Category: Administrative & Regulatory

Weekly Bankruptcy Alert March 3, 2025 (For the Week Ending March 2, 2025)

Covering reported business bankruptcy filings in Massachusetts, Maine, New Hampshire, and Rhode Island, and Chapter 11 bankruptcy filings in New York and Delaware listing assets of more than $1 million.

Chapter 11

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

1 Dalfanso LLC(Newburgh, NY)
Not Disclosed
Poughkeepsie(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/24/25

Dynamic Aerostructures LLC(Valencia, CA)
Aerospace Product and Parts Manufacturing
Wilmington(DE)
$10,000,001to$50 Million
$50,000,001to$100 Million
2/25/25

Dynamic Aerostructures Intermediate LLC(Valencia, CA)
Aerospace Product and Parts Manufacturing
Wilmington(DE)
$10,000,001to$50 Million
$50,000,001to$100 Million
2/25/25

Forrest Machining LLC(Valencia, CA)
Aerospace Product and Parts Manufacturing
Wilmington(DE)
$10,000,001to$50 Million
$50,000,001to$100 Million
2/25/25

Eureka Realty Corp.(New York, NY)
Residential Building Construction
Manhattan(NY)
$1,000,001to$10 Million
$1,000,000to$10 Million
2/25/25

Quinebaug Camp Properties, Inc.(Woonsocket, RI)
Not Disclosed
Providence(RI)
$100,001to$500,000
$500,001to$1 Million
2/28/25

MOM CA Investco LLC(Newport Beach, CA)
Activities Related to Real Estate
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
2/28/25

MOM AS Investco LLC(Newport Beach, CA)
Activities Related to Real Estate
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
2/28/25

MOM BS Investco LLC(Newport Beach, CA
Activities Related to Real Estate
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
2/28/25

Azzur Group Holdings LLC2(Hatboro, PA)
Management, Scientific, and Technical Consulting Services
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
3/2/25

Eureka Realty Corp.(New York, NY)
Residential Building Construction
Manhattan(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/25/25

Chapter 7

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

Genera Health Direct LLC(Needham, MA)
Not Disclosed
Boston(MA)
$0to$50,000
$500,000to$1 Million
2/24/25

AM Project 145 NWS LLC(Boston, MA)
Activities Related to Real Estate
Boston(MA)
$10,000,001to$50 Million
$1,000,001to$10 Million
2/25/25

AM Project 169 NWS LLC(Boston, MA)
Activities Related to Real Estate
Boston(MA)
$10,000,001to$50 Million
$1,000,001to$10 Million
2/25/25

MSI Global Talent Solutions LLC(Hampton, NH)
Not Disclosed
Concord(NH)
$100,000to$500,000
$1,000,001to$10 Million
2/25/25

At Home, Inc.(Dover-Foxcroft, ME)
Retail Trade
Bangor(ME)
$100,001to$500,000
$1,000,001to$10 Million
2/28/25

1Business Type information is taken from Bankruptcy Court filings, which may include incorrect categorization by the debtor or others.
2Additional affiliate filings include: Azzur Group, LLC, Cobalt LLC, Azzur Consulting LLC, Azzur Austin LLC, Azzur Chicago LLC, Azzur Denver LLC, Azzur IT LLC, Azzur North Carolina, LLC, Azzur of CA, LLC, Azzur of NE, LLC Azzur Princeton LLC, Azzur San Diego LLC, Azzur San Francisco LLC, Azzur Solutions LLC, Azzur Technical Services – Boston LLC, Azzur Training Center – Raleigh LLC, Azzur Washington DC LLC, Azzur Worcester LLC, Azzur Cleanrooms-On-Demand – Services LL, Azzur Cleanrooms-On-Demand – Boston LLC, Azzur Cleanrooms-On-Demand -Burlington LLC, Azzur Cleanrooms-On-Demand – Devens LLC, Azzur Cleanrooms-On-Demand – Raleigh LLC, Azzur Cleanrooms-On-Demand San Diego LLC, Azzur Cleanrooms-On-Demand San Francisco LLC, Azzur Labs, LLC, Azzur Labs – Boston LLC, Azzur Labs – Chicago LLC, Azzur Labs – Dallas LLC, Azzur Labs – San Diego LLC, Azzur Labs – San Francisco LLC and Azzur Labs NC, LLC.

Healthcare Preview for the Week of: March 3, 2025 [Podcast]

Attention Turns to Government Funding

Last week, after some drama on the floor, the House passed its version of a budget resolution in a 217 – 215 vote, a week after the Senate passed its “skinny” resolution. For the reconciliation process to move forward, the chambers must work together to agree on an aligned resolution, which is likely to include Medicaid reforms.
Reconciliation will move to the background for these next two weeks as Congress shifts its focus to government funding. The continuing resolution (CR) passed in late December 2024 funded the government through March 14, 2025. The CR also included healthcare extenders, such as Medicare telehealth flexibilities, disproportionate share hospital payments, and the hospital at home waiver, but they have an expiration date of March 31 (read more on the full list of extenders here). Republican lawmakers are debating the length and scope of the next government funding package, which could be a “clean” CR to fund the government through the remainder of fiscal year 2025. If public statements are accurate, spending cuts related to Department of Government Efficiency efforts may not be pursued in this immediate government funding package. House Republicans will likely need votes from Democrats to pass a CR, so all eyes are on the outline of this package.
In his first congressional address since returning to the White House, President Trump will head to Congress on Tuesday night to deliver an address to a joint session of Congress. Like a state of the union, the address will likely focus on Trump’s agenda for his next four years, including actions on immigration, tariffs, extending tax cuts, and reducing the government’s footprint. While healthcare is not anticipated as a feature of the speech, Trump could discuss his executive orders on healthcare price transparency, Make America Healthy Again, and gender-affirming care for youth, and could lay out additional healthcare agenda priorities. Sen. Elissa Slotkin (D-MI) will provide the Democratic response.
The Senate will continue with nomination hearings this week. The Senate Health, Education, Labor, and Pensions (HELP) Committee will hold back-to-back hearings for National Institutes of Health (NIH) director nominee Jay Bhattacharya, MD, on Wednesday and US Food and Drug Administration commissioner nominee Martin Makary, MD, on Thursday. Sen. Warren (D-MA), although not on the HELP Committee, sent both nominees letters requesting confirmation that they would not lobby for the industries they would regulate for four years after leaving office. Similar topics are likely to be brought up during the hearings. Bhattacharya’s hearing will also likely focus on the recent NIH guidance capping indirect costs for research grants and his views on research transparency and NIH structure reform. Later this week, the Medicare Payment Advisory Commission will meet and discuss various topics, including draft recommendations to reform the physician fee schedule and reduce cost-sharing for outpatient services at critical access hospitals.
Today’s Podcast

In this week’s Healthcare Preview, Debbie Curtis and Rodney Whitlock join Julia Grabo to discuss the state of the government funding package ahead of the March 14 deadline.

Regulated Entities: It’s Time to Play Love It or Leave It with Federal Regulations

Amidst the flurry of Executive Orders (“EOs”) that tends to accompany any new administration, one EO may have flown under the radar. But for the regulated community—which, these days, includes most businesses in some form or another—this EO could be both a source of opportunity and of angst.[1]
EO 14219, titled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative” (the “Deregulation EO”), was issued on February 19.[2] Consistent with the president’s long-stated goal to streamline and minimize federal agency regulation, the Deregulation EO sets forth a series of directives to federal agencies aimed at reducing regulations and minimizing the administrative state. This client alert summarizes the Deregulation EO and opines on the opportunities for the regulated community to seek reform or deregulation, on the one hand, or to prioritize existing or new regulations, on the other.

 The Deregulation EO

The Deregulation EO directs all agency heads to review their existing regulations within 60 days for consistency with law and the administration’s policy aims, in conjunction with the Department of Government Efficiency (“DOGE”) and the Office of Management and Budget (“OMB”), and, as necessary, the Attorney General. The agencies are required to identify for deregulation their regulations that fit within any of seven categories:

Those that are unconstitutional or those that raise serious constitutional questions, such as the scope of power vested in the federal government by the Constitution:
This category is aimed at regulations that exceed the power of the federal government;

Regulations that are based on unlawful delegations of legislative power:
This category stems from the constitutional Nondelegation Doctrine, which has seen renewed interest in recent years by courts and commentators.[3] The Nondelegation Doctrine is the principle that Congress cannot delegate its legislative or lawmaking powers to other entities—including Executive Branch agencies. Historically, to pass constitutional muster, when Congress did delegate to an agency, it was required to do so by providing “intelligible principles” to the agency to guide it in its rulemaking—a relatively lax standard. But in recent years, the Nondelegation Doctrine seems poised to grow some teeth;

Regulations that are based on anything other than the best reading of the underlying statute:
This category aligns with the Supreme Court’s decision last term in Loper Bright that overruled the Chevron doctrine—the principle that if an agency’s interpretation of an ambiguous statute was reasonable, even if not the best reading, the reviewing court should defer to the agency. In Loper Bright, the Court held that reviewing courts should not defer to an agency’s interpretation of an ambiguous statute, but may only view such interpretations as persuasive[4]; 

Those that implicate matters of “societal, political, or economic significance that are not authorized by clear statutory language”:
This principle appears aimed at the “major questions doctrine,” announced in 2022 by the Supreme Court’s decision in West Virginia v. EPA, 597 U.S. 697. There, the Court held that an agency may not resolve through regulation a question of “vast economic and political significance” without a clear statutory authorization; 

Regulations that impose significant costs on private parties that are not outweighed by public benefits; 
Those that harm the national interest by “significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objectives”; and 
Regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.

These last three categories appear to be aimed at the business interests this administration has expressed an intention to prioritize. The directive to conduct such a comprehensive review of existing regulations and sort them into the categories listed above could be a significant undertaking for agency heads and staff, who may be simultaneously working on directives under other EOs and adjusting to the realities of reduced personnel. And as such, there may be opportunities for affected businesses to provide input, as addressed below.

The Effect of the Deregulation EO

Upon the expiration of the 60-day review period, the Office of Information and Regulatory Affairs (“OIRA”) is directed to consult with the agency heads to develop a “Unified Regulatory Agenda” to rescind or modify any regulations agencies have identified as fitting within the seven categories. In other words, the agencies are directed to deregulate, to the extent their existing regulations fall within any of these seven classes.
Further, the Deregulation EO stresses that agency heads should deprioritize regulatory enforcement of any regulations that “are based on anything other than the best reading of the statute” or those that go beyond the powers of the federal government (classes (1) and (3) above). Agency heads, in consultation with OMB, also are directed to review ongoing enforcement proceedings on a case-by-case basis and to terminate those that “do not comply with the Constitution, laws, or Administration policy.” While it might initially seem that agencies would be reluctant to categorize their own regulations into the categories mentioned in the EO (e.g., unconstitutional; based on unlawful delegations of legislative power; based on other than the best reading of the underlying statute), new personnel within various agencies are likely bringing different perspectives about existing regulations, and may have specific ideas already about the particular regulations that they believe should be rescinded.
Finally, the Deregulation EO directs agencies to promulgate new regulations, consistent with the process set forth in EO 12866 for submitting new regulations to OIRA for review, and to consult with DOGE about such new regulations. OIRA is directed to consider the factors set forth in EO 12866 as well as the seven principles set forth in the Deregulation EO. The Deregulation EO also directs the OMB to issue implementation guidance as appropriate.

 Takeaways for the Regulated Community

Many businesses are subject to federal regulation, in some capacity. While the EO does not contemplate involvement by the regulated community in the 60-day review of agency regulations, nothing prevents affected industries from taking the apparent opportunity that now exists to identify and offer perspective to particular agencies and/or to OIRA about specific regulations that are problematic to their business, whether because of costs, technical compliance difficulties, or policy differences, and explaining why a regulation fits into one of the seven categories outlined in the Deregulation EO. [5]
Furthermore, if a business is subject to an ongoing enforcement proceeding (or the threat of one), the administration directive that agencies terminate such proceedings on a case-by-case basis provides a similar opportunity for companies to convey their thoughts to the relevant agency about the lawfulness and/or priority goals of the regulation at issue in that proceeding.
On the other hand, if there are regulations that are particularly beneficial to a given industry, or in which significant time or capital has been invested to further compliance, the industry may want to ensure these regulatory schemes are preserved. For these regulatory schemes, businesses may also want to reach out to the relevant agency proactively to explain why such regulations are consistent with the Deregulation EO, in an attempt to avoid the uncertainty or costs that could accompany any roll back.
While the EO does not clarify whether the coming deregulation process will follow the standard notice and comment rulemaking process of the Administrative Procedure Act—which requires a notice of proposed rulemaking in connection with the repeal of an existing regulation—that process will afford further opportunity for industry to submit comments on any regulations that an agency intends to repeal.
The Loper Bright, Corner Post, Jarkesy, and Ohio v. EPA cases demonstrate that a changing administrative state brings both opportunities and risks.[6] Staying proactive in addressing the regulatory regime applicable to a company’s industry is the best way to “take the bull by the horns”—whether that is in an effort to jettison existing, burdensome regulations, or to retain efficient, functional regulations.
Download This Alert

[1] See, e.g., Estimating the Impact of Regulation on Business | The Regulatory Review.

[2] Available at Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Regulatory Initiative – The White House

[3] E.g., Move Over Loper Bright — Nondelegation Doctrine Is Administrative State’s New Battleground | Carlton Fields

[4] Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).

[5] Nb. There presently are various legal challenges to many of the administration’s EOs, so any action by a regulated entity should be carefully considered (perhaps in conjunction with the relevant agency) to withstand an Administrative Procedure Act or other legal challenge.

[6] Legal Experts to Lay Out Recent SCOTUS Decisions’ Impact on Business – PA Chamber

The New Enforcement Landscape Under the Trump Administration’s Executive Orders

President Trump’s executive orders, signed on January 20, 2025, have significantly altered the immigration enforcement landscape. Key changes include:

Declaring a national emergency at the southern border
Expanding enforcement priorities to include broader categories of removable immigrants
Increasing Immigration and Customs Enforcement (ICE) presence for more worksite enforcement operations
Revoking federal funding from jurisdictions not complying with federal immigration laws

These actions signal a renewed focus on worksite enforcement, with increased audits, raids, and stricter penalties for I-9 violations. Employers must be prepared for unannounced visits that could disrupt operations and potentially lead to employee detentions in light of the Trump administration’s recent executive orders on immigration enforcement, ICE, and the Fraud Detection and National Security (FDNS) unit of U.S. Citizenship and Immigration Services (USCIS). The following guide outlines critical steps employers should take to ensure I-9 compliance, E-Verify compliance, and prepare for potential site visits.
I-9 Compliance Guide
The cornerstone of immigration compliance for employers is proper completion and maintenance of I-9 forms. Here are the essential steps to ensure I-9 compliance:
1. Timely Completion

Ensure Section 1 is completed by the employee on or before the first day of employment.
Complete Section 2 within three business days of the employee’s start date.

2. Document Verification

Physically examine documents presented by employees to establish identity and work authorization.
For E-Verify participants, ensure that List B documents contain a photograph.

3. Record Keeping

Retain I-9 forms for all current employees and for terminated employees as required by law.
Store I-9 forms securely, separate from other personnel records.

4. Regular Audits

Conduct internal audits of I-9 forms to identify and correct errors.
Consider using electronic I-9 systems to streamline compliance and reduce errors.

5. Training

Provide comprehensive training to HR personnel on I-9 compliance requirements.
Ensure staff understands proper completion, storage, and retention of forms.

E-Verify Compliance Guide
To prepare for a potential E-Verify site visit, employers should take the following compliance steps:
1. Account Maintenance

Ensure at least one program administrator is listed on the E-Verify account.
Keep the company profile up to date.
Verify all users have completed required tutorials, including refresher training.

2. Documentation and Record-Keeping

Maintain organized and secure storage of all I-9 forms and E-Verify records.
Be prepared to present all information originally submitted with E-Verify petitions.
Ensure List B identity documents have a photo.

3. Correct Records, as Needed

As per the E-Verify User Manual, if an employer discovers they inadvertently failed to create a case by the third business day, they should bring themselves into compliance immediately by creating a case for the employee. However, this applies to recent hires, not long-term employees. 
The E-Verify User Manual goes on to say, “Do not create a case for an employee whose first day of employment is before the effective date of the employer’s MOU.”[1] As such, for employees who have been with the company for a while, submitting an E-Verify case long after their start date is generally not recommended.

4. Workplace Notifications

Clearly display E-Verify Notice of Participation and Right to Work posters in English and Spanish.
Consider displaying posters digitally, online, or providing copies with job applications.

5. Training and Preparation

Ensure all staff involved in I-9 verification are well-trained and up to date on procedures.
Conduct regular internal audits to identify and correct any compliance issues.
Consider having an attorney conduct an external audit to preserve privilege.

Preparing for Site Visits
With the increased possibility of ICE or FDNS site visits, employers should take proactive steps to prepare:
1. Develop a Written Response Protocol — create a comprehensive plan that outlines:

Designated points of contact for handling site visits;
Steps for verifying the identity and authority of visiting agents;
Procedures for notifying legal counsel and management; and
Guidelines for employee interactions with agents.

2. Designate and Train Key Personnel

Appoint primary and alternate contacts familiar with immigration compliance.
Ensure these representatives are prepared to greet inspectors and facilitate the visit.
Train front-line employees on how to respond to agent arrivals.

3. Know Your Rights and Limits

Understand the difference between administrative and judicial warrants.
Be aware that ICE agents cannot enter private areas without a valid judicial warrant or consent.
Clearly mark and designate private areas within your workplace.

4. Prepare Documentation

Maintain organized and easily accessible I-9 records.
Keep copies of visa petitions, Labor Condition Applications, and other relevant immigration documents for foreign national employees readily available.
Consider creating a “compliance binder” with key information about your organization and employees.

5. Educate Employees

Inform employees about their rights during a site visit, including the right to remain silent and request legal representation, and the right to refuse to sign documents without legal advice.
Provide “Know Your Rights” cards to employees, which are available in multiple languages.
Conduct mock site visits to train/familiarize staff with procedures and teach them how to best respond to inquiries politely and assertively.

During a Site Visit:
If ICE or FDNS agents arrive at your workplace, follow these steps:

Verify Credentials: Ask to see and record the agents’ identification and badge numbers.
Review Warrants: If presented with a warrant, carefully review its scope and validity.
Contact Legal Counsel: Immediately notify your designated legal representative.
Limit Access: Only provide access to areas and documents specified in a valid warrant (for ICE visits) or (in FDNS visits) documents, information, and interviews related to information that was provided in an immigration benefits filing for a foreign national worker.
Document the Visit: Take detailed notes of all interactions, including questions asked and answers provided.
Accompany Agents: Do not leave agents unattended in your workplace.
Maintain Calm: Encourage employees to remain calm and professional throughout the process.

Post-Visit Actions
After a site visit, take the following steps:

Debrief with legal counsel and the management team.
Review notes and documentation from the visit.
Address any compliance issues identified during the inspection.
Consider conducting a full I-9 audit, if not recently completed.
Reinforce training for employees based on the visit experience.

Potential Consequences and Penalties
Employers should be aware of the increased penalties for I-9 violations in 2025:

Type of Violation
Old Fine
New Fine

Substantive Form I-9 violations (minimum)
$281
$288

Substantive Form I-9 violations (maximum)
$2,789
$2,861

Knowingly employing undocumented workers – 1st order
$698–$5,579
$716–$5,724

Knowingly employing undocumented workers – 2nd order
$5,579–$13,946
$5,724–$14,308

Knowingly employing undocumented workers – subsequent
$8,369–$27,894
$8,586–$28,619

Document fraud – 1st order
$575–$4,610
$590–$4,730

Document fraud – subsequent order
$4,610–$11,524
$4,730–$11,823

Prohibition of indemnity bonds
$2,789
$2,861

Further, E-Verify participation may be terminated and employers will be reported to agencies that investigate illegal employment activities if E-Verify finds evidence of misuse, abuse, discrimination, and/or fraud.
These steep penalties underscore the importance of maintaining strict compliance with immigration laws and being prepared for potential site visits.
In Conclusion
As the enforcement landscape evolves under the new administration, employers must prioritize I-9 compliance and preparation for potential site visits. By implementing robust compliance programs, training staff, and developing clear response protocols, businesses can mitigate risks associated with immigration enforcement actions.
Remember, while cooperation is generally advisable, employers also have rights during these visits. Balancing cooperation with protection of your business interests is crucial. By staying informed, prepared, and proactive, employers can navigate this challenging environment while maintaining compliance.

[1] “MOU” refers to the E-Verify Memorandum of Understanding for Employers.

Alabama Legislature Weighs Substantial Cannabis Reforms: Let’s All Take a Deep Breath

Well, it’s officially crazy season. An annual tradition in the Alabama statehouse since the inception of Alabama’s medical cannabis program, last week we saw a flurry of cannabis-related bills introduced with great fanfare and the accompanying panic amongst cannabis stakeholders in Alabama. I was inundated with a high volume of calls, texts, and emails unseen since the last Alabama legislative session.
And there was a little something for everyone involved in cannabis, both on the hemp and medical cannabis side. The good news? Things may be trending in the right direction.
Let’s get into it. 
Medical Cannabis Proposal Encounters Substantial Opposition, Drawing to a Head Whether There Is a Real Need for a “Legislative Fix”
Shortly before he gaveled his committee to order, Sen. Tim Melson introduced a substitute to Senate Bill 72. As a reminder, the original version of SB72 would have, in relevant part: (1) expanded the total number of integrated licenses from five to seven; (2) shifted the authority of issuing licenses from the AMCC to a consultant; and (3) shielded the decision from any judicial review. And, just as important, licenses wouldn’t be issued until well into 2026, assuming there was no litigation – an assumption I defy any serious person to tell me with a straight face is valid.
When the original version of SB72 was introduced, I wrote:
In my opinion, this bill has little chance of becoming law as drafted. I base that on my opinion that the Alabama Legislature has little interest in revisiting cannabis proposals at this time, my conversations with various stakeholders (including well-heeled applicants that employ influential governmental affairs specialists), and by the knowledge that it is easier to defeat legislation than it is to pass it.
For what it’s worth, I do believe the Legislature would pass a bill if all of the relevant stakeholders agreed it was the right way forward. Unfortunately, and this is inherent in any limited license situation, we are operating in a zero-sum game where there will be winners and there will be losers and those who believe a proposal will end in their defeat will fight tooth and nail to stop it.

The substitute bill would change the agencies tasked with appointing the consultant and would allow for the Alabama Court of Civil Appeals to review the award of licenses if the award was arbitrary or capricious or constituted a gross abuse of discretion. It would also move up the time to issue licenses, but it would still be in 2026, again assuming no lawsuits. While the substitute is a small step in the right direction and an acknowledgment of the flaws in the original bill, I still do not see it as the right path forward.
And here’s why: I reject that Alabama’s medical cannabis program requires a “legislative fix.” I believe that the original medical cannabis law, passed four years ago, isn’t broken. Major provisions in the law are currently awaiting a decision from the Alabama Court of Civil Appeals. I attended that oral argument in person – the first oral argument heard by the appellate court about the medical cannabis program. In my opinion, and the nearly unanimous opinion of people I trust to call balls and strikes, the panel signaled with unusual clarity and unanimity that it would be upholding the law and the challenged actions of the AMCC. If that is the case, we may be mere months away from issuing licenses to dispensaries and integrated facilities.
Once a single dispensary license is issued, Alabama doctors can begin obtaining certifications to qualify patients for medical cannabis and Alabamians with qualifying conditions can begin to obtain medical cannabis cards. So, if you believe that the appellate court offers a path forward that may allow medical cannabis in 2025, why would you press for a bill that would ensure that it isn’t? Put simply, if it ain’t broke, don’t legislatively “fix” it.
Psychoactive Hemp Ban Appears to Be Heading Towards Reasonable Compromise
Shortly before he gaveled his committee to order, Melson introduced a substitute to Senate Bill 132. As a reminder, that legislation would, in relevant part, “provide that only non-psychoactive cannabinoids derived from or found in hemp are exempt from [Alabama’s] Schedule I controlled substances list, thus classifying psychoactive cannabinoids as controlled substances” under Alabama law. That means “[i]f enacted into law, that’s the ballgame for nearly all non-industrial hemp products in Alabama. Say goodbye to your increasingly popular THC-infused seltzers. Adios federally compliant gummies and the like.”
I wrote at the time:
I suspect that certain psychoactive hemp restrictions will become law in Alabama in the current legislative session or in the coming years.
If it were my call, I would choose a path that regulates these products to ensure safety and only adult access, rather than to ban them outright. Put simply: Regulate, don’t eliminate.
If the stated goals of the supporters of SB132 are to keep psychoactive hemp out of the hands of minors and ensure that psychoactive hemp is safe, then why not pass laws to keep psychoactive hemp out of the hands of minors and ensure that psychoactive hemp is safe?
When it comes to keeping psychoactive hemp out of the hands of minors, the purveyors of psychoactive hemp products should be required to employ the same type of age-gating policies employed by sellers of tobacco and alcohol. These policies have been in place for years and should be able to govern psychoactive hemp sales without much difficulty. And law enforcement – aided by law-abiding psychoactive hemp companies policing bad actors – should take the law seriously and enforce it just as they do tobacco and alcohol.
When it comes to ensuring that psychoactive hemp products are safe for consumption, the law should require that products undergo the same type of rigorous testing and analysis required of marijuana products. The products should be tested by independent laboratories, and the results should be easily accessible and made available to consumers. Any batch that fails to meet the legal requirements for hemp or reveals unsafe materials in the batch should be destroyed before it is made available to the public.
In Alabama, this would be a substantial burden to many hemp manufacturers and retailers. But there are (at least) two reasons why it makes sense. First, responsible hemp operators welcome these types of regulation, and most of them are taking these steps already. Second, the law creates a higher barrier to entry into the psychoactive hemp market and makes it more difficult for less capitalized and unsavory companies. That should have the dual benefit of eliminating untested products and reducing the shelf space of what I call “gas station crank.”
This proposal would, as a practical matter, mean that the psychoactive hemp market would be dominated by increasingly popular hemp beverages and low-THC edibles. Those are two of the most popular versions of psychoactive hemp and have been widely accepted as alternatives to alcohol and controlled substances by cohorts ranging from young adults looking to turn away from alcohol in increasing numbers, middle-aged consumers looking to cut down on their midweek alcohol intake, and older Alabamians who increasingly look to psychoactive hemp for pain relief and sleep aids.

The substitute bill addresses many of the concerns I expressed about the original version of SB132. With a few tweaks, I think it could be a workable model for other states trying to adopt responsible hemp programs.
The substitute is essentially a two-part bill that separately addresses rules for (1) “hemp beverages” and (2) “psychoactive hemp products.”
Hemp beverages would essentially be treated like beer and wine. They would be subject to the traditional three-tiered model (manufacturer to distributor to retailer) and subject to the same franchise laws. They would be subject to much stricter testing rules to ensure conformance with federal and state laws, and they would have labeling requirements to ensure both that the products are not targeting children or making health claims and that a certificate of analysis was embedded in a QR code so that consumers could be confident that the beverage is what it purports to be. There would also be a 6% excise tax on hemp beverages in addition to any other applicable sales taxes.
The substitute defines and permits under certain defined circumstances the sale of “psychoactive hemp products.” The bill would define “psychoactive hemp product” to include:

A liquid that contains psychoactive cannabinoids and may include flavorings or other ingredients that are intended for use in an electronic nicotine delivery system or any other product marketed to consumers as an electronic cigarette, electronic cigarillo, electronic pipe, electronic hookah, vape pen, vape tool, vaping device, or any variation of these terms.
A candy, gummy, capsule, or other product that contains psychoactive cannabinoids and is intended to be ingested into the body.
An oil or tincture that contains psychoactive cannabinoids and is marketed to deliver to the body sublingually psychoactive cannabinoids.

Psychoactive hemp products may not contain more than a total of 10 milligrams of psychoactive cannabinoids per serving, and one gummy may not contain more than one serving.
Each product must be labeled in a manner that includes all of the following:

The name and website of the manufacturer
The batch number
The total number of milligrams of psychoactive cannabinoids found in a single serving
The International Intoxicating Cannabinoid Product Symbol (IICPS)
A list of ingredients, including identification of any major food allergens declared by name

So, What Now?
Loyal readers of Budding Trends will recall that multiple proposals were voted out of the same committee last legislative session and did not become law. They will also recall that it took more than one legislative session to pass a medical cannabis law in the first place. Is past prologue or is this another example of reform taking time?
The Montgomery political ecosystem is largely an echo chamber powered by rumors, innuendo, gossip, and occasionally facts purveyed specifically to influence the actions of legislators. This influence can take the form of flattery, a well-intended desire for positive change, or fear. Not fear of physical harm, but fear of being out of the loop; fear of being out of touch; fear of being on the wrong side.
Anyone who can get someone to pay them to offer an opinion on what will happen moving forward can probably get whatever the opinion they are paying to hear. After all, what’s the point in hiring someone in a government affairs role if they can’t convince you they can accomplish your objectives? With that in mind, and with full disclosure that I have clients who wish for differing outcomes (although I’m obviously not working any client against another), I think the best advice is to just read the room. What is leadership in the House and Senate saying publicly on the issue? What are the implications of the fact that the Alabama Court of Civil Appeals is currently deciding a case that could bring finality (or more confusion) to the issue? Who benefits most from change? Who suffers? And what is the chance that the Alabama Legislature could see this fight unfold and decide a medical cannabis program simply isn’t workable?
Find someone who can tell you the answers to those questions, and you’ll be in good hands.

Sitting Atop a Telehealth Cliff?

Once again, Congress is quickly approaching a telehealth cliff.
Without passing additional legislation, current Medicare telehealth flexibilities will expire on March 31, 2025. If this happens, millions of beneficiaries who have used telehealth as a means for receiving needed and often critical health care services, especially since 2020, will lose coverage for this benefit starting on April 1, 2025. This will mean, with limited exceptions, that Medicare beneficiaries will have to travel to a health care provider’s office or a health care facility to receive most telehealth services.
What Medicare Beneficiaries Have Come to Rely Upon
The COVID-19 pandemic changed perceptions of telehealth for many Americans. Starting in March 2020, Congress eased restrictions for Medicare beneficiaries as many health care providers closed offices and patients worried about being exposed to the virus in traditional in-person health care settings. Telehealth, and the greater access that the Medicare flexibilities allowed beneficiaries to have, was enormously appealing to patients living in rural areas or with mobility problems. Between April 2020 and June 2020, nearly half of all Medicare beneficiaries had at least one virtual medical visit.
Fast forward to May 2023, when the COVID-19 public health emergency officially came to an end. Congress folded extensions of the Medicare telehealth flexibilities into various spending bills, including a bill passed in December 2024. The difference? Unlike the other extensions, the bill (the American Relief Act, 2025 or “Act”) only created a 90-day extension for the Medicare telehealth flexibilities, through the end of March 2025. Section 3207 of the Act outlines what the continued flexibilities currently are:

Lifting geographic restrictions and maintaining the expanded list of originating sites including patients’ homes.
Expanding the list of distant site practitioners to include all practitioners who are eligible to bill Medicare for covered services (e.g., physical therapists, occupational therapists, speech-language pathologists, audiologists, marriage and family therapists, and mental health counselors).
Allowing federally qualified health centers and rural health clinics to serve as distant site providers of telehealth services.
Allowing payment for audio-only telehealth services.
Extending the waiver of the requirement for practitioners who provide behavioral and mental health via telehealth to provide in-person visits within 6 months of the first telehealth visit and annually thereafter.
Extending Acute Care Hospital at Home waiver authorities.

Medicare beneficiaries can receive the telehealth services described above through March 31, 2025.
What Happens Next?
With the March 31st deadline fast approaching, key organizations like the American Telemedicine Association (ATA) are working overtime to raise awareness of the pending deadline and ensuring telehealth remains accessible and viable for both patients and providers. In a recent letter to policymakers, ATA urged Congress to act decisively before the looming deadline. The ATA’s letter focused on the following priorities:

Making Medicare telehealth flexibilities permanent—removing geographic restrictions limiting telehealth to rural areas, ensuring FQHCs and RHCs can continue offering virtual care, and guaranteeing fair reimbursement rates for all providers.
Preserving audio-only telehealth options—for many telehealth users, especially seniors and those living in locations without reliable broadband access, phone calls are the only way to connect patients to providers in order to receive care via telehealth. Losing this flexibility will disproportionately affect vulnerable patients.
Rolling back restrictive Drug Enforcement Administration regulations—removing in-person visit requirements for prescribing controlled substances via telehealth. This has been a subject of other recent Health Law Advisor posts.

U.S. EPA Approves Class VI Injection Well Primacy in West Virginia

On February 26, 2025, the U.S. Environmental Protection Agency (EPA) published a notice in the Federal Register approving West Virginia’s application for Class VI injection well primary enforcement authority (primacy) pursuant to the Safe Drinking Water Act (SDWA) underground injection control (UIC) program. West Virginia is the first state in the Eastern U.S. to receive primacy. Primacy gives West Virginia the responsibility of overseeing and implementing a Class VI permitting program. Class VI wells are used to inject carbon dioxide into deep rock formations for permanent storage, known as carbon capture and sequestration (CCS), which is a tool used to reduce carbon dioxide emissions into the atmosphere. Point source emissions such as those from industrial facilities or power generation are common sources of carbon dioxide emissions and can be candidates for CCS. North Dakota, Wyoming, and Louisiana have already been granted Class VI primacy, and Alaska and Arizona currently have primacy applications pending with EPA. EPA has pledged to “fast-track” the agency’s review and approval of other Class VI well primacy applications.
The Class VI injection well permitting process generally starts with the applicant submitting an application, which undergoes a completeness review to ensure all required information is included. An applicant may receive a notice of deficiency or a request for additional information regarding their application. The application then undergoes a technical review to ensure the project does not pose a risk to drinking water. EPA indicates that it aims to complete its review of the permit application and issue Class VI permits “within approximately 24 months,” but states that have received Class VI permit primacy have completed the review process more quickly. Class VI well permit application requirements include site characterization, modeling to determine the impact of injection activities through the lifetime of the operation, well construction requirements, testing and monitoring throughout the life of the project, emergency and remedial response plans, operating requirements to prevent endangerment to human health or drinking water, and financial assurance mechanisms. If the application passes technical review, a draft permit is prepared and is made available for public comment period prior to the final permit being issued. Other requirements that apply to CCS projects in West Virginia are set forth in the West Virginia Underground Carbon Dioxide Sequestration and Storage Act, W.Va. Code § 22-11B-1, et seq.
CCS projects are eligible for the 45Q federal tax credit. The entity eligible to claim the tax credit is the owner of the capture equipment, and eligibility is determined based on the type of facility and its annual carbon capture thresholds. The eligibility thresholds are 1,000 metric tons of carbon dioxide for direct air capture facilities, 12,500 metric tons for industrial facilities, and 18,750 metric tons for electric generating units. Eligible projects that begin construction before January 1, 2033, can claim the tax credit for up to 12 years after being placed in service.

Senators Crapo and Wyden Release Draft Bipartisan Taxpayer Rights Legislation

I. Introduction
On January 30, 2025, Mike Crapo (R-ID), the Chairman of the Senate Finance Committee, and Senator Ron Wyden (D-OR), the Ranking Member of the Senate Finance Committee released a discussion draft of the “Taxpayer Assistance and Service Act” (the “bill”), a bipartisan taxpayer rights bill intended to streamline tax compliance and procedure.[1]
Many of the provisions are based on recommendations by the Taxpayer Advocate Service, an independent organization within the Internal Revenue Service (the “IRS”).
The Senators request comments on the discussion draft of the bill by March 31, 2025.[2] This blog post summarizes the bill’s key provisions.
II. Summary of the Bill’s Key Provisions
a. IRS Office of Appeals
The bill would include several provisions related to the IRS Independent Office of Appeals (“IRS Appeals”).
When a taxpayer receives a notice of deficiency (a “30-day letter’) from the IRS and disagrees with the IRS’ proposed adjustment(s), the taxpayer has the option, within 30 days of receiving the 30-day letter, to request an administrative appeal in IRS Appeals.[3] Many tax disputes are settled or compromised in IRS Appeals and without going to Tax Court. Section 7803(e)(4) provides that access to IRS Appeals is “generally available to all taxpayers”, but the regulations under section 7803(e)(4) provides a list of 24 exceptions to IRS Appeals’ consideration.[4]
In the IRS Appeals process, the taxpayer submits a protest of the IRS revenue agent’s findings, which the revenue agent submits to IRS Appeals (sometimes with the revenue agent’s rebuttal). The IRS Appeals officers review the protest and rebuttal, then request a conference to negotiate the settlement or compromise. IRS Appeals have the discretion to consider the “hazards of litigation”, or the probability that the revenue agent’s position would not be sustained in court. 
IRS Appeals functions as an independent organization within the IRS and is independent of the IRS office that proposed the adjustment. Further, the revenue agent and other IRS employees are generally prohibited from engaging in ex parte communications on substantive issues with IRS Appeals without the presence of the taxpayer or their representative.[5] Still, IRS Appeals reports directly to the Commissioner. In addition, IRS Appeals may not hire its own attorneys and, instead, receives advice from IRS Chief Counsel attorneys, who often attend initial conferences.
The Taxpayer Advocate Service has previously criticized the apparent lack of impartiality in IRS Appeals and has stated that for IRS Appeals to have its own independent legal counsel “would ensure that the IRS appeals process is free of agency influence in both reality and public perception, thereby bolstering taxpayer morale and confidence in the system’s impartiality.” 
The bill would authorize IRS Appeals to hire its own attorneys who report directly to the Chief of IRS Appeals (an official appointed by the Commissioner to supervise and direct IRS Appeals)[6] but would not otherwise change the role of Chief Counsel attorneys who provide advice to IRS Appeals.
Another provision in the bill would authorize IRS Appeals to directly hire candidates that are not IRS employees engaged in enforcement functions.
In addition, the bill would explicitly require IRS Appeals to evaluate and consider, “without exception”, all “hazards of litigation” in resolving tax disputes. As stated above, under current law, this is a discretionary right.
Finally, the bill would codify certain exceptions to taxpayers’ broad access to IRS Appeals, including:

Disputes that do not involve liability for tax, penalties or additions thereto;
Disputes based solely on the argument that a statute, regulation or other guidance is unconstitutional or otherwise invalid (unless there is an unreviewable decision from a federal court holding that the item is unconstitutional or otherwise invalid);
Positions rejected in federal court or identified by the Secretary of the Treasury as frivolous;
Issues resolved by closing agreements;
Matters that could interfere with criminal prosecutions of tax-related offenses; and
Cases designated by Chief Counsel for litigation.

If codified, these exceptions would enable IRS Appeals and the IRS audit function generally to avoid challenges under Loper Bright,[7] which we are seeing in many docketed cases. 
Each of these provisions would be effective on the date of enactment.
b. Extend “Mailbox Rule” to Electronic Submissions So Taxpayers Have Certainty Their Materials Are Submitted on Time
Under section 7502, documents (including tax returns) and payments to the IRS are treated as timely filed and paid if they are postmarked by certain couriers by the due date, even if the IRS physically receives them after that date (the “mailbox rule”). The mailbox rule does not apply to electronic submissions and payments. If the IRS receives a document or payment late, it is treated as timely if the taxpayer can show it was timely mailed using certain delivery services. While the mailbox rule applies to electronic submissions of tax returns through electronic return transmitters, it does not apply to most electronic payments (including the Electronic Federal Tax Payment System). Accordingly, if a taxpayer whose tax return and payment is due on April 15 electronically submits the return and mails a check to the IRS on April 15, the check will be postmarked as of the due date, and the payment will be considered timely. However, if the same taxpayer instead makes the payment electronically on April 15, the payment may not be debited from the taxpayer’s account until after that date, and the payment would be considered late.
The bill would extend the mailbox rule to electronic submissions using any method permitted by the Secretary of the Treasury. The bill would also require the Secretary of the Treasury to issue regulations or other guidance not later than the date that is one year after the date of enactment, and the provision would be effective for documents and payments sent on or after that one-year anniversary.
c. Tax Court Jurisdiction & Powers
The Tax Court is one of the courts in which taxpayers may litigate tax disputes with the IRS.[8] Taxpayers do not need to pre-pay any portion of the disputed taxes in order to bring a case to the Tax Court. Appeals from the Tax Court can be made to the U.S. Court of Appeals in which, at the time the Tax Court petition was filed, the taxpayer resided or had a principal place of business, principal office or principal agency of the corporation.[9]
1. Tax Court jurisdiction & certain powers
While most cases lodged in Tax Court involve tax deficiencies and collection due process cases (i.e., “lien and levy actions”), the Tax Court also has jurisdiction over TEFRA[10] items, BBA[11] actions, certain declaratory judgment actions (including those related to an organization’s tax-exempt status), section 6110 disclosure actions and determinations of relief from joint and several liability on returns in “innocent spouse relief” cases.[12]
The bill would clarify that the Tax Court has jurisdiction to:

Redetermine IRS bans on taxpayers’ ability to claim the Earned Income Tax Credit, Child Tax Credit and American Opportunity Tax Credit (effective as of the date of enactment);
Apply equitable tolling to extend the 30-day deadline in section 6213(a) for filing a petition in a collection due process case (applies to filings made after the date of enactment);
Determine tax liabilities in collection due process appeals (effective as of the date of enactment); and
Issue refunds and credits in refund cases (effective for actions filed after the date that is 18 months after the date of enactment).

In addition, the bill would expand the Tax Court’s power to review de novo and consider all relevant evidence in “innocent spouse relief” cases; under current law, a taxpayer is only permitted to submit to the Tax Court evidence that it has not yet submitted to the IRS if the evidence is “newly discovered.”[13] The provision would be effective for petitions and requests for “innocent spouse relief” filed or pending on or after the date of enactment.
The bill would also expand the Tax Court’s pre-trial discovery powers by authorizing the Tax Court to issue pre-trial third-party subpoenas. As a result, the Tax Court would have the power to issue subpoenas for the attendance of parties or witnesses, and the production of books, papers and other documents. The provision explicitly states that this grant of power is intended to facilitate pre-trial settlements. This provision would be effective on the date of enactment.
Further, bill would authorize the Tax Court to issue refunds and credits in collection due process cases in which it has jurisdiction to determine the taxpayer’s liability. The provision would be effective on the date of enactment.
2. Relaxation of “finality rule”
To appeal a Tax Court decision, a taxpayer must file a notice of appeal with the Tax Court clerk within 90 days after the decision was made.[14] If a Tax Court decision is not appealed to a higher court, it is not appealable or the deadline for filing a notice of appeal passes, the decision becomes final 90 days after it was made (the “finality rule”).[15]
Because of the finality rule, the Tax Court has less authority than other courts to modify or revise decisions that have become final. However, in certain cases, the Tax Court has relied on Rule 60(b) of the Federal Rules of Civil Procedure to vacate or alter a judgment, order or other part of the record to make corrections,[16] but some appellate courts have held that the Tax Court does not have the authority to rely on Rule 60 for this purpose.[17]
The bill would authorize the Tax Court to provide relief from a final judgment or order in certain circumstances where justice so requires, the standards for which are consistent with Rule 60. The bill would also clarify that the Tax Court has the authority to correct clerical errors, or mistakes from oversights or omissions, in judgments, orders or other parts of the record. The provision would be effective as of the date of enactment.
3. Judges in Tax Court
The Tax Court is made up of 19 presidentially appointed judges,[18] who are assisted in certain cases by special trial judges appointed by the Chief Judge of the Tax Court.[19]
The bill would authorize the parties to a tax case to consent to the assignment of the case to a special trial judge. This provision would be effective when the Tax Court adopts implementing rules. In addition, the bill would grant contempt authority to special trial judges in certain cases. This provision would be effective on the date of enactment.
Finally, the bill would extend the disqualification standards applicable to all federal judges to Tax Court judges and special trial judges. This provision would be effective on the date of enactment.
d. Notices of Math or Clerical Error
When a math or clerical error is identified on a taxpayer’s tax return, the IRS has the authority under section 6213(b) to send the taxpayer a notice, stating an additional amount of tax due (along with interest and penalties) or an amount of a refund (along with interest). The notices are not sent via certified or registered mail. Taxpayers have 60 days from the date of the notice to request abatement; otherwise, the assessment in the notice is final, and taxpayers lose the right to challenge the IRS in Tax Court. The notices do not always state this 60-day response period. Further, the process for screening returns for errors is highly automated, and the notices do not contain specific information on the cause or causes of the error. Given the short response period, lack of specificity and lack of guidelines on procedure, commentators (including the Taxpayer Advocate Service) have noted that many taxpayers lose their rights before they have the chance to respond. 
The bill would require the IRS to provide specific information about the math or clerical error (i.e., the type and nature of the error, the Code section to which it relates, the specific line of the tax return to which it relates, and the IRS’ computation of adjustments). Further, it would require the IRS to include a response date near the top of the notice. Finally, it would require the IRS to send the notices by certified or registered mail. The provision would be effective for notices sent after the date which is 12 months after the date of enactment.

[1] A section-by-section summary of the bill is accessible at TAS Act Discussion Draft Section by Section. 
[2] Comments can be sent to [email protected].
[3] Taxpayers that initially bypass the IRS Appeals process and go directly to Tax Court generally still have the right and opportunity to settle the dispute in IRS Appeals.
[4] See generally T.D. 10030.
[5] See, e.g., Internal Revenue Service Restructuring and Reform Act of 1988, Pub. L. No. 105-206, 112 Stat. 685 (July 22, 1998); Rev. Proc. 2012-18, 2012-1 C.B. 455.
[6] Section 7804(e)(2).
[7] See generally Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).
[8] The Tax Court is established under section 7441, pursuant to Article 1 of the U.S. Constitution.
[9] Section 7482.
[10] Tax Equity and Fiscal Responsibility Act.
[11] Bipartisan Budget Act of 2015.
[12] See Tax Court Rule 13.
[13] Section 6015(e).
[14] Section 7483.
[15] Section 7481.
[16] When there is no applicable Tax Court procedural rule, Tax Court Rule 1(b) authorizes the Tax Court to rely on the Federal Rules of Civil Procedure “to the extent that they are suitably adaptable to govern the matter at hand.”
[17] See, e.g., Heim v. Comm’r, 872 F.2d 245 (8th Cir. 1989).
[18] Section 7443(a).
[19] Section 7443A.

Copyright Litigation Ruling Spotlights Applicability of Fair Use as a Defense When Training AI

Highlights

A federal court held in a copyright infringement case the defendant could not maintain its “fair use” and other defenses
While curated and organized legal content is protected by copyright law, repurposing it to build a direct competitor and utilizing it to train AI pushes beyond fair use protections
Fair use is not a shield when AI training on copyrighted legal compilations directly undermines the original creator’s market and competitive edge

In a recent twist to a closely followed AI-related copyright infringement case between two legal research software providers, a federal court reversed its prior rulings and held the company accused of copyright infringement could not maintain its “fair use” and other defenses.
The court initially denied the parties’ cross-motions for summary judgment in September 2023, citing factual issues as to both whether the headnotes were sufficiently original to warrant copyright protection, as well as factual issues on elements of a fair use defense. Before the scheduled trial date in August 2024, the court continued the trial date and requested the parties to submit additional briefing.
After finding the defendant directly copied over 2,000 “headnotes,” or summaries of legal opinions, and that the headnotes were sufficiently original and copyrightable, the court spent most of its opinion focused on the defendant’s claim that the copying of data to train AI was excused under the fair use defense. The court considered the four factors that are weighed when assessing a claim of fair use, the: 1) purpose and character of the use, 2) nature of the copyrighted work, 3) amount and substantiality of the portion used, and 4) effect of the use upon the potential market for or value of the copyrighted work.
While the court found that the second and third factors weighed in the defendant’s favor, because the headnotes were not as original or creative as fictional works and the defendant’s AI product did not directly reproduce the copied headnotes, the court found that the two most important factors weighed in the plaintiff’s favor. Specifically, the court found that the purpose of the challenged use was commercial, and that the defendant intended to compete directly the incumbent plaintiff from the legal research market and enter the market of providing AI-powered legal research tools.
The court also noted that it did not matter if the plaintiff also intended to train its own AI tools on its headnotes, as the effect on the potential market was enough for the fourth factor to weigh in the plaintiff’s favor.
Importantly, the court took care to distinguish the AI tools in question from generative AI tools. The court found it important that the AI tools being challenged were trained on copyrighted works and only returned relevant judicial opinions based on its training to a user’s queries – not generate new output in response to prompts. The court explicitly left open the question of whether the fair use defense could succeed where generative AI tools are at issue and whether generative AI would change the analysis of a direct competitor creating content from an incumbent’s content.
Takeaways
This ruling reinforces copyright protections for curated legal research materials and signals stricter scrutiny for AI-driven data scraping in competitive industries. Additionally, it highlights a growing legal challenge for AI developers relying on proprietary datasets for training models.

IPO Introduces Survey to Steer Future of UK Design Law

On February 25, the United Kingdom (UK) Intellectual Property Office (IPO) launched a survey to collect feedback on potential changes to the UK’s design protection framework. The goal is to ensure that the system remains relevant, accessible, and effective in supporting designers and businesses across various industries. This initiative follows a previous call for views in 2022, with insights from the survey informing a formal consultation later in 2025.

The survey will remain open until April 1, and responses will help shape future policy decisions regarding intellectual property (IP) protections for designs.
A key focus of the survey is to evaluate five core principles for an improved design protection system:

Cost – Ensuring that the system is affordable and provides good value for money.
Validity – Ensuring clarity on what constitutes a valid design and the strength of associated IP rights.
Speed – Making design protection quicker to obtain and enforce.
Choice – Providing a flexible system that accommodates different needs.
Simplicity – Reducing complexity in accessing and managing design protections.

Beyond these principles, the survey also examines the scope of what should be legally protected as a “design.” Currently, UK IP law defines a design more narrowly than its common usage, protecting only the visual appearance of a product or its elements that are visible in normal use. This raises concerns about whether the current framework adequately meets the needs of designers, consumers, and businesses, particularly in an increasingly digital landscape.
Chris Mills, UKIPO’s director of rights policy, emphasized the importance of public participation in shaping the future of design protection. He encouraged a wide variety of stakeholders, including designers, businesses of all sizes, legal professionals, trade bodies, and other interested parties, regardless of their level of IP expertise, to share their insights and experiences.
Despite sentiments of weariness following the recent request for feedback in 2022, the UKIPO emphasizes the importance of this survey in shaping a more effective and accessible design protection framework. The agency seeks to address ongoing concerns and adapt the system to better serve the needs of designers and businesses in the evolving creative landscape. The feedback gathered will help modernize the UK’s design framework and ensure it supports innovation, economic growth, and competitiveness in global markets.
By engaging with this process, participants can contribute to shaping a design protection system that is more accessible, efficient, and adaptable to emerging industry needs. With results from the survey, the UKIPO aims to create a legal framework that keeps pace with technological advancements and evolving business practices while safeguarding designers’ rights.

Veil-Piercing Update: Supreme Court Restores the Status Quo, For Now

The US Supreme Court unanimously declined to reshape the corporate veil-piercing doctrine when presented with the opportunity to do so in Dewberry Group, Inc. v. Dewberry Engineers, Inc. On February 26, 2025, the Supreme Court issued an opinion vacating and remanding the US Court of Appeals Fourth Circuit’s decision affirming an award in a trademark infringement dispute under the Lanham Act that included disgorgement of profits from the named defendant’s non-party corporate affiliates. (Bracewell previously reported on this case in a client alert on November 20, 2024.) The Supreme Court held that because the affiliates were not joined as parties, and because they were separate corporate entities, they could not be made responsible for the defendant’s damages in the absence of a finding that the traditional standards for corporate veil-piercing had been met.
In vacating and remanding the decision, the Supreme Court rejected the US District Court for the Eastern District of Virginia’s treatment of the defendant and its non-party affiliates as a single corporate entity and instead interpreted the Lanham Act’s use of the term “defendant’s profits” to refer only to corporate defendants that were actually included as parties in the suit. Thus, the Court ruled that the District Court should not have included the profits of a non-party defendant in its damages award. Additionally, the Court ruled that the Fourth Circuit and the District Court had not undertaken an adequate analysis under the statute’s relevant provisions before considering the profits of the defendant’s non-party affiliates.
Notably, however, the Supreme Court declined to address several issues: whether proper use of the Lanham Act’s “just-sum” provision could result in a profit disgorgement award that includes profits of non-party entities; whether courts should look beyond the “just-sum” provision and into the “economic realities” of a defendant’s affiliates, an approach suggested in an amicus curiae brief submitted by the United States; and whether corporate veil-piercing is “an available option on remand.”
Justice Sotomayor, joining the majority opinion in full, authored a concurrence to encourage lower courts to consider the “economic reality” argument put forth by the United States in its amicus curiae brief. Under this approach, a court could look to non-arm’s-length relationships between defendant corporations and affiliates, or below-market rates charged by defendant corporations to affiliates for trademark-infringing services. Justice Sotomayor emphasized, “courts must be attentive to practical business realities for a Nation’s trademark laws to function, and the Lanham Act gives courts the power and the duty to do so.”
In response to the Supreme Court’s remand, the District Court could more fully engage in a “just-sum” analysis under the Lanham Act. Alternatively, the District Court could consider a veil-piercing approach or another equitable strategy to uncover the “economic reality” of the infringing party. For now, however, the traditional standards for corporate veil-piercing remain intact.