Category: Administrative & Regulatory

Louisiana Industrial Tax Exemption Program (ITEP) – New Rules and Executive Order

On March 20, 2025, Governor Landry issued Executive Order No. JML 25-033 and Louisiana Economic Development (LED)/Board of Commerce and Industry promulgated new rules (beginning at p. 366) which make changes to Louisiana’s Industrial Tax Exemption Program (ITEP). 
The changes, in part, recognize Governor Landry’s view of the importance of the ITEP as an economic development tool to encourage capital investment in Louisiana manufacturing projects. Among other changes, businesses with existing ITEP contracts under the 2017 and 2018 ITEP Rules may “opt out” of the jobs, payroll, and compliance components regardless of whether the contract is up for renewal. 
Businesses with existing ITEP contracts under the old rules may want to consider opting out of the jobs, payroll, and compliance components of those contracts. The “Opt-Out” Amendment Form may be filed via LED’s Fastlane NextGen. 
Among other changes, businesses with existing ITEP contracts under the 2017 and 2018 ITEP Rules may “opt out” of the jobs, payroll, and compliance components regardless of whether the contract is up for renewal.

Corporate Debtors and Transactions at an Undervalue–Lessons From the UK Supreme Court: El-Husseini and Another v Invest Bank Psc

The UK Supreme Court’s recent decision in El-Husseini and another v Invest Bank PSC [2025] UKSC 4 has clarified the circumstances in which section 423 of the Insolvency Act 1986 (the Act) provides protection against attempts by debtors to “defeat their creditors and make themselves judgment-proof”. This is a critical decision for insolvency practitioners, any corporate or fund which is involved in distressed deals and beyond to acquirers who were not aware they were dealing in distressed assets. It is potentially good news for the former, improving or fine-tuning weapons deployed for the benefit of creditors. It is potentially awkward news for the latter, who may have to look rather more broadly at insolvency issues when acquiring assets not only from distressed vendors but potentially also from vendors with distressed owners.
The case concerned an individual debtor, Mr Ahmad El-Husseini, but the decision has ramifications for corporate debtors. It confirms a broad interpretation of “transactions at an undervalue” applicable to section 423 (transactions defrauding creditors) of the Act and gives clear guidance that this interpretation applies to section 238 (transactions at an undervalue) of the Act, such that the assets which are the subject of the transaction do not need to be legally or beneficially owned by the debtor to be subject to these provisions. Instead, they can catch transactions in which a debtor agrees to procure a company which they own to transfer an asset at an undervalue. 
Section 423 and Section 238 of the ACT
Section 423 of the Act (which applies to both individuals and corporates, whether or not they are or later become insolvent) is engaged where a party enters into a transaction at an undervalue for the purpose of putting assets beyond the reach of creditors or otherwise prejudicing their interests. 
Section 238 of the Act (which applies to companies in administration or liquidation) is engaged where a company enters a transaction at an undervalue within two years of the onset of insolvency and the company was insolvent at the time of the transaction or became insolvent as a result of the transaction. 
If a claim pursuant to section 423 or 238 of the Act is successful, the court has the power to restore the position as if the transaction had not been entered into. 
The Facts in El-Husseini and Another V Invest Bank PSC
Seeking to enforce a United Arab Emirates (UAE) judgement in the sum of approximately £20 million, Invest Bank PSC (the Bank) identified valuable assets linked to Mr El-Husseini. In its judgment, the Supreme Court proceeded on the basis that Mr El-Husseini was the beneficial owner of a Jersey company which owned a valuable central London property. Further, that Mr El-Husseini had arranged with one of his sons that he would cause the Jersey company to transfer the property to the son for no consideration. As a result, the value of Mr El-Husseini’s shares in the Jersey company was reduced and the Bank’s ability to enforce the UAE judgement was prejudiced. The Bank brought claims under section 423 of the Act.
Defining A “Transaction” Falling Within Section 423 and the Ramifications For Section 238
The fundamental issue for the Supreme Court was whether, as asserted by the Bank, section 423 of the Act could apply to a transaction where the relevant assets were not legally or beneficially owned by the debtor but instead by a company owned or controlled by the debtor.
The Supreme Court ruled in the Bank’s favour, including on grounds that:

The plain language of section 423 strongly supports the conclusion that the provision contains no requirement that a transaction must involve a disposal of property belonging to the debtor personally.
A restrictive interpretation of “transaction” such that it was limited to transactions directly involving property owned by the debtor would undermine the purpose of section 423.
It was appropriate to rely on the purpose of section 423 to construe a provision which was common to section 423, 238 and 339 (which provides a remedy in the case of transactions at an undervalue where the debtor has subsequently been declared bankrupt) of the Act. These sections share a common purpose: to set aside or provide other redress when transactions at an undervalue have prejudiced creditors. The Supreme Court considered it impossible to think of circumstances in which a “transaction” was held to be within section 423 when it would not fall within section 238 and 339 of the Act. In any event, there was no reason as a matter of policy or purpose why a transfer by a company owned by an insolvent company or individual should not fall within those sections. 

Thus, not only does the judgment confirm the broad interpretation of “transactions at an undervalue” applicable to section 423, but it also gives clear guidance that this interpretation applies equally to section 238.
Key Takeaways

Debtors cannot hide behind corporate structures – The ruling confirms that a corporate structure does not shield debtors who procure the transfer at an undervalue of assets belonging to companies owned by them to evade their obligations to creditors.
Stronger protections for creditors – Creditors will welcome the decision, which makes it harder for debtors to circumvent enforcement.
Greater clarity – The judgment provides clear guidance that the broad interpretation of “transactions at an undervalue” applicable to claims under section 423 of the Act can be relied upon for the purposes of claims under section 238. 

Department of Labor Announces Appointment of New OFCCP Director

On March 24, 2025, the Department of Labor announced the appointment of Catherine Eschbach as Director of OFCCP. Direct Eschbach joins the agency after serving as an appellate lawyer in private practice.
Director Eschbach intends to “oversee [OFCCP’s] transition to its new scope of mission[.]” Notably, in the announcement Director Eschbach states that:
“President Trump made clear in his executive order on eliminating DEI that EO 11246 had facilitated federal contractors adopting DEI practices out of step with the requirements of our Nation’s civil rights laws and that, with the recission of EO 11246, the President mandates federal contractors wind those practices down within 90 days. As director, I’m committed to carrying out President Trump’s executive orders, which will restore a merit-based system to provide all workers with equal opportunity.”
According to reporting from The Wall Street Journal and Bloomberg, following her appointment, Director Eschbach issued an internal email to OFCCP employees outlining her plans for the agency. According to reports, Director Eschbach stated that:

“The reality is, most of what OFCCP had been doing was out of step, if not flat out contradictory, to our country’s laws, and all reform options are on the table[.]”
OFCCP will “examin[e] federal contractors’ previously submitted affirmative action plans to determine whether they indicate the presence of long-standing unlawful discrimination and whether it is appropriate for OFCCP to undertake any investigation and enforcement actions, or refer the matter to other relevant agencies with jurisdiction to investigate and/or initiate enforcement action[.]” 
OFCCP will “verify” that contractors have “wound down” the affirmative action programs for women and minorities by April 21, 2025, as required by Executive Order 14173.
OFCCP will “examine the statutory authority” for any investigations and enforcement action under VEVRAA and Section 503 and determine if “new rulemaking is necessary” and whether investigation and enforcement actions are “best housed” within OFCCP;
OFCCP plans to identify “potential civil compliance investigations” of large organizations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion in order to “deter DEI programs.” This is consistent with EO 14173, which requires federal agencies to identify up to nine large organization for DEI-related civil investigations. 
Consistent with previous OFCCP announcements and “the administration-wide DOGE agenda,” OFCCP will undergo a “rightsizing” to reduce its staff and office presence in light of OFCCP’s “reduced scope of mission.” As we previously reported, OFCCP had already planned to cut its workforce by 90 percent.

SEC Marketing Rule Update: New Staff FAQs on Performance Presentations

On March 19th, Staff from the Securities and Exchange Commission (SEC) issued much needed (and anticipated) relief in the form of two new frequently asked questions (FAQs) related to rule 206(4)-1 under the Investment Advisers Act of 1940 (the Marketing Rule).
Key Takeaways

The Staff’s “open door” policy, in which it invites comments from industry participants on their top-of-mind concerns and regulatory “sticking points,” is underway.
Don’t skip the footnotes! The FAQs provide useful additional context. For example:

gross and net performance of the total portfolio do not need to be presented on the same page to meet the “prominent” requirement – in some cases, presenting this information prior to the extracted performance and/or portfolio characteristic may be sufficient; 
while the FAQ provides some examples of typical portfolio characteristics or risk metrics (e.g., yield, coupon rate, contribution to return, volatility, sector or geographic returns, attribution analysis, Sharpe Ratio, Sortino Ratio), the Staff provides in a footnote other examples which in its view, would not be covered by the FAQ (e.g., total return, time-weighted return, return on investment, internal rate of return, multiple of invested capital, or total value to paid in capital); and
with regard to portfolio characteristics and risk metrics, the Staff is not opining on whether any such characteristics or metrics constitute “performance” under the Marketing Rule (and thus would be subject to all other aspects of the Marketing Rule). 

Note that the FAQs primarily address a narrow aspect of the Marketing Rule – specifically, rule 206(4)-1(d)(1), which requires that any presentation of gross “performance” also present net performance – it does not alter other obligations when presenting “performance” or the more general obligations under the general prohibitions (rule 206(4)-1(a)) or section 206 antifraud provisions.

The Issues
The first FAQ addresses a widely-know “pain point” for investment advisers when seeking to include in marketing materials individual portfolio positions (or groups of positions from within a portfolio), which falls within the definition of “extracted performance” under the Marketing Rule and must therefore be presented on a net basis. Doing so has been challenging for advisers because such fees are typically charged at the portfolio level. This presents the adviser with a difficult decision: 

developing an allocation approach that at best, serves a regulatory purpose but no business purpose and, at worst, may result in misleading investors; or 
deciding not to present the information despite believing that the information is meaningful to clients and potential clients. 

The second FAQ presents a different but related challenge for advisers: determining if a portfolio characteristic or risk metric falls within the meaning of “performance” (which is not defined in the Marketing Rule) and, therefore, must also be presented on a net basis. Such a result similarly restrains an adviser’s ability to present meaningful information about an adviser’s strategy and risk management processes because those metrics often do not lend themselves to net-of-fee presentation (as required under the Marketing Rule).
What the FAQs Permit
The Staff has set forth a “safe harbor” where it essentially offers a no-action position for an adviser who includes in an advertisement either “extracted performance” (which would include presenting case studies or lists of individual investments) or characteristics of a portfolio or investment, in both cases on a gross basis only, if:

the extracted performance and/or portfolio characteristic is clearly identified as being calculated “gross” (or without the deduction of fees and expenses);
the extracted performance and/or portfolio characteristic is accompanied by a presentation of the total portfolio’s gross and net performance;
the gross and net performance of the total portfolio is presented with at least equal prominence to, and in a manner designed to facilitate comparison with, the extracted performance and/or portfolio characteristic; and
the gross and net performance of the total portfolio is calculated over a period that includes the entire period over which the extracted performance and/or portfolio characteristic is calculated.

CTA UPDATE: FinCEN Issues Interim Final Rule Exempting Domestic Companies and US Beneficial Owners From Reporting Requirements

Go-To Guide:

Domestic companies and their beneficial owners are now exempt from the requirement to file beneficial ownership information (BOI) reports, or to update or correct previously filed BOI reports. 
Foreign reporting companies that do not qualify for an exemption must report BOI by April 25, 2025, but need not report their U.S. beneficial owners. 
The Financial Crimes Enforcement Network (FinCEN) is soliciting public comments on the interim final rule and intends to issue a final rule later this year. 

On March 21, 2025, FinCEN issued an interim final rule narrowing the scope of the CTA’s BOI Reporting Rule (Reporting Rule) to foreign reporting companies and foreign beneficial owners. This change follows a series of shifts in the status of the CTA since Dec. 3, 2024,1 when a Texas district court in Texas Top Cop Shop, Inc. v. Bondi preliminarily enjoined the CTA and the Reporting Rule on a nationwide basis.
Going forward, entities formed in the United States (regardless of when) are categorically exempt from CTA reporting requirements and do not have to report BOI to FinCEN, nor update or correct any BOI that may previously have been reported to FinCEN.
Foreign reporting companies (i.e., entities formed in a foreign country that are registered to do business in the United States) that do not qualify for an exemption must file their BOI reports by no later than April 25, 2025. Newly registered foreign reporting companies will have 30 days from their registration in the United States to comply with BOI reporting requirements.
Notably, foreign reporting companies need not report the BOI of any beneficial owners who are U.S. persons (including U.S. persons who are beneficial owners of foreign pooled investment vehicles by virtue of their substantial control). U.S. beneficial owners are likewise exempt from having to report their BOI with respect to foreign reporting companies in which they hold interests.
The Interim Final Rule does not exempt reporting of U.S. persons who serve as company applicants for foreign reporting companies.2 
The Interim Final Rule significantly reduces the number of entities subject to BOI reporting. FinCEN now estimates approximately 12,000 reporting companies must comply with the CTA and its implementing regulations—down from the 32.6 million projected under the previous rule.
Looking Ahead
FinCEN is accepting comments on the Interim Final Rule until May 27, 2025. A final rule is expected to be issued later this year. The Interim Final Rule, with its narrower scope of reporting requirements, will be in effect in the meantime.
Foreign reporting companies should prepare to comply with the CTA and the Reporting Rule, as amended by the Interim Final Rule. Interested parties may also consider submitting written comments to FinCEN by the May 27, 2025, deadline. Additionally, all companies should stay updated on FinCEN announcements, including with respect to the final rule.
It remains to be seen whether the Interim Final Rule will be the subject of any legal challenges. In the appeal pending in the Texas Top Cop Shop challenge, the Fifth Circuit has asked for supplemental briefing on whether the dispute remains live in light of the Interim Final Rule.
For additional information regarding the CTA and its reporting requirements, visit GT’s CTA Task Force page. 

1 On Dec. 3, 2024, the CTA and its Reporting Rule were preliminarily enjoined on a nationwide basis, approximately four weeks ahead of a key Jan. 1, 2025, deadline. FinCEN appealed that ruling, and on Dec. 23, 2024, a motions panel of the U.S. Court of Appeal for the Fifth Circuit stayed the injunction, allowing the CTA to go back into effect. Three days later, on Dec. 26, 2024, a merits panel of the Fifth Circuit vacated the motion panel’s stay, effectively reinstating the nationwide preliminary injunction against the CTA and Reporting Rule. On Dec. 31, 2024, the government filed an emergency application with the U.S. Supreme Court to stay that preliminary injunction. On Jan. 23, 2025, the Supreme Court granted that application (SCOTUS Order), staying the nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Bondi. See McHenry v. Texas Top Cop Shop, Inc., 145 S. Ct. (2025). Then, notwithstanding the SCOTUS Order staying the injunction in Texas Top Cop Shop, on Jan. 24, 2025, FinCEN confirmed that reporting companies were not required to file BOI Reports with FinCEN due to the separate nationwide relief entered in Smith v. U.S. Department of the Treasury (and while the order in Smith remained in effect). No. 6:24-CV-336-JDK, 2025 WL 41924 (E.D. Tex. Jan. 7, 2025). On Feb. 5, 2025, the government appealed the ruling in Smith to the U.S. Court of Appeals for the Fifth Circuit and asked the District Court to stay relief pending that appeal. On Feb. 18, 2025, the District Court in Smith granted a stay of its preliminary injunction pending appeal, thereby reinstating BOI reporting requirements once again. In response, on Feb. 19, 2025, FinCEN announced that the new filing deadline to file an initial, updated, and/or corrected BOI report was generally March 21, 2025. On March 2, the U.S. Department of the Treasury issued a press release announcing that it will not enforce any penalties or fines under the CTA against U.S. citizens, domestic reporting companies, or their beneficial owners under the current Reporting Rule or after the forthcoming rule changes take effect. 
2 A company applicant, in this context, would be (a) the person who directly files the document that registers the company in a U.S. state; and (b) if more than one person is involved with the document’s filing, the person who is primarily responsible for directing or controlling the filing.

PFAS Reporting Requirements Persist Amid EPA Deregulation

While the Trump Administration’s deregulatory efforts create uncertainty regarding oversight of per- and polyfluoroalkyl substances (PFAS), EPA remains active in addressing these toxic chemicals.
Under the Biden Administration, EPA established regulatory frameworks for PFAS under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); Clean Water Act (CWA); Resource Conservation and Recovery Act (RCRA); Safe Drinking Water Act (SDWA); Toxics Release Inventory (TRI) (under EPCRA); and Toxic Substances Control Act (TSCA), among others. As of today, EPA has delayed a number of these PFAS rulemakings by extending comment periods.
Importantly, in a March 12 list of 31 deregulatory actions and a memorandum revising the National Enforcement and Compliance Initiatives (NECI), EPA offered direction in its push to pare back regulations. Notably, EPA did not list PFAS rulemakings in this list of deregulatory targets, nor did EPA revise the Biden-era PFAS and drinking water NECIs. This suggests that actions to revise or rescind recently promulgated PFAS requirements are possibly lower on the list of deregulatory priorities. This may change.
In the meantime, the TSCA PFAS Reporting Rule remains in full force and effect and its reporting deadlines are fast approaching. The PFAS Reporting Rule was mandated by Congress in the National Defense Authorization Act (NDAA) of 2020 that amended TSCA section 8(a)(7). 88 Fed. Reg. 70,516 (Oct. 11, 2023). EPA later promulgated a final rule establishing the reporting period to begin on July 11, 2025, and to conclude for most businesses on January 11, 2026; some small businesses can report on or before July 11, 2026. 89 Fed. Reg. 72,336 (Sept. 5, 2024).
The TSCA rule requires manufacturers and importers of PFAS to report various data looking back twelve years to 2011. The PFAS Reporting Rule applies to manufacturers of PFAS substances and mixtures, including PFAS in byproducts and impurities. The rule also requires importers to report PFAS substances and mixtures, including articles containing PFAS (e.g. components, materials and products).
In addition to the unprecedented look-back period, the PFAS Reporting Rule requires companies to conduct a diligent inquiry into the presence of PFAS at their facilities and supply chains, assessing information that is “known or reasonably ascertainable” from upstream suppliers and downstream customers. Both internal and external inquiry is required. The rule will require thousands of businesses that have never reported under TSCA to conduct diligent inquiries of this type.
Unless or until EPA acts additionally to extend the deadlines or revise the reporting requirements of the PFAS Reporting Rule, businesses are required to comply. There is still time to gather and process the necessary information. Even amid regulatory uncertainty, businesses are encouraged to be prepared and avoid possible noncompliance risks. Also, several states have enacted or proposed reporting for PFAS in products, including some restrictions or outright prohibitions. States may also petition EPA to regulate PFAS further; some are already doing so regarding PFAS air emissions.
Businesses are urged to use the TSCA diligence and information gathering process to both collect information to comply with federal and state PFAS regulatory requirements and to establish an in-house knowledge base. Liabilities from PFAS exposures and contamination from third-party and governmental enforcement actions, distinct from reporting requirements, are expected to only amplify in the coming years.

Clear Terms of Franchise Agreement Are Enforced Against Franchisee

A recent federal court decision in T&T Management, Inc. v. Choice Hotels, Inc. underscores key contractual and operational considerations for franchisors. T&T filed suit in U.S. District Court for the District of Minnesota against Choice Hotels alleging that Choice Hotels breached a geographic exclusivity agreement and misappropriated trade secrets. However, on February 27, 2025, the court granted a motion to dismiss, emphasizing the importance of clear contractual terms.
Background
T&T Management entered a franchise agreement with Country Inn & Suites by Carlson in 2011, which granted them exclusivity within a defined area for that brand. Over the years, Country Inn & Suites changed ownership twice—first acquired by Radisson and later by Choice Hotels. Choice subsequently issued a franchise license to Sunshine Fund Port Orange, LLC to operate a WoodSpring Suites hotel near T&T’s location. T&T argued that this action violated its exclusive territorial rights and also alleged that Choice misused proprietary guest data.
Holding
The court dismissed all claims against Choice Hotels and its co-defendants, holding:

No breach of contract: The exclusivity clause only applied to Country Inn & Suites properties, not other brands under Choice’s growing portfolio. The agreement explicitly allowed Choice to license other hotel brands within the protected area.
No tortious interference: Since there was no breach of contract, Sunshine’s entry into the market was lawful and did not constitute improper interference.
No trade secret misappropriation: The agreement designated the franchisor as a co-owner of guest data, permitting Choice to use and share it without violating the Defend Trade Secrets Act.

Key Takeaways

Precise Contract Drafting is Crucial: Franchisors should ensure that exclusivity clauses explicitly define their scope. This case demonstrates that a narrowly tailored exclusivity provision can limit disputes when a franchisor expands its brand portfolio.
Ownership of Guest Data Should Be Clearly Defined: Franchise agreements should specify data ownership and usage rights. Here, the court upheld the franchisor’s right to use and share guest data, reinforcing the need for clear contractual language.
Successor Franchisors Must Understand Their Obligations: When acquiring a franchise system, due diligence is essential to ensure compliance with existing agreements. Franchisors should verify whether existing exclusivity or operational restrictions carry over post-acquisition.

This case serves as a reminder that well-drafted franchise agreements can protect franchisors while limiting liability in the face of legal challenges.

Employment Law This Week: Federal Contractors Alert: DEI Restrictions Reinstated by Appeals Court [Podcast, Video]

This week, we’re focused on federal contractors and the effects that the reinstatement of Executive Orders 14151 and 14173 will have on employers.
Federal Contractors Alert: DEI Restrictions Reinstated by Appeals Court
President Trump’s executive orders against diversity, equity, and inclusion (DEI) are back in effect after the U.S. Court of Appeals for the Fourth Circuit stayed a nationwide injunction, posing new compliance challenges for federal contractors.
In this week’s episode, Epstein Becker Green attorneys Nathaniel M. Glasser and Frank C. Morris, Jr., outline the implications for employers, focusing on the False Claims Act, whistleblower risks, and the need for certification of compliance with anti-discrimination laws. Tune in to learn what steps your organization can take to mitigate potential penalties and retaliation claims.
Other Highlights
Whistleblower Challenges and Employer Responses: One-on-One with Alex Barnard Managing whistleblower claims can be particularly challenging when they involve internal experts. Epstein Becker Green’s Alex Barnard shares insights on managing these challenges, distinguishing job duties from legitimate concerns, and investigating claims fairly.

Plaintiffs Try Another Bite at the Apple… and Google Too!

In a recent post about legal issues with the social casino sweepstakes model, we indicated that a recent RICO lawsuit against a social casino sweepstakes model, which also named Apple and Google, was dismissed voluntarily by the plaintiff. Plaintiffs are already taking another bite at the Apple.
A new lawsuit was filed against Apple and Google by lead Plaintiff Bargo and two co-plaintiffs. The new complaint alleges that the lawsuit is about “patently illegal gambling software being distributed to the cell phones, desktop computers and other personal electronic devices of individuals throughout New Jersey, New York and beyond, by an unlawful enterprise that includes two of the most successful companies in the world.” This complaint does not name any of the social casino games operators.
Rather, it alleges that the named defendants “willingly assist, promote and profit from” allegedly illegal gambling by: (1) offering users access to the apps through their app stores; (2) taking a substantial percentage of consumer purchases of Game Coins, Sweeps Coins and other transactions within the apps; (3) processing allegedly illicit transactions between consumers and the Sweepstakes Casinos using their proprietary payment systems; and (4) by using targeted advertising to allegedly “shepherd the most vulnerable customers to the Sweepstakes Casinos’ websites and apps” facilitating an allegedly unlawful gambling enterprise.
The legal claims are made under the NJ gambling loss recovery statute, the New Jersey Consumer Fraud Act, Unjust Enrichment, New York’s gaming loss recovery statute, NY consumer protection laws, and the RICO laws.

First-to-File: A Game-Changer in US Patent Law

The shift in patent law from First-to-Invent to First-to-File came about over a decade ago, but still leaves many inventors scratching their heads. Is First-to-File really as simple as “first come, first served”?
This article aims to help understand First-to-File a little better. 
The United States patent system underwent a significant change with the enactment of the First-Inventor-to-File (FITF) provision of the America Invents Act, which became effective on March 16, 2013. The FITF provision transitioned the United States from a First-to-Invent system to a First-Inventor-to-File system (aka First-to-File), and has had a profound impact on inventors, determination of patent ownership, and the patent process.
First-to-Invent
Prior to implementation of the FITF provision, First-to-Invent was the standard in the United States. Under First-to-Invent, the patent (assuming an invention was patentable) was awarded to the inventor who could prove they were the first to conceive and develop the invention, regardless of who filed the patent application first. For example, if two inventors independently conceived the same invention, the one who could prove prior inventorship would be awarded the patent, even if they filed their application later. The second inventor to file would have to prove that they were the first to invent and did not unduly delay filing. Thus, the First-to-Invent system required inventors to maintain records of their invention process, including dates, sketches, and witness testimonies, in order to establish their priority in case of a dispute. 
First-Inventor-to-File
The First-Inventor-to-File system, which is now used in the United States and most other countries, awards the patent to the first inventor who files a patent application, regardless of who actually invented a device first. In the example above, the inventor who filed their patent application first would have priority, regardless of who invented it first chronologically. Since there is no burden on the first filer to prove the date of their idea conception, this First-to-File system improves speed and efficiency in the patent process. The US Patent and Trademark Office (USPTO) can process applications with fewer complications. Plus, the FITF provision better aligns with international patent practices, making it easier for US inventors to obtain patent protection in foreign jurisdictions. 
Advantages and Disadvantages
Both systems have their advantages and disadvantages. 
The First-to-Invent system was seen as more equitable to individual inventors and small businesses who may not have had the resources to file a patent application as quickly as larger companies. Larger entities might have the funds to file a patent before an individual inventor or small business could justify or afford the expense. Under First-to-Invent, the actual filing date was irrelevant, giving the smaller entity a better chance at controlling the IP. However, First-to-Invent often led to complex and costly legal battles to determine inventorship, possibly negating the fairness factor. 
The First-to-File system is simpler and more predictable, reducing legal disputes and promoting faster dissemination of knowledge and ideas. However, it can disadvantage individual inventors and small businesses who may need more time and resources to develop their invention and/or file a patent application. A better-financed party, which honestly conceived of the invention independently but later than the original inventor, could file a patent application earlier than the first inventor and control the IP. 
The FITF provision does provide for some exceptions. For example, if a later filer can prove that an earlier filer derived the claimed invention from them without authorization, the later filer can establish priority through a “derivation” proceeding. This is basically a trial or appeal to determine whether an invention was improperly derived from another, but the evidence must be substantial with a high burden of proof. Due to the difficulty of proving derivation, these proceedings are rare and considered to be a last resort compared to regular patent challenges such as interferences or post-grant reviews. 
Implications of the Change
The shift to First-to-File has had several implications for inventors and the patent system. FITF has placed much greater emphasis on patent filing strategies. Inventors must now act quickly to file a patent application as soon as they have a viable invention. Consequently, this has led to an influx of application filings, especially initially, which caused increased patent backlogs and delays in the examination process. Beneficially, the change has encouraged greater international harmonization of patent law, as most other countries already use the First-to-File system. 
Conclusion
The shift from First-to-Invent to First-to-File was a significant change in the United States patent system. While the new system offers greater clarity and efficiency, it also places a greater emphasis on speed and strategic patent filing. To adapt to this system, inventors need to be more proactive in protecting their intellectual property; they will want to consider filing on key inventions as soon as possible. Inventors may want to consider utilizing provisional patent applications, which offer a quicker, less expensive, and less formal way to establish an early filing date (i.e., priority date) and give inventors an additional 12 months to file a full formal, non-provisional patent application. 
Under FITF, procrastination on patent matters could lead to lost opportunity. With key innovations, it is probably wise to be “first come, first served.”

UK Parliament Proposes Increased Penalties for Failure to Consult in a Collective Redundancy

The Employment Rights Bill has undergone significant amendments in March 2025 as it progresses through Parliament. Included in the amended bill are changes addressing redundancy and the controversial practice of “fire and rehire.”

Quick Hits

In March 2025, the UK government announced amendments to the Employment Rights Bill following a series of consultations.
The penalty “protective award” payable to employees when an employer fails to consult properly in a collective redundancy situation would be doubled from 90 to 180 days’ pay.
Collective redundancy consultation obligations (which apply when twenty or more redundancies are proposed) would continue to be determined separately for each “establishment” (meaning “workplace”), removing the original proposal that the determination should be based on the total number of proposed terminations in the whole company.
“Fire and rehire” would be automatically considered unfair unless carried out under very limited circumstances.

Redundancy
Amongst the bill amendments is an adjustment to collective redundancy rules. Employers are currently required to consult collectively when making twenty or more redundancies at a single establishment. The new amendments maintain this threshold, meaning that original plans to scrap this establishment test are no longer on the agenda. However, the amendments introduce a yet-to-be-defined threshold for multisite redundancies. This alternative threshold is expected to be based on redundancies across entire organisations and may be a specified percentage of employees.
Additionally, when carrying out collective redundancy consultations employers would not need to consult with all employee representatives together or reach the same agreement with all representatives.
The government intends to increase the maximum protective award duration from 90 days to 180 days of pay, which is applicable in successful claims for violations of collective redundancy obligations. The doubling of the protective award is “to ensure that employers will not be able to deliberately ignore their obligations,” the government stated in response to the consultation on strengthening remedies against unfair practices in collective redundancy and “fire and rehire” (which also requires following redundancy rules). It also stated that “it should never be the case that it is financially beneficial to [ignore the rules].”
Employment tribunals would retain the authority to adjust the duration of the protected period, with a maximum limit of 180 days, as deemed fair and appropriate based on the circumstances. This decision would take into account the severity of the employer’s actions as well as any mitigating factors.
The government plans to provide additional guidance to employers on adhering to best practices in meeting their collective redundancy consultation responsibilities.
‘Fire and Rehire’
To address the practice of “fire and rehire,” where employers impose harmful contractual changes on employees by threatening dismissal and reengagement on new contractual terms, the amendments stipulate, among other things, that dismissing an employee “to vary the employee’s contract of employment” would be automatically deemed unfair except in situations where organisations are in extreme financial distress and “the reason for the variation [is] to eliminate, prevent or significantly reduce … any financial difficulties” affecting “the employer’s ability to carry on the business as a going concern.”
Improving business efficiency alone does not satisfy these criteria; there would need to be a clear absence of alternatives. Consequently, in practice, this exception would likely apply only in rare and limited circumstances. However, when such situations do occur, employers would need to comply with the Code of Practice on dismal and re-engagements, which is also proposed to receive updates under the current government.
Employers effectively may want to provide justifications for any proposed contractual changes and demonstrate that all alternative solutions have been explored. Failure to comply with these requirements could result in significant penalties, including compensation for negatively impacted employees.
In response to the consultation on enhancing protections against the misuse of collective redundancy and fire-and-rehire practices, the government has confirmed that the earlier proposal to introduce interim relief in unfair dismissal cases linked to collective redundancy will not be implemented. This is due to concerns about the excessive burden it would place on employers and the challenges of enforcement.