Litigation

This quarterly update highlights key legislative, regulatory, and litigation developments in the fourth quarter of 2023 and early January 2024 related to technology issues.  These included developments related to artificial intelligence (“AI”), connected and automated vehicles (“CAVs”), data privacy, and cybersecurity.  As noted below, some of these developments provide companies with the opportunity for participation and comment.

I. Artificial Intelligence

Federal Executive Developments on AI

The Executive Branch and U.S. federal agencies had an active quarter, which included the White House’s October 2023 release of the Executive Order (“EO”) on Safe, Secure, and Trustworthy Artificial Intelligence.  The EO declares a host of new actions for federal agencies designed to set standards for AI safety and security; protect Americans’ privacy; advance equity and civil rights; protect vulnerable groups such as consumers, patients, and students; support workers; promote innovation and competition; advance American leadership abroad; and effectively regulate the use of AI in government.  The EO builds on the White House’s prior work surrounding the development of responsible AI.  Concerning privacy, the EO sets forth a number of requirements for the use of personal data for AI systems, including the prioritization of federal support for privacy-preserving techniques and strengthening privacy-preserving research and technologies (e.g., cryptographic tools).  Regarding equity and civil rights, the EO calls for clear guidance to landlords, Federal benefits programs, and Federal contractors to keep AI systems from being used to exacerbate discrimination.  The EO also sets out requirements for developers of AI systems, including requiring 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.

Federal Legislative Activity on AI

Congress continued to evaluate AI legislation and proposed a number of AI bills, though none of these bills are expected to progress in the immediate future.  For example, members of Congress continued to hold meetings on AI and introduced bills related to deepfakes, AI research, and transparency for foundational models.

  • Deepfakes and Inauthentic Content:  In October 2023, a group of bipartisan senators released a discussion draft of the NO FAKES Act, which would prohibit persons or companies from producing an unauthorized digital replica of an individual in a performance or hosting unauthorized digital replicas if the platform has knowledge that the replica was not authorized by the individual depicted. 
  • Research:  In November 2023, Senator Thune (R-SD), along with five bipartisan co-sponsors, introduced the Artificial Intelligence Research, Innovation, and Accountability Act (S. 3312), which would require covered internet platforms that operate generative AI systems to provide their users with clear and conspicuous notice that the covered internet platform uses generative AI. 
  • Transparency for Foundational Models:  In December 2023, Representative Beyer (D-VA-8) introduced the AI Foundation Model Act (H.R. 6881), which would direct the Federal Trade Commission (“FTC”) to establish transparency standards for foundation model deployers in consultation with other agencies.  The standards would require companies to provide consumers and the FTC with information on a model’s training data and mechanisms, as well as information regarding whether user data is collected in inference.
  • Bipartisan Senate Forums:  Senator Schumer’s (D-NY) AI Insight Forums, which are a part of his SAFE Innovation Framework, continued to take place this quarter.  As part of these forums, bipartisan groups of senators met multiple times to learn more about key issues in AI policy, including privacy and liability, long-term risks of AI, and national security.

Continue Reading U.S. Tech Legislative, Regulatory & Litigation Update – Fourth Quarter 2023

Only one claim survived dismissal in a recent putative class action lawsuit alleging that a pathology laboratory failed to safeguard patient data in a cyberattack.  See Order Granting Motion to Dismiss in Part, Thai v. Molecular Pathology Laboratory Network, Inc., No. 3:22-CV-315-KAC-DCP (E.D. Tenn. Sep. 29, 2023), ECF 38.

In December 2021, plaintiffs allege

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

May courts look beyond the face of a loan transaction to identify the “true lender”?  In a lawsuit filed by California’s financial regulator, a California state court recently answered yes, finding that a fact-intensive inquiry into the “substance” of a loan transaction was necessary to determine who the “true lender” is and declining to dismiss

This half-yearly update on insurance coverage litigation summarises significant insurance coverage cases in the English courts and provides a detailed analysis of the Corbin & King v AXA Insurance UK Plc case, highlighting the key takeaways for policyholders. In the first half of 2022, the English courts have delivered important judgments on a number of critical issues for policyholders, including Covid-19 business interruption insurance, aggregation clauses, insurers’ implied obligation to pay claims within a “reasonable” time, and the effect of lenders’ mortgagee interest insurance policies; some of which are policyholder friendly, some less so.  

Significant cases 2022 H1

Corbin & King v AXA Insurance UK Plc [2022] EWHC 409 (Comm): In the most anticipated decision of the last half-year relating to Covid-19 business interruption losses, the English High Court determined in favour of a restaurant business, that a prevention of access clause in its policy was triggered by the Government-mandated lockdowns arising from Covid-19 in 2020 and 2021. Given the importance of this case for policyholders, we analyse the court’s findings in further detail below.

Spire Healthcare Limited v Royal & Sun Alliance Insurance Limited [2022] EWCA Civ 17: This decision is the latest word on the interpretation of “aggregation clauses” in insurance policies that require a policyholder to aggregate similar or related losses into a single claim against the insurer, which is then subject to a liability cap on each claim. The Court of Appeal held that several claims against the policyholder could be aggregated into one claim against the insurer on the basis that there was “one source or original cause” of the policyholder’s loss. As a result, the policyholder’s recovery was limited to £10 million, the policy limit per claim.Continue Reading Half Year Review: Insurance Coverage Litigation (H1 2022)

Recent months have seen a growing trend of data privacy class actions asserting claims for alleged violations of federal and state video privacy laws.  In this year alone, plaintiffs have filed dozens of new class actions in courts across the country asserting claims under the federal Video Privacy Protection Act (“VPPA”), Michigan’s Preservation of Personal

A recent class action refiled in federal court against Shopify highlights a growing trend of lawsuits against companies related to the theft of cryptocurrency, particularly as a result of internal company threats.  See Forsberg et al v. Shopify, Inc. et al, 1:22-cv-00436 (D. Del.).  Despite not itself being a repository for or facilitating the

An Illinois federal district court recently rejected dismissal of Illinois Biometric Information Privacy Act (“BIPA”) claims in In re Clearview AI, Inc., Consumer Privacy Litigation, No. 21-cv-135 (N.D. Ill.).  The Clearview plaintiffs alleged that Clearview violated their privacy rights without their knowledge and consent by scraping more than three billion photographs of facial images

On Thursday, the Illinois Supreme Court unanimously ruled in McDonald v. Symphony Bronzeville Park LLC that the exclusivity provisions of the state’s workers’ compensation statute do not preclude liquidated damages claims under the Biometric Information Privacy Act.  The decision narrows the defenses available to employers facing employment-related BIPA claims.

Illinois’s Workers’ Compensation Act generally provides