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In a new post on the Inside Government Contracts blog, our colleagues discuss new reporting requirements by the Department of Commerce, Bureau of Industry and Security for the development of advanced AI models and possession of large-scale computing clusters.

Continue Reading Every Quarter, On the Quarter:  BIS Proposes New Reporting Requirements for the Development of Advanced Artificial Intelligence Models and Possession of Large-Scale Computing Clusters

In a new post on the Inside Government Contracts blog, our colleagues discuss recent developments under President Biden’s Cybersecurity Executive Order and the U.S. National Cybersecurity Strategy.  To read the post, please click here.

Continue Reading September 2023 Developments Under President Biden’s Cybersecurity Executive Order and National Cybersecurity Strategy

Yesterday, the White House issued a Fact Sheet summarizing its Executive Order on a comprehensive strategy to support the development of safe and secure artificial intelligence (“AI”).  The Executive Order follows a number of actions by the Biden Administration on AI, including its Blueprint for an AI Bill of Rights and voluntary commitments from certain developers of AI systems.  According to the Administration, the Executive Order establishes new AI safety and security standards, protects privacy, advances equity and civil rights, protects workers, consumers, and patients, promotes innovation and competition, and advances American leadership.  This blog post summarizes these key components.

  • Safety & Security Standards.  The Executive Order sets out several required actions for developers of AI systems.  Notably, the White House, “in accordance with the Defense Production Action,” will require companies developing any foundation model “that poses a serious risk to national security, national economic security, or national public health and safety” to notify the federal government when training the model and provide results of all red-team safety tests to the government. 

Relatedly, the Executive Order directs certain federal agencies to undertake the following actions and initiatives:

  • National Institute of Standards and Technology:  establish standards for red-teaming required before the public release of an AI system. 
    • Department of Homeland Security:  apply the NIST standards to use of AI in critical infrastructure sectors and establish an AI Safety and Security Board. 
    • Departments of Energy and Homeland Security:  address AI systems’ threats to critical infrastructure, as well as chemical, biological, radiological, nuclear, and cybersecurity risks; it also calls for the creation of standards for biological synthesis screening.
    • Department of Commerce:  develop guidance for content authentication and watermarking to label content generated by AI and received by the government; it also suggests that federal agencies would be required to use these tools.
    • National Security Council & White House Chief of Staff:  develop a National Security Memorandum that ensures that the United States military and intelligence community use AI safely, ethically, and effectively.

Continue Reading Biden Administration Announces Artificial Intelligence Executive Order

On 26 June 2023, the International Sustainability Standards Board (“ISSB”) published its inaugural International Financial Reporting Standards Sustainability Disclosure Standards (the “ISSB Standards”) (read our previous blog post on this here).  In August 2023, the UK Financial Conduct Authority (“FCA”) published Primary Market Bulletin 45, confirming its intentions…

Continue Reading Corporate Reporting in the UK: The International Sustainability Standards Board

FCA Issues Reminder on Board and Executive Management D&I Disclosure Obligations

The UK Financial Conduct Authority (“FCA”) has provided a reminder to primary market participants in its Primary Market Bulletin 44 of the need to make diversity and inclusion-related (“D&I”) disclosures in their annual reports. The obligations were introduced last year through amendments to the Listing Rules  and the Disclosure Guidance and Transparency Rules (“DTRs”), as set out in the FCA’s Policy Statement PS 22/3 (and covered in our previous blog post here).

At a glance, the amendments to the Listing Rules oblige in-scope companies to disclose annually on a “comply or explain” basis whether they meet specific board diversity targets, and to publish standardised data on the composition of their board and senior management, in each case in relation to sex or gender and ethnic background.

Changes to the corporate governance rules were introduced (through the amendments to the DTRs) to encourage a broader consideration of diversity at a board level, including with respect to a wider pool of diversity characteristics, spanning ethnicity, sexual orientation, disability, and socio-economic background

The rules are intended to increase transparency with better, more comparable information on the diversity of companies’ boards and executive management. The FCA believes that greater transparency will provide improved data for companies and investors to assess progress in this area, and inform shareholder engagement and investment decisions, thereby enhancing market integrity and promoting greater D&I.Continue Reading FCA Primary Market Bulletin No. 44

Practice and Procedure

The ITC’s Recent Sua Sponte Use of 100-Day Expedited Adjudication Procedure

Over the last few years, the International Trade Commission (“ITC” or “Commission”) has developed procedural mechanisms geared toward identifying potentially dispositive issues for early disposition in its investigations. These procedures are meant to give respondents an opportunity to litigate a dispositive issue before committing the resources necessary to litigate an entire Section 337 investigation.

In 2018, the ITC adopted 19 C.F.R. § 210.10(b)(3), which provides that “[t]he Commission may order the administrative law judge to issue an initial determination within 100 days of institution . . . ruling on a potentially dispositive issue as set forth in the notice of investigation.” Although the ITC denies the majority of requests by respondents to use this procedural mechanism, the ITC has ordered its ALJs to use this program in a handful of investigations to decide, among other things, whether the asserted patents claim patent-eligible subject matter, whether a complainant has standing to sue, whether a complainant can prove economic domestic industry, and whether claim or issue preclusion applies.

In a recent complaint filed in Certain Selective Thyroid Hormone Receptor-Beta Agonists, Processes for Manufacturing or Relating to Same, and Products Containing Same, Inv. No. 337-TA-1352, Complainant Viking Therapeutics, Inc. (“Viking”) alleged that respondents had misappropriated trade secrets to create their own drug candidates to compete with Viking’s VK2809 (phase 2) clinical drug candidate. As required by Section 337(a)(1)(A) governing trade secret cases, Viking alleged that the respondents’ unfair acts caused injury and threatened to cause injury going forward to Viking’s domestic industry. Viking’s theory of injury was based on the assumption that Viking’s VK2809 drug candidate and respondents’ ASC41 and ASC43F drug candidates would both receive FDA approval, would both launch into the same market, and would compete with one another. Viking’s complaint stated that its domestic industry product drug candidate, VK2809, will be brought to market in 2028.

Unlike past instances where the ITC employed 100-day proceedings, the Commission took the remarkable step of placing this investigation into a 100-day proceeding sua sponte on the issue of injury, even though no respondent raised the issue of injury as a basis to deny institution or order expedited adjudication. See Notice of Institution (Jan. 20, 2023). Respondents had not even argued that Viking’s injury allegations were deficient in their pre-institution filing. Commissioner Schmidtlein wrote separately to express her disagreement with the majority’s decision to order and expedited proceeding, noting that “these issues [are not] suitable for resolution within 100 days.”Continue Reading Section 337 Developments at the U.S. International Trade Commission

In the past five years, loot boxes have been the focus of many gaming regulators worldwide.  While the regulatory status of loot boxes is still unclear in the EU, the Report of the European Parliament on Consumer Protection in Online Video Games: a European Single Market Approach, adopted on January 18, 2023, may bring some clarity on how loot boxes will be regulated in the EU in the future.

This blog post illustrates how loot boxes are currently regulated in the EU and explains why the gaming industry should already prepare for a possible ban on paid loot boxes.

Qualification of Loot Boxes in the EU

In its Study on Loot Boxes in Online Games and Their Effect on Consumers, in Particular Young Consumers of July 2020, the European Parliament broadly defined loot boxes as “features in video games which are usually accessed through gameplay, or which may be optionally paid for with real-world money.  They are ‘mystery boxes’ which contain randomised items, so players do not know what they will get before opening.  Players can access diverse types of in-game content through loot boxes such as cosmetic items for game customisation (e.g. skins and new looks for the player’s avatar) or items affecting gameplay (e.g. tools, weapons, levels, maps, in-game currency etc.) which could, for example, help players compete better or advance more quickly.”

Thus, loot boxes are usually characterized by the following features:Continue Reading Upcoming EU Legislation on Loot boxes?

Last year, Congress passed and President Biden signed into law the Inflation Reduction Act (IRA), which included provisions to allow Medicare to directly negotiate the price of drugs along with other cost control measures that, taken together, represented the most sweeping and impactful drug pricing policy reform in generations. “We finally beat pharma,” the President declared.

President Biden doubled down in his State of the Union address, repeating the mantra that Americans “pay more for prescription drugs than any major country on earth” – to back up his promise to veto any effort in Congress to repeal the IRA. Given the albeit slim Democratic majority in the Senate, the odds of legislation to repeal the IRA hitting the President’s desk in the next two years are nil. But putting political rhetoric aside, the reality is that the congressional environment for pharma remains threatening on a number of fronts.

Democrats in Congress continue to see drug pricing as a winning issue. Senate Finance Committee Chairman Wyden has essentially already rejected the idea of amending the IRA to put small molecule drugs on the same timeline for negotiation as biologics.  Wyden also recently sent a letter to the Centers for Medicare and Medicaid Services to make certain that the IRA’s inflation rebate provisions are timely and completely implemented. At the same time, as a counter balance, new House Energy and Commerce Chair McMorris Rodgers and others plan to use their oversight authorities to force transparency from Administration regarding the impact of the IRA on drug innovation and other issues.Continue Reading Drug Pricing Reform Efforts in DC: A Continuing Pill for the Biopharma Industry

February 10, 2023, Covington Alert

Political committees, advertisers, and advertising platforms have operated under a cloud of uncertainty regarding which disclaimers, if any, must appear on internet-based advertisements. Existing Federal Election Commission (“FEC”) regulations and guidance left many unanswered questions about the disclaimers required for these increasingly important internet ads. The FEC has finally offered some clarity in this area, though some tough questions remain.

In December, the FEC voted to expand the agency’s political advertising disclaimer requirements to explicitly address internet-based ads, capping a winding rulemaking process that began over 11 years ago. These new rules go into effect on March 1, 2023. This client alert discusses how the disclaimer rules have changed, what ambiguities still exist, and what political committees, advertisers, and advertising platforms should expect going forward.

How did the FEC’s disclaimer rules change?

The new FEC disclaimer rules expand the scope of the types of internet-based communications that must have disclaimers, and also describe the content that such internet advertising disclaimers must include.

Expanded Scope. FEC regulations place disclaimer requirements on all “public communications” that (1) are made by political committees, (2) contain express advocacy, or (3) solicit a contribution. While the content of the general disclaimer requirements depends on the identity of the entity making the communication, all disclaimers must be “clear and conspicuous,” must indicate whether the entity is authorized by a candidate, and must identify the person who paid for the ad.Continue Reading What You Need to Know about the FEC’s New Internet Communications Disclaimer Rules