on Real Estate Landlord’s Claim for Unpaid Postpetition Rent

In In re Jughandle Brewing Co. LLC, 23-15703 (Bankr. D.N.J. June 3, 2024), the U.S. Bankruptcy Court for the District of New Jersey faced the following question: whether, in a chapter 7 case, postpetition, pre-rejection payments due under an unexpired lease of nonresidential real property must be treated as an administrative expense claim under section 503(b)(1), regardless of whether the rent payments were actual, necessary costs of preserving the estate. It answered the question in the negative, holding that there is no per se rule that a trustee’s obligation to perform postpetition lease obligations under section 365(d)(3) creates an administrative expense claim. And on the facts before it, the Court crafted a middle ground, allowing an administrative expense claim in favor of the landlord in an amount equal to three months of base rent less amounts paid to the landlord by the secured creditor as a use and occupancy fee for removal of its collateral, along with a general unsecured claim for prorated stub rent for the initial postpetition period. In so doing, the Court confirmed that courts may craft an appropriate remedy when a trustee or debtor in possession breaches a real estate lease before rejection on a case-by-case basis.

The Department of Defense Issues New Proposed Rule Implementing Contractual Requirements Related to CMMC 2.0

On August 15, 2024, the Department of Defense (DoD) released a long-awaited proposed rule implementing certain requirements of the Cybersecurity Maturity Model Certification (CMMC) program 2.0. As we have previously reported, CMMC is a program developed by the DoD to protect the Defense Industrial Base from cyber threats. Under this program, nearly all DoD contractors and subcontractors will be required to achieve certain levels of cybersecurity maturity. The DoD first announced the CMMC program in 2019, then issued an initial version of the program (CMMC 1.0) in November 2020. In November 2021, the DoD announced that it would be overhauling the CMMC and replacing it with CMMC 2.0. The purpose of CMMC 2.0 was to restructure the CMMC program and to reduce the cost and administrative burden of achieving cybersecurity compliance. On December 26, 2023, the DoD issued a proposed rule and related guidance implementing many aspects of CMMC 2.0. The newly released proposed rule would amend the Department of Defense Federal Acquisition Regulation Supplement (DFARS) to implement the contractual requirements related to CMMC 2.0. This new proposed rule is largely consistent with the December 26, 2023, proposed rule, but provides additional detail about how the CMMC program will be administered and introduces new contract clauses to implement the program.

Department of Commerce Releases Five Products to Help Guide AI Development

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.

Truth-in-AI and Robo-Deception: How Regulation Is Evolving to Address Deepfakes, Robocalls and More to Avoid the Erosion of Consumer Trust

While major legal cases involving AI have largely focused on copyright issues, few cases thus far have directly addressed truthful advertising of AI products and AI-generated content. Indeed, the ease with which consumers and the public can be deceived by AI, as well as the fear of mal-intentioned interference in political elections, has underscored the urgency of considering legislation and regulations that are capable of addressing these issues directly.

FCC Attempts to Regulate Artificial Intelligence in Political Advertising Through New Disclosure Requirements

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.

Preclusion Confusion: Federal Circuit Decision in ZyXEL Communications v. UNM Rainforest Sparks Uncertainty at the PTAB

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.

Bankruptcy Court Rejects Attempts to Lock Up Creditor Votes in Favor of Reorganization Plan

In April 2024, Chief Judge Martin Glenn for the U.S. Bankruptcy Court for the Southern District of New York rejected a provision in certain post-petition agreements with aircraft lessors (collectively, the “Aircraft Agreements”) requiring the aircraft lessor (and creditor) to vote its claim in favor of a not yet filed or negotiated chapter 11 plan. See In re GOL Linhas Aéreas Inteligentes S.A., No. 24-10118 (WG), 2024 WL 1716490 (Bankr. S.D.N.Y. Apr. 22, 2024). The Court’s decision, as well as other decisions in In re SAS AB and In re LATAM Airlines Group S.A., reflects a renewed focus on lock-up provisions by bankruptcy courts. This focus comes as debtors are requesting with increasing frequency similar commitments from creditors to attain the requisite votes for confirmation. None of these cases, however, resulted in a court disregarding the votes cast by the lessors.

Discovery Dilemma: An Update on the Legal Battle Between The New York Times and OpenAI

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.

Subsidence from Geothermal Operations: Navigating the Regulatory Landscape and Potential Claims

Geothermal projects in the United States and abroad face scrutiny of their potential impacts on the surrounding environment and communities. Seismic activity, noise and water contamination are commonly cited concerns.

The End of the Chevron Doctrine and the Reassertion of Judicial Primacy in Reviewing Federal Regulatory Actions

In 1984, the U.S. Supreme Court (SCOTUS) decided Chevron USA, Inc. v. National Resource Defense Council. See 467 U.S. 839 (1984). The unanimous decision, written by Justice Stephens, reversed then-D.C. Circuit Judge Ruth Bader Ginsburg’s ruling that set aside EPA’s Clean Air Act “bubble policy,” which was intended to provide regulatory relief from certain EPA permitting requirements.

Purdue Pharma and the Future of Nonconsensual Third-Party Releases in Chapter 15 Cases

On July 27, 2024, the U.S. Supreme Court issued a long-awaited ruling regarding the validity of nonconsensual third-party releases in the chapter 11 plan of pharmaceutical company Purdue Pharma. In Harrington v. Purdue Pharma L.P., the Supreme Court held that absent consent from the affected claimants, the bankruptcy court lacked the power to approve a plan provision releasing Purdue’s founders, the Sackler family, from liabilities arising from Purdue’s sale of opioids. In reaching that result, the Supreme Court concluded that nonconsensual third-party releases fall outside the scope of section 1123(b) of the Bankruptcy Code, which limits the types of provisions a bankruptcy plan may include. It also reasoned that nonconsensual third-party releases contravene section 1141(d), which provides “a discharge” from liability only to “a debtor.”

U.S. Supreme Court Ruling Gives Insurers with Financial Responsibility “Party in Interest” Standing in Chapter 11 Cases Filed by Insured Entities

On June 6, 2024, in Truck Insurance Exchange v. Kaiser Gypsum Company, Inc., the U.S. Supreme Court ruled unanimously that an insurer with financial responsibility for claims asserted in a bankruptcy has standing under the U.S. Bankruptcy Code to object to plan confirmation. The Supreme Court reversed a decision by the Fourth Circuit Court of Appeals denying an insurer standing based on the “insurance neutrality” doctrine but did not adopt the insurer’s position that the underlying insurance contract’s “duty to cooperate” triggered the insurer’s right to be heard in connection with the chapter 11 proceeding. Justice Sotomayor delivered the Supreme Court’s unanimous decision. Justice Alito did not take part in the decision.