Understanding Cryptocurrency Forfeiture: A Guide to Digital Asset Seizure
Introduction
The rapid evolution of the digital economy has introduced new modes of value transfer, investment, and criminal activity, which has complicated the legal landscape of digital asset seizures. Federal, state, and local authorities have increasingly leveraged digital asset forfeiture as a tool to disrupt illicit activity, with the legal framework evolving rapidly—particularly following the establishment of the United States Strategic Bitcoin Reserve. This policy shift, emphasizing the retention of forfeited cryptocurrency as a long-term government asset, is underpinned by updated legal frameworks, advanced blockchain intelligence, and a renewed focus on victim restitution and law enforcement funding.
The Strategic Bitcoin Reserve marks a significant departure from prior practices, in which seized digital assets were typically liquidated at auction. The current administration empowers the government to retain a portion of forfeited cryptocurrency, aligning asset management with broader national security and financial stability objectives. This development has far-reaching implications for market participants, including businesses, investors, and individuals subject to asset seizure or forfeiture proceedings.
This article provides a comprehensive analysis of the current administration’s approach to cryptocurrency asset forfeiture, including statutory and regulatory frameworks, investigative methodologies, and the integration of forfeited digital assets into government reserves. The discussion aims to elucidate the legal and procedural considerations shaping asset forfeiture in the digital economy, and to examine best practices for compliance, risk mitigation, and defense strategies relevant to legal practitioners and industry experts navigating this rapidly changing field.
Statutory and Regulatory Framework
The statutory framework governing federal asset forfeiture, particularly as it applies to digital assets, is evolving rapidly. The legal foundation for asset forfeiture in the United States is based on a complicated web of statutes, regulations, and case law that have been adapted to address the unique characteristics of cryptocurrencies and other digital assets. Foundational authorities remain central, but recent policy developments have clarified and expanded their reach, especially in light of the growing prevalence of digital assets in criminal investigations and enforcement actions.
Key statutes relevant to digital asset forfeiture include:
18 U.S.C. § 981(a)(1)(A) & (C) (civil forfeiture of property involved in money laundering, fraud, and other specified unlawful activities). This statute allows the government to seize assets connected to a wide range of financial crimes, even in the absence of a criminal conviction, provided that the government can establish a preponderance of the evidence linking the property to illegal activity.
18 U.S.C. § 982(a) (criminal forfeiture following conviction for money-laundering predicates). Criminal forfeiture is typically pursued as part of a criminal prosecution, and requires a conviction on the underlying offense. The government may seek forfeiture of assets directly or indirectly involved in the criminal conduct.
21 U.S.C. § 853(p) (substitute-asset provisions allowing forfeiture of property unrelated to an offense when direct proceeds are beyond the court’s reach). This provision is particularly relevant in cases where digital assets have been transferred, dissipated, or otherwise rendered unavailable, allowing the government to pursue substitute assets of equivalent value.
31 U.S.C. § 9705 (Treasury Forfeiture Fund, authorizing agencies such as Internal Revenue Service Criminal Investigation, Homeland Security Investigations, and the Secret Service to retain and deploy forfeiture proceeds, and to support the Strategic Bitcoin Reserve). The Treasury Forfeiture Fund plays a critical role in managing and distributing proceeds from forfeited assets, including digital currencies.
28 U.S.C. § 524(c) (Department of Justice (“DOJ”) Assets Forfeiture Fund, applicable to Federal Bureau of Investigations (“FBI”) and Drug Enforcement Administration matters and permitting retention of forfeited assets for government use). This fund supports a range of law enforcement activities and now includes provisions for the retention of digital assets as part of the Strategic Bitcoin Reserve.
Recent executive orders and agency guidance confirm that digital assets—including cryptocurrencies and stablecoins—are treated as “property” for forfeiture purposes. The administration’s directive to retain forfeited cryptocurrency in the Strategic Bitcoin Reserve, subject to statutory requirements for victim restitution and law enforcement funding, underscores the importance of understanding the evolving legal obligations and rights under these rules. Additionally, the government has issued guidance clarifying the treatment of digital assets under existing forfeiture statutes, and courts have increasingly recognized the applicability of these laws to a wide range of digital asset types, including non-fungible tokens (“NFTs”) and decentralized finance (“DeFi”) tokens.
Congress and federal agencies continue to refine the legal framework governing digital asset forfeiture. Proposed reforms may further expand the government’s authority to seize and retain digital assets, while also introducing new procedural safeguards and transparency requirements.
Current Policy Drivers
The administration’s approach to cryptocurrency asset forfeiture is shaped by several key policy initiatives, each with direct implications for the legal and financial sectors. These policy drivers reflect a broader shift in the government’s strategy for managing digital assets, balancing the need for effective law enforcement with considerations of market stability, victim restitution, and due process.
Establishment of the Strategic Bitcoin Reserve.The government’s retention of forfeited Bitcoin and other digital assets as part of a national reserve, rather than immediate liquidation, is intended to preserve long-term value and support law enforcement operations. This policy shift necessitates careful analysis of the legal status and management of seized assets. The Strategic Bitcoin Reserve is designed to serve as a hedge against inflation, a source of funding for future enforcement actions, and a tool for enhancing national security. By holding digital assets rather than selling them at auction, the government can avoid flooding the market and potentially depressing asset prices, while also benefiting from potential appreciation in value. This approach also aligns with international trends, as other countries explore similar strategies for managing seized digital assets.
Emphasis on Victim Restitution and Law Enforcement Funding.Executive orders and agency protocols mandate that forfeited assets be used first to compensate victims. Remaining assets may be allocated to the Strategic Bitcoin Reserve or used to fund law enforcement initiatives, including investments in blockchain intelligence tools and training. The government has established structured liquidation policies to ensure that a portion of seized assets is preserved in reserve, while only liquidating assets when necessary to meet operational funding needs or to provide restitution to victims. This approach creates a self-sustaining budget cycle for law enforcement, enabling agencies to reinvest proceeds from liquidated assets into ongoing investigations and capacity-building efforts.
Expansion of Blockchain Intelligence and Public-Private Partnerships.The administration’s investment in advanced blockchain analytics and partnerships with exchanges and stablecoin issuers has accelerated the identification, freezing, and seizure of digital assets. Public-private collaboration is critical to the success of these efforts, as exchanges, wallet providers, and other virtual asset service providers (“VASPs”) play a key role in detecting and reporting suspicious activity. The government has also worked closely with international partners, such as Europol and the Guardia Civil, to coordinate cross-border investigations and asset recovery efforts. These partnerships have led to the dismantling of major criminal networks and the recovery of substantial amounts of illicit digital assets.
Reform of Asset Forfeiture Laws and Structured Liquidation Policies.Recent reforms have amended DOJ and Treasury protocols to authorize long-term Bitcoin retention rather than immediate liquidation. The government has established secure custody solutions for holding seized assets and implemented policies that align liquidation with market conditions, ensuring strategic sales instead of default post-seizure liquidation. These changes are designed to maximize the value of seized assets, minimize market disruption, and enhance transparency and accountability in the management of government-held digital assets.
Investigative Tools and Enforcement Practices
Federal agencies employ a range of investigative techniques to trace and freeze cryptocurrency assets. Understanding these practices is essential for legal practitioners and industry experts, as the sophistication of law enforcement’s digital asset investigations continues to increase. The following is an overview of key investigative tools and enforcement practices currently in use:
Tracing Illicit Cryptocurrency Flows.Law enforcement relies on advanced blockchain analytics tools, such as Chainalysis Reactor, TRM Labs, and Elliptic, to trace digital assets across multiple blockchains, identify links to criminal activity, and map the flow of funds. These platforms integrate with sanctions lists, open-source intelligence, and proprietary databases, enabling the visualization of complex transaction patterns and the identification of wallets associated with illicit activity. Investigators can follow the movement of funds through mixers, tumblers, and privacy coins, often uncovering sophisticated money laundering schemes. Legal professionals and industry participants must assess exposure and respond to inquiries related to such investigations, including requests for information, subpoenas, and search warrants.
Freezing Assets via Exchanges and Stablecoin Issuers.When assets are traced to exchanges or stablecoin wallets, law enforcement may collaborate with these platforms to freeze funds. Centralized stablecoin issuers (e.g., Tether, Circle) can freeze or burn tokens associated with illicit activity, while exchanges may restrict withdrawals or transfers from accounts flagged as high risk. Legal practitioners often advise on compliance protocols, the risks of account freezes, and the legal remedies available, including challenging the basis for a freeze and seeking the release of legitimate funds. The development of internal policies for responding to law enforcement requests and managing reputational risks associated with asset freezes is also critical.
Legal and Procedural Steps.Law enforcement typically seeks seizure warrants from courts, presenting evidence of a nexus to criminal activity. Upon judicial authorization, assets are transferred to government-controlled wallets or frozen in place. The process may involve ex parte applications, emergency restraining orders, and coordination with multiple agencies. Practitioners must be familiar with the statutory process for contesting seizures and asserting the rights of potential claimants, including filing claims under the Civil Asset Forfeiture Reform Act (“CAFRA”) and pursuing motions to suppress evidence obtained through unlawful searches or seizures.
Physical Seizure of Cold Wallets.Agencies are increasingly adept at identifying and securing hardware wallets, seed phrases, and other cold storage devices during searches. Investigators may use digital forensics tools to extract wallet information from computers, mobile devices, and physical storage media. Best practices for safeguarding digital assets, maintaining secure backups, and responding to search warrants or subpoenas involving physical crypto storage are essential considerations. Legal implications of providing or withholding access to private keys and recovery phrases should also be carefully evaluated.
International Collaboration and Asset Sharing.Cross-border investigations and asset sharing with international partners are now routine. Law enforcement agencies frequently work with counterparts in Europe, Asia, and other regions to trace and recover digital assets linked to transnational crime. Mutual legal assistance treaties (“MLATs”), joint task forces, and information-sharing agreements facilitate the coordination of investigations and the repatriation of seized assets. Navigating the complexities of international enforcement and asset recovery requires attention to compliance with foreign legal requirements and the negotiation of asset-sharing agreements.
Emerging Technologies and Future Trends.The landscape of digital asset enforcement is constantly evolving, with new technologies and investigative techniques emerging on a regular basis. Artificial intelligence, machine learning, and advanced data analytics are increasingly being used to detect patterns of illicit activity and predict future threats. The government is also exploring the use of blockchain-based evidence management systems and digital asset custody solutions to enhance the security and transparency of seized assets. Staying abreast of these developments is critical for legal and industry professionals to adapt to new enforcement practices and regulatory requirements.
Recent Representative Cryptocurrency Forfeiture Actions
Recent enforcement actions underscore the government’s increasing sophistication in tracing and recovering digital assets. These cases illustrate the practical application of investigative tools, the importance of public-private collaboration, and the evolving policies surrounding the Strategic Bitcoin Reserve:
Cryptocurrency Confidence Scams (2025).The DOJ last week seized more than $225.3 million in cryptocurrency linked to investment fraud and money laundering schemes. These funds are associated with “cryptocurrency confidence scams” that deceived victims into believing they were making legitimate investments. The cryptocurrency was part of a sophisticated money laundering network that executed hundreds of thousands of transactions to obscure the origins of the stolen funds. The FBI and U.S. Secret Service (“USSS”) played significant roles in tracing and seizing the illicit funds, marking the largest cryptocurrency seizure in USSS history. More than 400 suspected victims lost funds, with reported losses exceeding $5.8 billion in 2024 alone. The DOJ emphasized its ongoing commitment to protecting the public from cryptocurrency scams and recovering stolen funds for victims.
Colonial Pipeline Ransomware Recovery (2021).The DOJ traced and recovered approximately $2.3 million in Bitcoin paid as ransom, demonstrating the power of real-time blockchain analysis. Investigators were able to follow the movement of funds through multiple wallets, ultimately seizing the private keys associated with the ransom payment. This case set a precedent for the use of blockchain analytics in high-profile cybercrime investigations. These developments highlight the importance of strategic legal responses to investigations and asset recovery, including negotiation with law enforcement and the pursuit of civil claims for the return of seized assets.
Pig Butchering Scam Takedowns (2023-2024).U.S. law enforcement, in collaboration with stablecoin issuers and exchanges, froze and seized hundreds of millions of dollars in digital assets linked to large-scale scams. These operations involved the use of advanced analytics to identify fraudulent accounts, the rapid freezing of assets by centralized platforms, and the coordination of victim restitution efforts. Legal and compliance professionals play a key role in developing internal controls to detect and prevent fraud, contesting or mitigating the impact of asset freezes, and ensuring adherence to reporting requirements and best practices for cooperating with law enforcement.
Operation Spincaster and International Seizures (2024-2025).Joint operations with international law enforcement and blockchain analytics firms have dismantled global scam networks and resulted in significant cryptocurrency seizures. These cases often involve complex cross-border investigations, the use of mutual legal assistance treaties, and the negotiation of asset-sharing agreements between countries. Multi-jurisdictional enforcement actions require careful navigation of conflicting legal requirements and the protection of interests across multiple jurisdictions.
Spanish Guardia Civil Cryptocurrency Seizure (2025).In a landmark operation, Spanish authorities, supported by U.S. law enforcement and blockchain intelligence firms, seized more than EUR 27 million in cryptocurrency from a transnational criminal organization. The operation spanned multiple provinces and involved the freezing of assets on several major exchanges. This case highlights the growing importance of international collaboration and the role of advanced technology in asset recovery.
Other Notable Cases.Additional recent actions include the seizure of assets from darknet marketplaces, the recovery of funds from ransomware attacks targeting critical infrastructure, and the dismantling of money laundering networks operating through DeFi platforms. These cases demonstrate the government’s commitment to pursuing illicit actors across the digital asset ecosystem and the need for businesses to maintain robust compliance programs.
The DOJ last week seized more than $225.3 million in cryptocurrency linked to investment fraud and money laundering schemes. These funds are associated with “cryptocurrency confidence scams” that deceived victims into believing they were making legitimate investments. The cryptocurrency was part of a sophisticated money laundering network that executed hundreds of thousands of transactions to obscure the origins of the stolen funds. The FBI and U.S. Secret Service (“USSS”) played significant roles in tracing and seizing the illicit funds, marking the largest cryptocurrency seizure in USSS history. More than 400 suspected victims lost funds, with reported losses exceeding $5.8 billion in 2024 alone. The DOJ emphasized its ongoing commitment to protecting the public from cryptocurrency scams and recovering stolen funds for victims.
These cases highlight the importance of sophisticated legal analysis in navigating rapid, intelligence-driven seizures and the evolving policies surrounding the Strategic Bitcoin Reserve. Experience in handling high-profile forfeiture actions is essential for providing strategic advice and effective representation in complex cases.
Procedural Mechanics of Crypto Seizure and Forfeiture
The procedural mechanics of crypto seizure and forfeiture involve a combination of technical investigation and legal process. The process typically begins with the identification of suspicious activity, often through the use of blockchain analytics tools that trace funds to specific wallet addresses. Investigators may follow assets through multiple transactions, exchanges, and privacy-enhancing technologies, building a comprehensive picture of the flow of funds and their connection to alleged criminal activity.
Once sufficient evidence is gathered, law enforcement may seek to freeze assets by working with exchanges, stablecoin issuers, or other virtual asset service providers. This can be accomplished through court-ordered seizure warrants, emergency restraining orders, or compliance protocols that enable rapid restriction of high-risk accounts. In some cases, stablecoin issuers may freeze or burn tokens associated with illicit activity, while exchanges may restrict withdrawals or transfers from flagged accounts.
Prosecutors typically seek judicial authorization—through a Rule 41 warrant, civil forfeiture complaint, or other legal process—detailing the evidence and technical methods for securing assets. The government must demonstrate probable cause or a preponderance of the evidence linking the assets to criminal conduct, depending on the type of proceeding. Legal professionals play a critical role in responding to such actions, asserting rights throughout the process, and challenging the basis for seizure when appropriate.
After assets are seized or frozen, the government is required to provide notice to potential claimants. This may be accomplished through blockchain messaging, publication in official channels, and direct service to known parties. Claimants have a statutory period to contest forfeiture under the CAFRA or other applicable laws. The process may involve filing claims, participating in administrative proceedings, and litigating contested issues in court.
Following adjudication or default, assets may be returned to victims, liquidated, or retained in the Strategic Bitcoin Reserve. The government’s structured liquidation and custody protocols are designed to ensure transparency, maximize asset value, and protect the interests of victims and legitimate owners. Contesting forfeiture, seeking asset return, negotiating settlements, and navigating the complexities of government asset management policies are key areas of focus. Experience in high-stakes forfeiture proceedings, compliance with strict notice and claim requirements, and the development of strategies for recovering or protecting digital assets are essential for effective legal practice in this area.
Possible Legal Defenses to Cryptocurrency Forfeiture
A range of legal challenges may be asserted in cryptocurrency forfeiture proceedings, including constitutional, statutory, and procedural defenses. The unique characteristics of digital assets present both opportunities and challenges for claimants seeking to protect their property rights. Key defenses include:
Fourth Amendment Challenges.Clients may contest seizures as unreasonable searches, particularly where warrants are based on probabilistic blockchain analysis or lack specificity regarding private keys. The use of advanced analytics and artificial intelligence in tracing digital assets raises novel questions about the reliability and admissibility of evidence. While courts often uphold the use of blockchain analytics, lawyers continue to litigate issues related to overbroad warrants, lack of particularity, and the protection of privacy interests in digital wallets and private keys. There have been successful challenges to the scope of search warrants and the methods used to access encrypted devices and storage media.
Eighth Amendment Proportionality.The forfeiture of highly appreciated digital assets can be challenged as an excessive fine, especially when asset values far exceed alleged criminal proceeds. The volatility of cryptocurrency prices and the potential for significant appreciation between the time of seizure and forfeiture raise important questions about proportionality and fairness. Developing proportionality arguments, presenting expert testimony on asset valuation, and navigating the evolving case law in this area are critical. Recent court decisions have recognized the need to consider the relationship between the value of the forfeited assets and the gravity of the underlying offense.
Innocent-Owner Claims (CAFRA).Third parties may assert lack of knowledge or involvement in criminal conduct. The distributed and pseudonymous nature of crypto custody can complicate these claims, particularly with multi-signature wallets, custodial arrangements, and DeFi platforms. Developing and presenting robust innocent-owner defenses, including documenting the source of funds, demonstrating lack of control over tainted assets, and challenging the government’s tracing methodologies, is essential. Practitioners should also be aware of the procedural requirements for asserting innocent-owner claims and the potential for negotiated settlements.
Procedural and Technical Defenses.Challenging government tracing methodologies, contesting the timeliness of proceedings, and disputing the identification of tainted assets is critical. As blockchain investigations become more sophisticated, it is important to ensure that procedural and technical rights are fully protected. Experience in challenging the admissibility of digital evidence, contesting the use of proprietary analytics tools, and advocating for greater transparency in government investigations is increasingly important. The use of expert witnesses, preservation of digital evidence, and development of technical defenses based on the unique features of blockchain technology are also key considerations.
Other Potential Defenses.Additional defenses may include challenges based on lack of jurisdiction, violations of due process, the improper application of forfeiture statutes to novel digital asset types, or the statute of limitations has expired. Identifying all available defenses and developing comprehensive strategies for protecting interests in forfeiture proceedings is a critical aspect of legal practice in this area.
Policy Considerations for Practitioners and Lawmakers
The evolving landscape of digital asset forfeiture raises several policy considerations relevant to practitioners, lawmakers, and the broader legal community. As the legal and regulatory framework continues to develop, it is essential to consider the broader implications of current policies and to advocate for reforms that promote fairness, transparency, and efficiency.
Balancing Enforcement, Victim Restitution, and Due Process.While rapid asset freezes are vital for disrupting criminal networks and preventing the dissipation of illicit funds, they must be balanced with procedural safeguards and prompt opportunities for claimants to contest forfeiture. The government’s emphasis on victim restitution is commendable, but it is equally important to ensure that innocent owners and legitimate businesses are not unfairly deprived of their assets. Ensuring due process at every stage—including timely notice, access to judicial review, and the opportunity to present evidence and challenge the government’s case—is essential.
Strategic Asset Management and Custodial Risk.The government’s retention of large cryptocurrency reserves introduces market and security risks, including the potential for price volatility, hacking, and mismanagement. The implications of custodianship, staking rewards, airdrops, and structured liquidation policies must be carefully considered. The development of secure custody solutions, transparent asset management protocols, and independent oversight mechanisms is essential to mitigate these risks and to maintain public confidence in the government’s handling of digital assets.
Funding Law Enforcement and Avoiding Improper Incentives.The use of forfeited assets to fund law enforcement raises transparency and conflict-of-interest concerns. While self-sustaining budget cycles can enhance the effectiveness of digital asset investigations, they may also create incentives for overzealous enforcement and the pursuit of revenue at the expense of due process. The impact of these funding mechanisms should be critically assessed, with support for fair and transparent processes and reforms that promote accountability and the responsible use of forfeiture proceeds.
International Coordination and Best Practices.As cross-border investigations increase, harmonizing doctrines and adopting best practices—such as enhanced judicial oversight, victim claims portals, and standardized asset-sharing agreements—are essential. The complexity of international asset recovery requires close collaboration between governments, private sector partners, and civil society organizations. International coordination requires navigating conflicting legal requirements, negotiating asset repatriation agreements, and advocating for the adoption of global standards for digital asset forfeiture.
Future Directions and Legislative Reform.Ongoing legislative and regulatory reforms are likely to further shape the landscape of digital asset forfeiture. Proposed changes may include enhanced procedural protections for claimants, greater transparency in asset management, and the development of new tools for tracing and recovering digital assets. Active engagement in policy discussions and advocacy for reforms that balance the needs of law enforcement, victims, and legitimate asset holders are essential for the continued evolution of the legal framework.
Conclusion
As the legal landscape for digital asset forfeiture continues to evolve, the integration of digital assets into national policy, the expansion of investigative tools, and the retention of forfeited assets in government reserves all present new challenges and opportunities for the financial ecosystem and legal profession.
Remaining at the forefront of legal developments is essential for protecting property rights, asserting effective defenses, and adapting to the rapidly changing digital economy. A comprehensive approach includes compliance with evolving statutory and regulatory frameworks, the development of robust internal controls, effective responses to law enforcement inquiries, and the litigation of complex forfeiture proceedings. Strategic guidance on risk management, asset recovery, and the development of best practices for digital asset custody and management is increasingly important.
Looking ahead, continued innovation in both technology and policy is anticipated, with new tools and legal doctrines emerging to address the unique challenges of digital asset enforcement. Legal and industry professionals must remain vigilant and informed to navigate the future of digital asset forfeiture with confidence and clarity.
State of Employment Law: Meal and Rest Break Laws Vary Significantly from State to State
As reported earlier this week, Minnesota recently passed laws that mandate a meal break of at least 30 minutes each shift and rest breaks of at least 15 minutes for every four consecutive hours worked. While federal law generally does not mandate meal or rest breaks, several states require one or both.
Nineteen states require employers to provide meal breaks and nine states require employers to provide rest breaks. However, employers may struggle to develop a one-size-fits-all multi-state policy for meal breaks, as state laws vary significantly.
For example, in Colorado, employers must provide a 30-minute meal break to employees scheduled to work a shift of at least five hours. In contrast, employers in Illinois only have to provide a 20-minute meal break, and only to employees who work at least seven and a half hours.
In Nevada, employees must work eight hours to earn a 30-minute meal break. New York mandates longer minimum lunch breaks for factory workers than non-factory workers and Maryland only requires lunch breaks for retail workers.
Some states mandate when the meal break must be taken, while others are silent on timing. Arkansas does not require meal breaks, but if an Arkansas employer provides meal breaks shorter than 30 minutes, then they must be counted as hours worked.
A consistent multi-state rest break policy is likely easier to implement, as most states that require rest breaks require 10 minutes of break time for every four hours worked.
E-Verify Users Must Now Generate Status Change Reports to Identify Terminated Work Authorizations
Employers enrolled in E-Verify must now generate Status Change Reports to identify employees whose work permits have been terminated due to changes in temporary status protections or similar programs.
The recent termination by the Department of Homeland Security (“DHS”) of removal protections and employment authorization for several hundred thousand individuals covered by Temporary Protected Status and parole programs has resulted in situations where a worker’s employment authorization document (“EAD”) may appear valid despite having been revoked. Previously, E-Verify would issue Case Alerts to employers where an EAD had been revoked by DHS.
As per June 23, 2025 guidance issued on the E-Verify website, Case Alerts will no longer be used for EAD revocations related to the termination of parole or other humanitarian protected status programs. Employers now “should regularly generate the Status Change Report to identify E-Verify cases created with an EAD that is now revoked” on these bases. As per the guidance, employees whose EADs were revoked between April 9-June 13, 2025 would be reflected in Status Change Reports available as of June 20, 2025.
The guidance further states that employers should not create a new E-Verify case in the event an employee appears on a Status Change Report. Rather, “E-Verify employers must use Form I-9, Supplement B, to immediately begin reverifying each current employee whose EAD the Status Change Report indicated was revoked, or after your employee voluntarily discloses to you that their EAD has been revoked, and complete all reverifications within a reasonable amount of time.” In such situations, employees may still be authorized to work in the United States based on another status or provision of law and may provide other acceptable Form I-9 documentation to the employer to demonstrate employment authorization.
E-Verify will continue to provide Case Alerts for EADs that are expiring regularly and not as a result of changes in temporary status protections or similar programs.
California Delays NOP Requirements for Compostable Products
Earlier this month, the California Department of Resources Recycling and Recovery (CalRecycle) sent a letter to the Biodegradable Products Institute (BPI) that effectively delays, until June 30, 2027, a key requirement for “compostable” and “home compostable” products set to take effect next year. California’s AB 1201 required that after January 1, 2026, products labeled “compostable” or “home compostable” must not only pass tests specified under the law but must also be “an allowable agricultural organic input under the requirements of the United States Department of Agriculture [(USDA)] National Organic Program [(NOP)].” Although this requirement applies to any material that meets AB 1201’s broad definition of a “product,” the law principally affects plastic and plastic-coated products. To assure that products meeting California’s current compostability standards can continue to be labeled “compostable” or “home compostable” in California, BPI submitted a petition in 2023 to the National Organic Standards Board (NOSB) seeking recognition for compostable plastic and plastic-coated products under the USDA NOP. That petition is still pending. CalRecycle’s letter to BPI grants an extension for “products that contain synthetic substances that otherwise satisfy all requirements for lawfully being labeled ‘compostable,’ including the requirement that products meet an ASTM standard specification pursuant to section 42357(a)(1). This extension shall expire as of June 30, 2027.” Absent this action, many companies would have had to remove current “compostable” labels for their products at a time when other laws – notably SB 54, California’s Extended Producer Responsibility (EPR) law for packaging – require that products meet source reduction, recyclability, or compostability requirements by specific deadlines.
CalRecycle’s extension allows plastic and plastic-coated products that currently meet all requirements for being labeled “compostable” or “home compostable” in California, save for formal recognition by the USDA NOP, to continue to be sold in that state without changes to labels until June 30, 2027. After that date, companies must revise labeling for their “compostable” and “home compostable” products sold in California that are not listed as an allowable agricultural organic input under the requirements of the USDA NOP, unless CalRecycle grants a further exemption. On this point, CalRecycle explained that before June 30, 2027:
CalRecycle will evaluate whether to renew exemptions for products that would become compliant with PRC section 42357(g)(1)(B) pursuant to regulations then under consideration. CalRecycle may determine regulations to be under consideration if there is a pending NOSB rulemaking recommendation to the NOP, the NOP has decided to initiate rulemaking but has not yet done so, or the rulemaking process is underway. A renewed extension shall continue while such regulations remain under consideration but shall not extend beyond January 1, 2031.
CalRecycle’s action is good news for companies selling covered compostable products in California. However, the compostability legal landscape remains fractured, with some different – and inconsistent – state laws. Although other states have not adopted California’s added NOP obligations, states like Washington, Colorado, and others have their own restrictions for labeling and marking “compostable” products. CalRecycle’s 18-month extension is a positive step for many companies who have invested in compostable and home compostable products. Nevertheless, businesses offering compostable packaging and products nationally must be familiar with all applicable compostability requirements in developing their labeling and marketing materials.
Companies Gauge Impact of Return to Office
The prevalence of remote and hybrid work varies by industry, type of job, and job level in an organization’s hierarchy. A survey from Robert Half found that, from 2023 to 2025, the proportion of job listings with hybrid work jumped from 9 percent to 24 percent, while the proportion of job listings with fully remote work rose from 10 percent to 13 percent, and the proportion of job listings with fully in-person work dropped from 83 percent to 63 percent.
Quick Hits
Remote work and hybrid work remain a growing trend.
Some employers, including federal agencies, have implemented return-to-work policies during the last two years.
Employers with a return-to-work policy may want to measure its ongoing impact on employee retention, recruitment, and productivity.
In many industries, remote and hybrid work increased dramatically during the coronavirus pandemic in 2020 and 2021. After the pandemic subsided, some employers announced new policies requiring all workers to return to the office four or five days per week. On January 20, 2025, President Donald Trump issued an executive order requiring federal agencies to end remote work and order federal employees to be present in the office five days per week.
Some employers and managers hoped a return to the office would increase productivity, strengthen the corporate culture, and promote collaboration and innovation. Did the return-to-work policy bring the intended results, or did it have unintended consequences for employers and employees?
A 2023 survey from Unispace found that 42 percent of employers that mandated a return to the office experienced higher than normal turnover, and 29 percent had a harder time recruiting employees. Productivity increased at workplaces where the use of remote work increased, even before the pandemic, according to a 2024 study from the U.S. Bureau of Labor Statistics. About 31 percent of U.S. employees were engaged at work in 2024, up from 26 percent in 2000, according to a Gallup survey.
Many employees like remote work because it eliminates their commuting time and costs, like gas and parking. The time that would have been spent commuting can be spent on work-related tasks. Remote work also gives employees greater flexibility and time to handle personal and family matters, like medical appointments and school meetings.
For employers, remote work may increase employee retention and widen the talent pool for hiring. It also may lower spending on office space, utilities, commuter benefits, and office supplies. Likewise, it may lower payroll costs because some workers will accept a lower salary for a remote position that offers better work-life balance.
Common Legal Issues With Remote and Return-to-Office Work
Americans with Disabilities Act (ADA) Accommodation Challenges: Employers face potential disability discrimination claims when mandating office returns for employees with qualifying disabilities who request remote work as a reasonable accommodation. Failure to engage in the interactive process before applying return-to-work policies to employees with disabilities can create legal liability.
Discrimination Concerns: As with most other employment decisions, selectively applied return-to-office mandates might create a perception of favoritism or unfairness, potentially creating discrimination claims based on race, gender, age, disability, and other protected characteristics.
Compensation Equity Issues: Different pay structures for remote versus in-office employees, or employees working in diverse geographic regions, may create pay equity complications or discrimination claims.
Pay Transparency Compliance Issues: An increasingly complex web of state and local pay transparency laws mandate disclosure of salary ranges in job postings or by request from current employees. Some laws require disclosure in the jurisdiction if the job could be filled by a remote worker or if the worker will perform work at a location in the jurisdiction. Complying with these laws in the context of hybrid or remote work requires careful planning.
Productivity Measurement Liability: Methods used to monitor remote versus in-office productivity could create privacy or discrimination issues if not applied consistently.
Travel Time and Expense Reimbursement: A hybrid work arrangement can give rise to complexities regarding travel time for nonexempt employees, particularly where there may be ambiguity regarding whether travel counts as commuting time or on-the-clock travel time. Moreover, in some states where expense reimbursement is required for use of personal devices, internet service, and the like, ambiguities may arise with hybrid schedules allowing employees to work remotely on a flexible schedule.
Next Steps
Employers may wish to measure the impact of return-to-work policies on productivity, recruiting, retention, payroll, and other overhead costs. This can be accomplished with employee engagement surveys, accounting software, and gathering data on cost per hire, time to hire, and turnover rates in various corporate departments and locations.
Among other compliance steps, employers may want to consider:
Developing and consistently following written standards regarding remote, hybrid, or in-office work location obligations.
Implementing a consistent, documented interactive process for employees requesting remote work accommodations.
Reviewing compensation practices and conducting pay equity audits.
Mapping out pay transparency laws and complying with state and local mandates.
Developing clear metrics to measure productivity, regardless of work location.
Reviewing policies to ensure they don’t create unintended discriminatory impacts.
Creating clear guidelines about reimbursable remote work expenses.
This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.
Supreme Court Provides Crucial Guidance on Venue for Clean Air Act Challenges
On June 18, 2025, the Supreme Court decided Oklahoma v. EPA and EPA v. Calumet, a pair of cases that focus on the Clean Air Act’s (CAA or Act) venue selection provisions.
The judicial review provisions of the Act send review of “nationally applicable” EPA actions to the DC Circuit and review of “locally or regionally applicable” EPA actions to the regional circuits. See 42 U.S.C. § 7607(b)(1). However, in an exception to that rule, venue may lie in the DC Circuit for regionally applicable actions that are “based on a determination of nationwide scope or effect.” In the Court’s two recent decisions, it explained that the CAA venue analysis called for a two-step inquiry. First, courts must decide whether the EPA action is nationally applicable or only locally or regionally applicable; if nationally applicable, the case belongs in the DC Circuit. Second, if locally or regionally applicable, courts must decide whether the case falls within the exception for “nationwide scope or effect” to override the default rule of regional circuit review.
In Oklahoma, the Court held that EPA’s disapproval of the Oklahoma and Utah state implementation plans (SIPs) belonged in a regional circuit, not the DC Circuit. At the first step, the Court found the SIP disapprovals were “[c]learly” “locally or regionally applicable.” The Court held that the disapproval of a SIP by its nature (and by statute) is always a locally or regionally applicable action. EPA cannot change that by grouping multiple state-specific disapprovals into one Federal Register notice. At the second step, the Court set forth a high standard that EPA must clear in order to show that a locally or regionally applicable action is based on a determination of nationwide scope or effect: That determination must lie at the “core” of EPA’s decision, i.e., it must serve as the most important part of EPA’s rationale. EPA receives no deference on this issue. If it is “debatable” whether such a determination lay at the core of EPA’s rationale, then the exception does not apply. In Oklahoma, the Court explained that the SIP disapprovals were based on a variety of state-specific facts and that EPA’s various nationwide determinations were not the primary reasons for disapproving the SIPs. Thus, the exception did not apply, and the litigation belonged in the Tenth, not DC, Circuit.
In Calumet, the Court reached a different conclusion regarding challenges to exemptions under the CAA’s renewable fuels program for fuel refineries. Although EPA’s denial of exemption petitions was “locally applicable,” the Court concluded that EPA had relied on national legal and economic determinations that applied “generically to all refineries, regardless of their geographic location.” Because those nationwide determinations provided the basis for denying the individual exemption requests, they lay at the core of EPA’s action and thus triggered the exemption to bring venue to the DC Circuit.
Together, these decisions clarify the line between national and local or regional EPA actions for purposes of venue under the CAA. Oklahoma suggests that actions grounded in state-specific facts (like SIP disapprovals) belong in regional circuits, even if decided in omnibus fashion or using a shared analytical framework. Calumet shows that when EPA applies a uniform national rationale not grounded in state- or region-specific considerations, challenges belong in the DC Circuit.
The Oklahoma decision will be particularly helpful in clarifying proper venue in other cases involving state plans. For example, under the current administration, EPA is proposing to approve state plans for “reasonable progress” on visibility improvement during the second planning period. Venue for any challenges to those EPA approvals will presumptively lie in the local circuits.
From Wall Street to Main Street: Investor Advocate Puts Private Funds on the 401(k) Horizon
On June 25, 2025, the SEC’s Office of the Investor Advocate (OIAD) released its annual report to Congress on its policy priorities for fiscal year 2026. The office was established by Congress to focus on retail investor issues and, in many years, its annual report draws limited attention. This year’s report is notable because it places the inclusion of private equity, private credit and other alternative strategies in retirement savings plans (such as 401(k) plans) on its short list of 2026 policy priorities. If retail investors are given greater latitude to invest in private funds through their retirement plans, they could become a significant new source of capital for private fund managers.
Although OIAD does not write rules, its work reflects the Commission’s agenda and shapes the final outputs. Its staff conducts research that can inform how the Commission designs rules, for example, by providing evidence of investor preferences to regarding particular asset classes and their level of understanding of common investment structures. This information could, in turn, be used to design any guardrails the SEC may impose or to support the cost-benefit analysis the SEC is required by statute to conduct.[1]
OIAD’s focus does not guarantee imminent rulemaking; however, history shows that themes highlighted in its reports frequently reappear elsewhere on the SEC’s agenda. The inclusion of private market issues in OIAD’s report provides further confirmation, alongside other recent changes at the SEC and elsewhere,[2] such as abandoning the previous informal limitation on closed-end funds’ investments in private funds as well as recent statements from the SEC Commissioners and staff, that easing the path for retail investors to invest in alternative assets through their retirement savings plans is one step closer to becoming a reality.[3]
[1] The economic analysis section of a rulemaking release is frequently nearly the same length as the legal section. SEC rules have been regularly overturned on the basis of flaws in the economic analysis, as opposed to the legal analysis. By taking the extra time to assemble strong economic evidence in advance of a rulemaking action, the SEC could help to create a rule that will survive legal challenge.
[2] For example, the United States House of Representatives recently passed a bill that would expand the definition of accredited investor to include additional categories of professional certification, which could expand the universe of eligible investors in private funds. Similar bills have been passed before only to languish in the Senate, but the near-unanimous approvals by of the House’s bills may indicate a broadly bipartisan coalition is developing in favor of increased access to private investments.
[3] Rule changes at the SEC are not the only actions that must take place before retirement plan investments in private funds become widespread. This would likely also require action by the Department of Labor (which, reportedly, could be the subject of a future executive order) as well as decisions by individual plan fiduciaries to add funds to their platforms. While the SEC’s actions alone will not change the environment for private fund managers, they represent an important step along the path.
Looks Like Estoppel, Sounds Like Estoppel … But It’s Just Director Discretion
The acting director of the US Patent & Trademark Office (PTO) granted a patent owner’s request for discretionary denial and denied institution of an inter partes review (IPR) proceeding, finding that the petitioner engaged in unfair dealings by challenging a patent on which its employees were the inventors. Tessell, Inc. v. Nutanix, Inc., IPR2025-00322 (PTAB June 12, 2025) (Stewart, Act. Dir.)
Four individuals were Nutanix employees when they invented the subject matter of the challenged patent. Two of the individuals left to form Tessell and later hired the other two. Tessell, which now includes nearly all of the inventors of the challenged patent, filed a petition for IPR arguing that the claims of the patent were unpatentable. Nutanix filed a request for discretionary denial, which Tessell opposed.
The doctrine of assignor estoppel generally prevents an inventor who has sold or assigned a patent from challenging the validity of the patent. Although assignor estoppel does not apply in IPR proceedings, the acting director explained that the PTO may consider unfair dealings as a factor when determining whether to exercise discretion to deny institution under 35 U.S.C. § 314(a). The acting director found that it was inappropriate for the inventors to have used PTO resources to obtain a patent only to later advocate for its unpatentability. The acting director therefore exercised discretion to deny institution.
Foley Automotive Update June 26, 2025
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Trade and Tariff Policies
Foley & Lardner provided an update for multinational companies to mitigate risks posed by the Trump administration’s focus on drug cartels and transnational criminal organizations (TCOs).
Mexico will impose an Export Notice requirement for five tariff lines that include certain mechanical and electrical machinery, according to an update from Foley & Lardner.
A Section 232 investigation into imports of semiconductors and semiconductor manufacturing equipment that may result in new import tariffs prompted widespread concern from automakers and other stakeholders in a review of public comments featured in Bloomberg. The Commerce Department did not provide an update on the expected outcome of the investigation.
President Trump on June 12 stated he may raise automotive tariffs “in the not-too-distant future. The higher you go, the more likely it is they build a plant here.”
The U.S. Supreme Court rejected a request from two family-owned businesses to expedite their challenge to President Trump’s broad “reciprocal” tariffs. A federal appeals court had ruled in a separate case that the tariffs can remain in effect at least until a hearing in late July.
Ford and other automakers are still experiencing challenges obtaining adequate supplies of certain rare earth magnets two weeks after the announcement of a U.S.–China trade deal.
The Trump administration’s attention to the U.S. auto trade deficit with Japan is one of the key issues that have impeded that nation’s trade agreement negotiations.
Automotive Key Developments
Automotive News released its annual ranking of the top 100 global parts suppliers.
U.S. new light-vehicle sales in June are projected to increase 2.5% year-over-year to reach a SAAR of 15 million units, according to a joint forecast from J.D. Power and GlobalData.
A draft of the “big, beautiful” budget and tax bill released by the Senate Finance Committee on June 16 would end EV tax credits for all automakers 180 days after bill passage.
California and 10 other states sued the federal government on June 12 over Congressional Resolutions that revoked Clean Air Act waivers which had allowed the Golden State to establish vehicle emission standards that were more stringent than federal requirements. The waivers had also facilitated a California program that required increasing percentages of zero-emission vehicle sales in the state over the next decade.
California Governor Gavin Newsom signed an executive order on June 12 reaffirming the state’s “commitment to accelerate the deployment of zero-emission technologies.”
The U.S. Supreme Court on June 20 ruled that fuel producers have standing to sue over California’s vehicle emissions standards.
A Seattle federal judge on June 24 issued a preliminary injunction blocking the Trump administration from withholding funds for EV charging infrastructure projects in certain states, but stayed the order to allow time for an appeal.
The National Highway Traffic Safety Administration (NHTSA) plans to streamline reviews of automakers’ exemption requests to deploy self-driving vehicles without certain required human controls such as steering wheels or brake pedals.
The Alliance for Automotive Innovation expressed concernsover risks to vehicles’ wireless safety features resulting from provisions in the “big, beautiful” bill that may require the Federal Communications Commission (FCC) to auction federal spectrum rights in the years ahead. Features at risk of losing functionality may include remote parking, hands-free trunk release, and anti-theft capabilities, as well as certain systems to prevent collisions.
OEMs/Suppliers
Certain ongoing trade challenges experienced by a Japanese supplier to Honda suggest “the true toll of the trade war on the auto sector will be magnitudes more than the billions of dollars forecast” by the top automakers, according to a report in Bloomberg. Japan’s top automakers estimated the Trump administration’s tariffs will cost them over $19 billion.
German automakers incurred approximately €500 million ($576 million) in tariff-related costs in April.
Marelli CEO David Slump cited tariffs “against automotive manufacturers and suppliers” as a key factor in the company’s Chapter 11 bankruptcy filing.
Toyota intends to raise prices on certain vehicles sold in the U.S. by up to $270 per vehicle beginning in July in response to the Trump administration’s tariffs. Ford and Subaru raised vehicle prices by up to $2,000 because of the levies, and Mitsubishi will raise prices on U.S. vehicles by an average of 2.1%.
Consultancy AlixPartners estimated consumers’ new-vehicle prices will increase by nearly $2,000 per vehicle due to tariffs.
A number of parts suppliers are reported to be skeptical of certain Chinese automakers’ promises to adhere to 60-day payment terms. This coincides with concerns over the impact to profit margins and financial risk resulting from ongoing price wars among China’s car companies.
Dana Inc. announced an agreement to sell its off-highway business to Allison Transmission for $2.7 billion. The divestment supports Dana’s goal to reduce the complexity of its business and “become a streamlined light- and commercial-vehicle supplier with traditional and electrified systems.”
Continental announced a partnership with GlobalFoundries to establish an Advanced Electronics and Semiconductor Solutions (AESS) organization to design automotive semiconductors.
Market Trends and Regulatory
The Alliance for Automotive Innovation called for significant reforms to NHTSA, and stated the regulator has impeded automotive industry progress and innovation.
Nippon Steel closed its $14.1 billion acquisition of U.S. Steel after reaching an agreement that will give the U.S. government approval over certain provisions such as job moves, facility closures or future acquisitions.
Exports of Chinese-built vehicles to Brazil are projected to rise by 40% year-over-year to represent approximately 8% of the nation’s total light-vehicle registrations in 2025.
China suspended vehicle trade-in subsidies in certain cities due to funding shortfalls, as well as scrutiny over the prevalence of exporting new zero-mileage cars as “used” to boost sales volumes.
New-vehicle registrations in Europe rose 1.6% YOY in May, but declined 0.6% for the first five months of 2025, according to data from the European Automobile Manufacturers’ Association (ACEA).
Ford will require the majority of its salaried workforce to report to the office four days a week.
A report from a court-appointed monitor concluded that UAW President Shawn Fain unjustly withdrew certain key duties of Secretary-Treasurer Margaret Mock in 2024 after Mock was “falsely accused of misconduct.”
Workers at GM’s plant in San Luis Potosí, Mexico will vote this week on whether to join the National Auto Workers Union (SINTTIA).
Autonomous Technologies and Vehicle Software
Waymo launched driverless rides in parts of Atlanta for Uber passengers on June 24, expanding a partnership that started earlier this year in Austin, Texas. Separately, Waymo applied for a permit to begin autonomous vehicle testing in New York City.
Daimler Truck subsidiary Torc Robotics announced a new $5.6 million engineering center in Ann Arbor, Michigan.
Livonia, Michigan-based Roush Industries was selected to scale upfitting trucks with autonomous driving systems for Kodiak Robotics.
Amazon-owned autonomous vehicle company Zoox opened a plant in Hayward, California that will be capable of producing up to 10,000 robotaxis annually.
China released draft guidance to regulate the export of data generated by cars in the country, including details of scenarios that may require security assessments for companies seeking to transfer data outside the nation.
Volvo and Daimler Truck announced the launch of joint venture Coretura to develop a software-defined vehicle platform for commercial vehicles.
Electric Vehicles and Low-Emissions Technology
BloombergNEF expects battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) to represent 27% of U.S. new light-vehicle sales by 2030, from a previous forecast of 47.5%. The updated analysis eliminated 14 million units from the 2030 sales projection, and assumes California will retain its ability to set its emissions standards.
A report from the Alliance for Automotive Innovation indicates BEVs and PHEVs achieved a 9.6% share of total new light-vehicle sales in the first quarter of 2025, representing a decline of 1.3 percentage points from the fourth quarter of 2024, and a 0.3 percentage point increase YOY.
Cox Automotive estimated new EV sales in May fell 10.7% year-over-year to 103,435 units, representing a 6.9% share of the total U.S. new light-vehicle market. The average transaction price (ATP) for a new EV in May declined 1% YOY to $57,734.
Leases represented nearly 60% of first quarter 2025 new EV sales in the U.S.,up from 36% one year ago, according to data from Experian.
Automotive News provided an update on the status of notable U.S. battery manufacturing investments and projects.
Uber announced an international partnership with C40 Cities to increase access to charging infrastructure in London, Boston and Phoenix. Uber also launched the Electric Vehicle Infrastructure Estimator (EVIE) tool to help cities project EV charging demand from Uber drivers. Uber estimated there are 230,000 EV drivers on its platform globally, and charging access has overtaken vehicle cost as drivers’ top concern.
Ion Storage Systems began small-scale production of solid-state batteries at its factory in Maryland. Solid-state technology is expected to significantly extend batteries’ range and improve charging speeds. However, the technology has a number of challenges to overcome to achieve cost-effective production at scale.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
When It Comes to Objective Criteria of Nonobviousness, Nexus Is Looser for License Evidence
The US Court of Appeals for the Federal Circuit partially reversed a decision by the Patent Trial & Appeal Board, effectively relaxing the nexus requirements for patent licenses pertaining to their usage as objective indicia of nonobviousness. Ancora Technologies, Inc. v. Roku, Inc. et. al., Case Nos. 23-1674; -1701 (Fed. Cir. June 16, 2025) (Lourie, Reyna, Hughes, JJ.) (per curium).
Ancora owns a patent directed to limiting software use on a computer through license verification. The patented technology centers on storing an “agent,” which is a license verification program, in a computer’s basic input/output system (BIOS) rather than in volatile memory. In 2021, Nintendo, Roku, and VIZIO separately filed petitions for inter partes review (IPR) challenging claims of Ancora’s patent. The Board consolidated the proceedings and ultimately found certain claims of the patent unpatentable as obvious over a combination of two prior art references: Hellman (which discloses storing license information in nonvolatile memory) and Chou (which discloses a BIOS-level security routine). Ancora appealed.
Ancora raised three issues on appeal:
That the Board erred in construing the claim term “agent”
That even if the Board correctly construed “agent,” it nonetheless erred in determining obviousness under 35 U.S.C. § 103 based on a combination of Hellman and Chou
That the Board erred in its analysis of secondary considerations of nonobviousness.
The Federal Circuit affirmed the Board’s construction of “agent” to mean “a software program or routine” with no further limitations. The Court disagreed with Ancora’s argument that “agent” was limited to use in software only, primarily because neither the patent nor prosecution history provided any disclaimer of hardware. For similar reasons, the Court also disagreed with Ancora’s argument that “agent” was limited to use at the operating-system level.
On the obviousness determination, the Federal Circuit upheld the Board’s conclusion that the combination of Hellman and Chou rendered the claims prima facie obvious. The Court rejected Ancora’s argument that the Hellman/Chou combination would not provide motivation to combine since they are redundant.
The Federal Circuit disagreed with the Board’s analysis of the objective indicia of nonobviousness, particularly the treatment of Ancora’s licensing evidence. The Board found that Ancora failed to establish a sufficient nexus between the claimed invention and evidence of two objective indicia of nonobviousness: industry praise and licensing.
The Federal Circuit agreed with the Board on industry lack of nexus for the alleged praise (where the Board found that praise for the invention in a press release and an agreement between Ancora and another company offering products using the patent was directed broadly to the patent and not specifically to the challenged claims). However, the Court found that the Board erred regarding the appropriate nexus as it relates to Ancora’s licensing evidence.
The Board found that Ancora failed to show a nexus between the challenged claims and two licenses it obtained through settlement agreements in other cases. The Federal Circuit disagreed, finding that the Board applied an overly stringent nexus standard inconsistent with precedent. While products may require detailed analysis to show a nexus because of the presence of unclaimed features, the Court explained that licenses, by their nature, are directly tied to the patented technology and do not require the same level of scrutiny. The Court also agreed with Ancora that the substantial license payments, the defendants’ awareness of relevant prior art, and the fact that the licenses covered all of the challenged claims supported a nexus. Additionally, the Court found that the Board misread one of the licenses and failed to properly evaluate its significance. Concluding that the Board erred in its analysis of secondary considerations, the Court remanded the case for reconsideration of the nexus issue as it pertains to Ancora’s licensing evidence.
A SHARP DISSENT: A Review Of The Dissent’s Take On The Supreme Court’s Ruling In McLaughlin.
Let’s Get You Up To Speed
In McLaughlin Chiropractic Assocs., Inc. v. McKesson Corp., No. 23-1226, 2025 WL 1716136 (U.S. June 20, 2025), the Supreme Court determined that the Hobbs Act does not bind district courts in civil enforcement proceedings to adopt an agency’s interpretation of a statute. Rather, district courts must make their own determinations under ordinary principles of statutory interpretation while affording appropriate respect to the agency’s interpretation. According to the Supreme Court, the phrase “determine the validity” merely bars a district court from striking down the agency order outright– it does not prevent them from applying a different rule of law where the agency’s interpretation is deemed inapplicable.
As a result, the Supreme Court applied a “default rule” which permits district courts to review and depart from agency action when appropriate.
The Dissent
Justice Kagan, joined by Justices Sotomayor and Jackson, dissented.
“Ship first, litigate later… [A]s the majority sees things, the Act ‘does not preclude district courts’ from declaring a rule or order invalid years after it issued, at the behest of a party who declined to seek judicial review in the first instance.”
McLaughlin Chiropractic Assocs., Inc. v. McKesson Corp., No. 23-1226, 2025 WL 1716136, at *13 (U.S. June 20, 2025).
The dissent highlights a simple idea: when Congress has created a framework – like the Hobbs Act – for how and when to challenge agency interpretations, courts should yield to that structure. Under the Hobbs Act, agency orders must be challenged directly and timely in the court of appeals. If nobody does, the interpretation stands.
According to the dissent, the majority fumbled a matter of basic statutory interpretation. “The text of the Hobbs Act makes clear that litigants who have declined to seek pre-enforcement judicial review may not contest the statutory validity of agency action in later district-court enforcement proceedings.” Id. at *14. The dissent views the majority as sidestepping the Hobbs Act’s natural meaning by inventing a brand-new “default rule”—one that says Congress must use specific words or build in redundancy to bar future challenges. In doing so, the majority effectively guts the Hobbs Act and jeopardizes the predictability and effectiveness of administrative enforcement.
The Hobbs Act gives federal courts of appeals the exclusive power to review and invalidate certain agency rules and orders. The core question is whether that exclusivity bars someone from later challenging an agency’s action in a district court enforcement case, long after the action was issued and reviewed. The dissent argues this question is answered by the text of the statute.
“[T]he Hobbs Act gives courts of appeals exclusive authority to ‘determine the validity’ of specified agency actions. ‘Exclusive,’ of course, means courts of appeals alone, not district courts.”
Id. at *14. Thus, if a district court rejects an agency order, the district court is doing what the Hobbs Act expressly forbids: “determin[ing] the validity” of that rule. This undermines the Act’s exclusive-review structure and allows litigants to sidestep Congress’ clear division of judicial power.
The dissent further criticizes the majority’s interpretation of “determine the validity” to mean “issue a declaratory judgment determining the validity.” Nothing in the Hobbs Act limits the term to the majority’s narrow interpretation and Congress is more than capable of saying so if that’s what it intended. The majority has essentially rewritten the statue by adding language Congress didn’t intend to include.
According to the dissent, history, precedent, and common sense all point to one conclusion: the Hobbs Act was meant to prevent exactly the kind of late-stage challenge to agency orders the majority now allows. The dissent cites a century’s worth of case law – Venner, Yakus, Port of Boston, etc…—to show that when Congress gives appellate courts “exclusive jurisdiction” to determine the validity of agency action, that language precludes district courts from challenging those orders later on. Congress legislated against the backdrop of these decisions, and the Supreme Court’s past interpretations have consistently upheld the exclusivity of appellate review.
The dissent argues that the “default rule,” requires Congress to take a “belt and suspenders” approach—adding a redundant “we mean it too” sentence—whenever it intends for an exclusive jurisdiction provision to vest review solely in the courts of appeals. The majority offers two reasons for this approach: (1) the presumption of judicial review of agency action and (2) the Administrative Procedure Act (“APA”). The dissent challenges both.
Presumption of Judicial Review of Agency Action
The dissent agrees that there is a basic presumption of judicial review for agency actions, however, it argues that the presumption isn’t as radical as the majority claims. Congress often channels judicial review into a specific forum without eliminating it entirely. Citing past cases like Thunder Basin and Axon, the dissent argues that when Congress provides an exclusive structure for judicial review, the presumption of district court review doesn’t apply. Here, because the Hobbs Act offers a centralized appellate review structure, the default presumption of district court review should not be triggered.
Administrative Procedure Act
Further, the dissent argues that the APA, specifically Section 703, does not support the majority’s “default rule.” It emphasizes that Section 703 explicitly carves out an exception when Congress provides a “prior, adequate, and exclusive” path for judicial review—precisely what the Hobbs Act does. Thus, district courts must determine in each case whether Congress had the intent to preclude or permit judicial review of agency action in enforcement proceedings, and not defer to a “default rule.” In essence, the APA calls for statutory interpretation, not its avoidance as the majority does by deferring to a “default rule.”
Consequences of the Majority’s Misreading of the Hobbs Act (According to the Dissent)
The majority’s misreading of the Hobbs Act undermines its core purpose: to ensure finality and prevent disruptive, belated challenges to agency action. By allowing parties to contest agency decisions without first notifying the government, the ruling threatens the stability of administrative frameworks and invites legal uncertainty. It may also discourage prompt compliance with lawful regulations, even in areas where Congress prioritized immediate enforcement.
The Court’s ruling undermines the Hobbs Act’s which relies on a strict 60-day window to bring challenges to agency actions. After the 60 days are up, those interested are meant to have clear rules to be guided by. But by allowing future challenges, the majority opens the floodgates of indefinite disruption, threatening stability with nothing being ever truly settled.
Further, this decision strips the government of its right to defend agency orders. Normally, challengers must sue the United States and notify both the agency and the Attorney General, ensuring the government has a chance to respond. Now, however, district courts may invalidate agency orders in private suits. As a result, agency decisions can be reversed without the FCC or other agencies having any opportunity to object.
Finally, Congress deliberately structured the Hobbs Act to prevent regulated entities from treating compliance with agency orders as options, and gambling on a more favorable outcome in the future. The Hobbs Act ensures compliance by requiring early judicial review, not post hoc challenges.
“The Hobbs Act gives the courts of appeals “exclusive jurisdiction” to “determine the validity” of covered agency action. Those words mean what they say, or anyway should. They mean that, because the appellate courts’ jurisdiction is exclusive, district courts have no power to make the determination anew.”
Id. at *20. The majority has effectively gutted the framework of the Hobbs Act and gave regulated actors too much leeway to disregard agency orders.
AI, Deepfakes, and the Rise of the Fake Applicant – What Employers Need to Know
In an age of artificial intelligence and technological advances that improve the quality of deep fake programming, companies must remain vigilant to protect their brand and assets. They also have to be wary of who is applying for open positions. The person applying and going through the interview and selection process may not be the same as the person who shows up on the job. In fact, the person applying may not be a person at all.
The Proliferation of Fake Applicants and Corresponding Dangers to Businesses
Generative AI tools that can create fake resumes, images, and voices are leading a surge in fraudulent job applicants, particularly for remote positions. Recent news stories have focused on companies hiring contract workers operating in North Korea, but the problem is more widespread than state hackers. A leading research firm predicts that over the next three years 25% of job candidates globally could be fake.
The motives are varied. Sometimes it is a talented individual impersonating the real applicant to help the applicant pass pre-employment assessments or impress during interviews. Other times an individual will utilize AI to respond to questions that the individual would not otherwise be qualified to answer. Unfortunately, but not surprisingly, there are also malicious actors looking to get access to company networks, install malware, steal proprietary information, or engage in other misconduct.
Another area of concern for businesses is compliance with child labor laws. With the growth of sophisticated generative AI, applicants are supplying paperwork that can pass muster under the E-Verify process both as to age and eligibility for employment in the United States. Both under the Biden and Trump administrations the government has taken a very aggressive enforcement stance seeking to hold employers strictly liable for violations, even if the company complied in good faith with the E-Verify process.
Best Practices to Detect and Deter Fake Applicants
Companies can employ a variety of potential strategies to detect and deter improper or malicious activity. There has been a growth of companies selling AI or other services designed to counter and combat fraudulent applicants as the technological arms race in this area continues. Before selecting a service, a company should be aware of the potential exposure that utilizing third-party services can have in this area. Each hiring process is unique, and counsel at Bradley can advise your company on specific steps to incorporate into the screening and hiring process to maximize effectiveness.
Here are a few best practices to consider:
Train recruiters and hiring agents. Companies should ensure that their recruiters and hiring agents are aware of the risks and take appropriate steps to minimize fraud. One security firm thwarted an AI deepfake by asking the individual to wave his hand in front of his face, which the bot was unable to do. Make sure candidates are on camera and disable their video filters. Consider asking the applicant to use screen sharing to show a relevant document.
Consider more in-person interactions. While it may not be economically feasible for a company to conduct all interviews onsite, increasing in-person interactions before a final hiring decision can help uncover fraud. There may be value in having the applicant deliver certain documents in person rather than by email.
Coordinate with IT. IT personnel can assist during and after the hiring process to mitigate fraud. Questionable remote workers may look to have equipment sent to locations other than their stated address (even outside the country). IT or other personnel could assist in cross referencing resume details with other sites (LinkedIn, etc.) or resources.
Utilize detection tools. A variety of companies now offer tools and systems to detect fraud, such as facial recognition and other systems that verify identities. Indeed, some companies tout the use of AI technologies to detect an applicant’s use of AI technologies. As outlined in the next section, though, companies need to be careful before they utilize such products.
Complications for Businesses That Attempt to Address the Issue
As the technology evolves, more and more companies are offering services to detect fake job applicants. Before a company begins utilizing such services it is important that the company consider the potential areas of exposure. First, any type of system used to screen applicants could have a disparate impact on certain legally protected groups. If the screening tool has not been properly validated, its use could violate state or federal employment laws. Companies should conduct proper due diligence on the vendors selling the product to understand how the product was developed, whether there may be a disparate impact, and whether proper validation data supports the use of the product for the jobs in question. Knowing that a company can be held liable for the discriminatory impact of its vendors’ services, companies should ensure that their contracts with vendors contain sufficient insurance and indemnification provisions and other requirements.
Specific types of technologies can also have unique risks. Facial recognition technology may be effective to ensure the worker hired is the same person as the worker interviewed, but many states and localities have laws governing, and potentially prohibiting, the use of such technologies. And the remote location of applicants could impact which laws apply.
Finally, while there may be differences between the use of such detection systems and a regular background check, the law in this area is not fully developed with respect to these new technologies. If a process is considered a background check, then the Fair Credit Reporting Act (FCRA) may impose special requirements before it can be used, including specific disclosures to applicants, written authorization, and other certification procedures.
Your applicants may be fake, but the potential damages to your organization are quite real. If your company is concerned about the proliferation of deepfakes and applicant abuse or is considering changes to its screening or hiring process, you should investigate options to minimize costs and exposure.
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