China’s State Administration for Market Regulation Releases Top 10 Typical Cases of Intellectual Property Law Enforcement for 2024
On April 29, 2025, China’s State Administration for Market Regulation (SAMR) released the Top 10 Typical Cases of Intellectual Property Law Administrative Enforcement for 2024 (2024年知识产权执法十大典型案件). Administrative enforcement is an additional route to enforce intellectual property rights and is often faster than civil litigation. While fines and seizure are available, damages are not. It is also possible that SAMR will refer cases to the procuratorate for criminal prosecution.
A translation of SAMR’s summary follows. The original text is available here (Chinese only).
1. Market supervision departments of nine provinces (autonomous regions and municipalities) jointly investigated and dealt with the case of infringement of the exclusive right to use the registered trademark “Jimi” by Jiangxi Caiying Technology Co., Ltd. and others
Chengdu JmGO Technology Co., Ltd. discovered during market sales that Jiangxi Caiying Technology Co., Ltd. (hereinafter referred to as “Caiying” Company) and its related companies used the “JmGO Nuts” trademark on similar products, suspected of infringing its exclusive right to the “JmGO” registered trademark, causing serious impact on product sales. The infringement involved dozens of entities in processing, warehousing, packaging, sales and other links, across multiple provinces.
After receiving clues about the case, the Law Enforcement Inspection Bureau of the State Administration for Market Regulation immediately convened law enforcement backbones from market supervision departments in nine provinces (autonomous regions and municipalities), including Jiangxi, Guangdong, Beijing, Shanghai, Zhejiang, Jiangsu, Henan, Guangxi, and Sichuan, to jointly study and formulate a thorough action plan. At the same time, it coordinated with e-commerce platforms such as JD.com, Pinduoduo, Taobao, and Douyin to retrieve the sales records of “Jimi Nuts” suspected of infringing goods and collect the evidence of infringement by the parties. On March 6, 2024, the market supervision departments of nine provinces (autonomous regions and municipalities) took unified action to conduct surprise inspections on all the entities involved in the case, and verified the illegal acts of all relevant companies in one fell swoop. The State Administration for Market Regulation sent personnel to Jiangxi and Guangdong to supervise and guide on the spot. Based on the illegal facts found out by the centralized action, the State Administration for Market Regulation designated the Yichun Municipal Market Supervision Bureau of Jiangxi Province to conduct a unified investigation and handling of “Caiying” Company and the related companies controlled by it.
Upon investigation, it was found that Xiao XX, the actual controller of “Caiying” company, registered a total of 10 companies, commissioned others to produce projectors, projection screens and other products, used trademarks such as “Jimi Nuts” on the products and their packaging, and opened 25 online stores for sale on e-commerce platforms such as JD.com, Pinduoduo, Taobao, and Douyin. The Yichun Municipal Market Supervision Bureau of Jiangxi Province made a penalty decision in accordance with the law, confiscated the illegal income of 3.1434 million RMB from 10 companies including “Caiying”, imposed a fine of 1.9287 million RMB, and the total fines and confiscations were 5.0721 million RMB. In this case, “Caiying” company reached a settlement agreement with the right holder, admitted the infringement and compensated for the loss of 4 million RMB. Other companies involved in this case (processing, warehousing and packaging companies, etc.) will be further investigated and handled by the local market supervision department.
2. Beijing Municipal Market Supervision Bureau investigates and punishes Beijing Youyou Education Consulting Co., Ltd. for infringing the exclusive right to use the registered trademark “LEGO”
In May 2024, the Beijing Municipal Market Supervision Bureau received a tip-off from Lego Co., Ltd., stating that Beijing Youyou Education Consulting Co., Ltd. had infringed on the exclusive right to use a registered trademark. After receiving the tip-off, the Beijing Municipal Market Supervision Bureau quickly launched an investigation. When law enforcement officers conducted an on-site inspection at the business premises of Beijing Youyou Education Consulting Co., Ltd., they found that the company’s main business was education and training, which was the same as the trademark verification service items held by Lego Co., Ltd. At the same time, the company used the “乐高”, “LEGO” and ”” trademark logos on the signs of its business premises, classroom doorplates in the store, promotional posters, front desk, etc., and was unable to provide legal license documents for the use of these trademarks. Law enforcement officers questioned and investigated the person in charge of the company, and the person confessed to the use of the relevant trademarks. At the same time, law enforcement officers conducted a detailed analysis of the company’s operating data and determined that the illegal business volume totaled 3.5138 million RMB.
The act of a party using a trademark identical to a registered trademark on the same kind of goods without the permission of the trademark registrant constitutes an infringement of the exclusive right to a registered trademark as stipulated in Article 57 of the Trademark Law of the People’s Republic of China, and the circumstances are serious and suspected of criminal offenses. The Beijing Municipal Market Supervision Bureau will transfer the case to the judicial authorities for handling in accordance with the law.
3. The Market Supervision Bureau of Xindu District, Xingtai City, Hebei Province investigated and dealt with the case of infringement of the exclusive right to use the registered trademark “Huawei”
In December 2023, the Xindu District Market Supervision Bureau of Xingtai City, Hebei Province received a complaint from a consumer that the screen and battery of the Huawei mobile phone they purchased on the Douyin live broadcast platform “Tangtang Youxuan Second-hand Mobile Phone” and “Mijing Youxuan Second-hand Mobile Phone” had problems. The Xingtai Municipal Market Supervision Bureau and the Xindu District Market Supervision Bureau immediately set up a special task force to launch an enforcement investigation.
The Douyin store involved in the case, “Tangtang Optimal Used Phones”, is actually registered under Kuamoutang Network Technology Co., Ltd., and its principal is Mu. The other Douyin store involved in the case, “Mijing Optimal Used Phones”, is actually registered under MiXX Electronic Technology Co., Ltd., and its principal is Xue. Both stores claimed that they sold official genuine mobile phones of the “Huawei” brand through Douyin live broadcast rooms. It was found that the items involved in the case were assembled by the parties themselves without the authorization of the rights holder, and were infringing goods.
On March 26, 2024, the Xingtai Municipal Market Supervision Bureau and the Xingtai Municipal Public Security Bureau dispatched a number of law enforcement officers and police officers at the municipal and county levels, and divided them into 4 evidence collection and arrest teams to carry out a roundup operation simultaneously. 11 people involved in the case were arrested on the spot, 2 mobile phone assembly factories and 2 live broadcast rooms were destroyed, and the mobile phones involved in the case (Mate series, Pura series) and related accessories worth more than 3 million RMB were seized. The amount involved in the online sales of the two stores was as high as 16.408 million RMB.
The party’s act of selling goods that infringe the exclusive right to use a registered trademark constitutes an act of infringing the exclusive right to use a registered trademark as stipulated in Article 57 of the Trademark Law of the People’s Republic of China. As the amount involved is large, it is suspected of constituting a crime, and the law enforcement department has transferred the case to the judicial authority for handling in accordance with the law.
4. Shanghai Municipal Market Supervision Bureau investigates and punishes five companies and individuals including Shanghai Jixu Food Co., Ltd. for infringing the exclusive right to use the “Liuhe” registered trademark
In March 2024, based on reports from rights holders, the Shanghai Municipal Market Supervision Bureau and Suzhou Market Supervision Department launched a joint law enforcement operation, seizing 18 tons of infringing frozen poultry, more than 1,500 counterfeit packages and multiple infringing printing templates, with a total amount involved of more than 5.2 million RMB.
After investigation, it was found that from November 2023 to March 2024, Shanghai Jixu Food Co., Ltd. and Yu XX conspired to entrust relevant enterprises in Changzhou to print packaging boxes containing the Liuhe trademark. Subsequently, Yu used the above-mentioned counterfeit packaging boxes to pack low-priced single frozen chicken breasts and other products. Jixu Company purchased more than 100,000 boxes of the above-mentioned counterfeit products from Yu and sold them to Tang XX. Tang then sold them to the outside through relevant online platforms. The total amount involved in the case of the above-mentioned parties is more than 3.4 million RMB.
It was also found that Shanghai Nuoping Industrial Co., Ltd. purchased more than 30,000 counterfeit Liuhe trademarked packaging boxes from a Suzhou company and Shanghai Gujun Packaging Materials Co., Ltd., and used the counterfeit packaging boxes to pack low-priced single frozen chicken breasts and other products, and sold them through relevant e-commerce platforms, involving more than 1.4 million RMB. Shanghai Gujun Company produced and sold more than 230,000 counterfeit packaging boxes without authorization, involving more than 400,000 RMB.
The actions of the above five companies and individuals violated Article 57 of the Trademark Law of the People’s Republic of China. As the amount involved was large, they were suspected of committing a crime. The case handling department transferred the relevant cases to the public security organs for handling in accordance with the law. At present, the above parties have been prosecuted.
5. The Market Supervision Bureau of Longwan District, Wenzhou City, Zhejiang Province investigated and dealt with the case of Wenzhou Zunxiang Technology Co., Ltd. selling goods that infringed the exclusive right of registered trademarks
The Market Supervision Bureau of Longwan District, Wenzhou City, Zhejiang Province, investigated and dealt with the illegal behavior of Wenzhou Zunxiang Technology Co., Ltd. in selling goods that infringed the exclusive rights of registered trademarks in accordance with the law. The amount involved was more than 10 million RMB. As the party’s behavior was suspected of constituting a crime, the case has been transferred to the public security organs for handling.
At the beginning of 2024, the Market Supervision Bureau of Longwan District, Wenzhou City received reports from many consumers, reporting that Wenzhou Zunxiang Technology Co., Ltd. attracted customers through low-priced mobile phones online, and fabricated “operator subsidies” offline to induce consumers to exchange for Apple Bluetooth headphones. The headphones provided by one of the consumers were identified by Apple, and the outer packaging, printing details and production process were significantly different from the genuine ones. In response, law enforcement officers immediately launched an investigation into the store, extracted a large amount of electronic data on the spot, accurately locked more than 200 false mobile phone sales records and exchange evidence, and completely eradicated the illegal chain of “low-price traffic-induced exchange-high-price fake sales”. Combined with logistics data traceability and geographic information visualization technology, a network map of counterfeiting and selling counterfeit products covering five provinces including Zhejiang, Fujian, Jiangxi, and Guangdong was drawn, and sales and storage locations were accurately located.
In response to the illegal activities, the Longwan District Market Supervision Bureau and the public security organs set up a special task force to carry out a unified cross-provincial crackdown operation, successfully destroying 5 stores selling counterfeit goods and 5 storage locations, and seized more than 1,000 counterfeit Apple Bluetooth headsets and more than 5,000 infringing mobile phone cases on the spot. 32 criminal suspects were arrested, and the total amount involved in the case was more than 10 million RMB.
6. Anhui Province Fuyang Municipal Market Supervision Bureau investigates and punishes Gu Moumou and others for infringing the exclusive rights of registered trademarks such as “Arc’teryx”
In December 2023, the Market Supervision Bureau of Fuyang City, Anhui Province received a case clue that Fuyang Pengfei Clothing Co., Ltd. was suspected of producing infringing clothing. Law enforcement officers immediately launched an investigation and found that the company’s legal representative Zhang XX, in order to increase sales and expand profits, produced a total of 7,323 “Arc’teryx” jackets that infringed on the exclusive rights of others’ registered trademarks under the arrangement of the client Gu XX, involving a total amount of more than 1.44 million RMB.
Because the illegal facts of the case have reached the standard for criminal prosecution, the Fuyang Municipal Market Supervision Bureau transferred the case to the public security organs for investigation on December 28, 2023. Subsequently, the public security and market supervision departments set up a special task force to carry out joint law enforcement. From January to April 2024, the task force went to Ningbo, Anqing, Bozhou, Chizhou, Lu’an, Cangzhou, Langfang and other places to conduct investigations and tracking, seized a large number of infringing clothing, and successfully destroyed more than 20 production, warehousing and sales dens. It was found that since September 2019, Gu, without the permission of the trademark registrant, customized fabrics and accessories according to various well-known brands of clothing, produced counterfeit logos, and commissioned clothing processing factories in many provinces and cities to process clothing that infringed trademark brands such as “Arc’teryx”, “The North Face”, “Adidas”, “Gucci”, “Lululemon”, “Amy”, and “Balenciaga”, and then hired employees to promote and sell them. The amount involved in the case reached more than 200 million RMB. In April 2024, the procuratorate filed a public prosecution against Gu and others for the crime of counterfeiting registered trademarks. So far, 6 people have been sentenced and 15 people have been approved for prosecution.
7. The Market Supervision Bureau of Xiangyang City, Hubei Province investigated and dealt with the case of Shen’s gang producing and selling trademark-infringing “specially supplied wine”
In July 2024, the Market Supervision Bureau of Xiangyang City, Hubei Province received a report from the public that there were illegal production and sales of “special supply wine.” The bureau quickly launched the investigation procedure and established a joint working group with the public security department to jointly handle the case. On July 24, the joint working group launched a surprise operation after careful deployment, and conducted surprise inspections on multiple suspected production and storage locations, successfully destroying 2 major production dens and 10 storage dens, and at the same time destroyed 3 criminal gangs that produced and sold counterfeit well-known brand wines. Law enforcement officers seized more than 1,000 pieces of Moutai liquor with words such as “Great Hall of the People”, “Beijing West Hotel”, “Beijing Military Region” and “State Council” labeled “specially supplied”, as well as counterfeit Moutai, Wuliangye, Guojiao 1573, Baiyunbian and other brand finished liquors; more than 1,000 kilograms of counterfeit raw material base liquor; 5 sets of filling equipment, air pumps, rivet guns and other production tools and more than 210,000 packaging materials. The amount involved in the case was as high as more than 80 million RMB. The sales network covered 15 provinces and cities across the country, and 26 criminal suspects were arrested.
The party involved in the case, Shen’s gang, forged and used the above-mentioned “special supply” trademark logo, misleading consumers into thinking that it was a high-end product customized for a specific institution or occasion. In fact, these so-called “special supply wines” are just ordinary liquors, which are sold at high prices by attaching false labels and counterfeiting well-known brand liquors, seriously infringing on consumers’ right to know and right to choose. The party’s behavior constitutes an illegal act of infringing on the exclusive right of others to use registered trademarks. Because the value of the goods involved is huge and it is suspected of constituting a crime, the case has been transferred to the judicial authorities for handling.
8. The Jieyang Municipal Market Supervision Bureau of Guangdong Province investigated and dealt with the case of Wang XX producing watches with counterfeit registered trademarks of “ROLEX”, “RADO” and “FOSSIL”
In December 2023, the Jieyang Municipal Market Supervision Bureau of Guangdong Province, based on the clues of the report, jointly with the public security organs, inspected a den suspected of producing counterfeit watches of well-known trademark brands. 3,470 finished watches marked with the “ROLEX” logo, 900 dials (semi-finished products), 3,000 straps (semi-finished products), and 300 finished watches marked with the “RADO” and “FOSSIL” logos were found on the spot. The Jieyang Municipal Market Supervision Bureau filed a case on the same day and took administrative compulsory measures to seize the above-mentioned items involved in the case in accordance with the law.
Upon investigation, it was found that the parties, Mr. and Mrs. Wang XX, had hired five workers to process watches with the “ROLEX”, “RADO” and “FOSSIL” logos for them since June 2023 without obtaining a license to use the registered trademarks such as “ROLEX”, “RADO” and “FOSSIL”. According to the identification opinion issued by the domestic legal institution authorized by the right holder, the finished watches marked with the “ROLEX”, “RADO” and “FOSSIL” logos produced by the parties were not produced by the right holder or with its permission.
The party produced watches with “ROLEX”, “RADO” and “FOSSIL” trademarks without the permission of the trademark registrant, which constituted an illegal act of infringement of the exclusive right to use a registered trademark as stipulated in Article 57 (1) of the Trademark Law of the People’s Republic of China, with a value of 116.9465 million yuan. The Jieyang Municipal Market Supervision Bureau transferred the case to the judicial authorities for handling in accordance with the law. At present, the seven suspects have been transferred to the procuratorate for prosecution in accordance with the law.
9. Chongqing Youyang County Market Supervision Bureau and the public security organs jointly investigated and dealt with the case of Chen et al. selling goods that infringed the exclusive rights of registered trademarks such as “LV”
In January 2024, law enforcement officers from the Market Supervision Bureau of Youyang Tujia and Miao Autonomous County, Chongqing City, discovered during an inspection that the Balenciaga, Dior, and LV brand products sold by a store with the sign “Shark Luxury Buyer Store” were suspected of counterfeiting other people’s registered trademarks. Because the party Chen could not provide the authorization basis for the goods sold, law enforcement officers immediately seized more than 490 suspected infringing goods in accordance with the law. After identification by the right holder, the goods sold by the party were all counterfeit registered trademarks of others, and the value of the goods reached more than 2.5 million RMB. His behavior constituted an illegal act as stipulated in Article 57 (3) of the Trademark Law of the People’s Republic of China. Because the amount involved was large and suspected of being a crime, the Youyang County Market Supervision Bureau transferred the case to the public security organs for investigation.
After investigation, it was found that since 2019, the suspects Zhou, Luo, Wen and others have set up processing factories in Guangdong to produce counterfeit brand clothing, bags, and footwear products, and wholesaled them to Chen and others through logistics delivery, and then sold them through e-commerce platforms, offline physical stores, and online social media. From April to May 2024, the market supervision department and the public security organs jointly dispatched more than 60 law enforcement personnel to Chongqing, Guangdong, Fujian, Hunan and other places to carry out case investigation and handling, destroying 5 counterfeiting “black factories” and 18 “black dens”, and seized more than 75,000 counterfeit clothing and bags, more than 20,000 semi-finished products, and more than 80 sets of counterfeiting equipment. The amount involved is as high as more than 300 million RMB. At present, 14 people have been transferred for prosecution, and the case is under further investigation.
10. The Market Supervision Bureau of Luzhou City, Sichuan Province investigated and dealt with the case of Luzhou Brothers Yijia Decoration Engineering Co., Ltd. infringing the exclusive right to use the registered trademark “Brothers Decoration”
In May 2024, Chongqing Municipal Market Supervision Bureau received a report from Chongqing Brothers Decoration Engineering Co., Ltd. (hereinafter referred to as the right holder), claiming that Luzhou Brothers Yijia Decoration Engineering Co., Ltd. (hereinafter referred to as the party) infringed its exclusive right to use the registered trademark No. 52642360 “Brothers Decoration”. As the party is located in Luzhou City, Sichuan Province, Chongqing Municipal Market Supervision Bureau and Sichuan Provincial Market Supervision Bureau held a joint law enforcement cooperation meeting within the framework of Sichuan-Chongqing cooperation to guide the handling of the case, and handed the case over to Luzhou Municipal Market Supervision Bureau for handling.
According to the investigation by the Luzhou Municipal Market Supervision Bureau, the party concerned was established on March 12, 2024 and engaged in interior decoration services. In April 2024, it commissioned an advertising company to replace the “Yi Ge Decoration” on the billboard on the facade of the building with “Brothers Decoration”; and replaced the “Thangka Decoration” above the entrance hall, on the floor distribution sign, and on the front wall of the elevator room with “Brothers Decoration”.
The “Brother Decoration” logo used by the party in advertisements, shop signs and contracts is exactly the same as the registered trademark No. 52642360 “Brother Decoration” in terms of language, text composition, font, arrangement order, etc., and is the same trademark. It was also found that the party signed 23 contracts with consumers, with a total contract amount of 2.74 million RMB. The party’s use of the same logo as the registered trademark of the right holder in advertisements, shop signs and contracts without permission constitutes an infringement of the exclusive right to a registered trademark as stipulated in Article 57 (1) of the Trademark Law of the People’s Republic of China. Because the party is suspected of committing a crime, the Luzhou Municipal Market Supervision Bureau has transferred the case to the public security organs for handling.
United States and China Announce Temporary 115 Percent Reduction in Tariffs While Trade Discussions Continue
After negotiations over the weekend in Geneva, Switzerland, the United States and China reached a new trade deal on Monday, May 12, 2025, to temporarily slash tariffs on each country’s goods by 115 percent for the next 90 days. President Trump issued an executive order the same day reflecting this modification, reducing the 125% “reciprocal” tariff levied on Chinese imports on April 10, 2025, to ten percent. In turn, China will remove the retaliatory tariffs imposed on U.S. imports since April 4, 2025, but will retain a ten percent tariff. The revision to the “reciprocal” tariff will be effective on or after 12:01 a.m. Eastern Daylight Time on May 14, 2025, as the United States and China continue discussions on economic and trade relations.
All other duties imposed on China by the Trump Administration remain in effect, including:
Tariffs ranging from 7.5 to 25 percent imposed on certain categories of imports from China pursuant to Section 301 of the Tariff Act of 1974 (Section 301);
25 percent tariffs on imports of aluminum, steel and cars and car parts implemented pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232); and
20 percent tariffs on all imports from China imposed under the International Emergency Economic Powers Act (IEEPA) in response to the fentanyl national emergency.
The U.S. and China trade deal follows on the heels of a recent “Economic Prosperity Deal” reached between the United States and the United Kingdom last Thursday, May 8, 2025, which addressed, amongst other things, removal of barriers to make it easier for American and British businesses to operate, invest and trade in both countries. In particular, the United States agreed to exclude UK steel and aluminum from the Section 232 25% duties on imports of steel and aluminum and cut Section 232 tariffs on UK cars and car parts coming into the United States from 25% to 10% for the first 100,000 UK cars.
These trade deals work to address the Trump Administration’s concern over trade imbalances and to deliver, according to the White House, “real, lasting benefits to American workers, farmers and businesses.”
Compelling Rationale for Producing Proprietary Products in U.S. Found in USTR’s Special 301 Report on IP Protection and Enforcement Abroad (Part I)
While the current Trump Administration has based its global trade war on trade imbalances stemming from unfair trade practices of foreign countries, its weapon of choice—increased tariffs—is designed to encourage businesses to relocate manufacturing operations to the U.S., thereby boosting American employment and industrial capacity. The U.S. Trade Representative’s 2025 Special 301 Report, issued on April 29, provides an independent justification for onshoring or reshoring manufacturing, namely the failure of certain trading partners to adequately protect and enforce intellectual property (IP) rights of U.S. IP holders within their borders.
The Special 301 Report is an annual report that evaluates the adequacy and effectiveness of IP protection and enforcement among U.S. trading partners. USTR requested written submissions from the public through a notice published in the Federal Register on December 6, 2024. USTR later conducted a public hearing that provided the opportunity for interested persons to testify before the interagency Special 301 Subcommittee of the Trade Policy Staff Committee (TPSC) about issues relevant to the review. The hearing featured testimony from many witnesses, including representatives of foreign governments, industry, and non-governmental organizations.
USTR reviewed more than 100 trading partners for this year’s Special 301 Report and placed 26 of them on the Priority Watch List or Watch List. The countries on these watch lists are the “countries that have the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on relevant U.S. products.” In this year’s report, trading partners on the Priority Watch List present the most significant concerns regarding insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on intellectual property protection. Eight countries are on the Priority Watch List: Argentina, Chile, China, India, Indonesia, Mexico, Russia, and Venezuela. According to the report, these countries will be the subject of “particularly intense bilateral engagement during the coming year.” For those failing to address U.S. concerns, the report warns, “USTR will take appropriate actions, which may include enforcement actions under Section 301 of the Trade Act or pursuant to World Trade Organization (WTO) or other trade agreement dispute settlement procedures.”
The 2025 Special 301 report further notes that an important part of the mission of USTR is to support and implement the Administration’s commitment to protect American jobs and workers and to advance the economic interests of the United States. “Fostering innovation and creativity is essential to U.S. economic growth, competitiveness, and the estimated 63 million American jobs that directly or indirectly rely on intellectual property (IP)-intensive industries.” These include manufacturers, technology developers, apparel makers, software publishers, agricultural producers, and producers of creative and cultural works. “Together, these industries generate 41% of the U.S. gross domestic product (GDP). The 47.2 million workers that are directly employed in IP-intensive industries also enjoy pay that is, on average, 60% higher than workers in non-IP-intensive industries.”
According to the report, a common problem with those countries on the Priority Watch List is IP infringement:
IP infringement, including patent infringement, trademark counterfeiting, copyright piracy, and trade secret theft, causes significant financial losses for right holders and legitimate businesses. IP infringement can undermine U.S. competitive advantages in innovation and creativity, to the detriment of American workers and businesses. In its most pernicious forms, IP infringement endangers the public, including through exposure to health and safety risks from counterfeit products, such as semiconductors, automobile parts, apparel, footwear, toys, and medicines. In addition, trade in counterfeit and pirated products often fuels cross-border organized criminal networks, increases the vulnerability of workers to exploitative labor practices, and hinders sustainable economic development in many countries.
Inadequate and ineffective IP protection and enforcement is hardly a new complaint by the U.S. government regarding trading partners such as China—it is a chronic problem. Still, the USTR Special 301 Report should serve as a warning to U.S. IP holders that these IP threats are real and not going away, at least anytime soon. While sourcing innovative products from lower cost countries with less regulatory burdens supports short-term profitability objectives, it can come at a steep long-term cost as many companies have learned. The loss or diminution of IP rights due to substandard IP protection and enforcement regimes abroad can cause significant damage to enterprise value, including enabling competition by infringers to rise up. This constant threat in the new “America First” era in which higher tariffs are the norm, however, may cause IP-intensive businesses to rethink their sourcing strategy and decide to onshore or reshore the production of proprietary products or components. Though the U.S. IP laws are imperfect, they are still considered the gold standard by many, including the U.S. Chamber of Commerce, and thus provide a better support system for long-term protection and enforcement of IP and financial success.
Continued Developments in the Anti-Bribery/Anti-Corruption Sector: A Potential Expansion of the International Anti-Corruption Prosecutorial Taskforce on the Horizon
There have been a number of developments in the anti-bribery/anti-corruption sector following the start of President Trump’s second term. First, on February 5th, Attorney General Pamela Bondi issued a memo titled, “Total Elimination of Cartels and Transnational Criminal Organizations” in which she instructed the Foreign Corrupt Practices Act (FCPA) Unit at DOJ to focus on “investigations related to foreign bribery that facilitate the criminal operations of Cartels” and Transnational Criminal Organizations (TCOs). She also suspended the requirement that the Fraud Section lead investigations involving the FCPA and Foreign Extortion Prevention Act if the investigation is into “foreign bribery associated with Cartels and TCOs.”
That memo was followed by President Trump signing Executive Order 14209 titled, “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security.” In that order, President Trump noted that FCPA enforcement has been “stretched beyond proper bounds and abused in a manner that harms” the U.S. He further explained that FCPA enforcement compromises the U.S.’s foreign policy goals, “the President’s Article II authority over foreign affairs,” national security, and the ability of the U.S. “and its companies gaining strategic business advantages.” President Trump ordered Attorney General Bondi to revise DOJ guidelines and policies related to the FCPA, require new FCPA investigations and enforcement actions to have Attorney General Bondi’s approval, review pending FCPA investigations and enforcement actions to ensure their compliance with the order, and identify whether any remedial actions are necessary. This order was accompanied by a fact sheet that echoed the points described above.
In response to the federal government’s shift with FCPA enforcement, states have indicated they may step up their bribery enforcement actions. For example, California’s Attorney General Rob Bonta issued a legal advisory “reminding businesses operating in California that it is illegal to make payments to foreign-government officials to obtain or retain business.” Attorney General Bonta explained that FCPA violations can be the basis for actions under California’s Unfair Competition Law. Similarly, the District Attorney for Manhattan shared that his office was exploring methods for taking on various enforcement priorities that the DOJ has indicated it will not be pursuing as heavily as it once did, including domestic bribery and corruption.
Internationally, the UK, France, and Switzerland announced the launch of the International Anti-Corruption Prosecutorial Taskforce. The taskforce includes (1) the UK’s Serious Fraud Office, (2) France’s National Financial Prosecutor’s Office, and (3) the Office of the Attorney General of Switzerland. Among other things, the taskforce announced its commitment to tackling “the significant threat of bribery and corruption and the severe harm that it causes.” The taskforce also noted that it would “invite other like-minded agencies” to join the taskforce’s efforts. To accomplish its goal, the taskforce identified four action items: (1) regularly exchanging “insight and strategy,” (2) “devising proposals for co-operation on cases,” (3) sharing best practices “to make full use of” the taskforce’s “combined expertise,” and (4) “seizing opportunities for operational collaboration.”
Last week, Jean-Francois Bohnert, the head of France’s agency tasked with bringing enforcement actions against, among other things, corruption, mentioned that other countries have contacted the taskforce to discuss their interest in potentially cooperating with the taskforce. Those countries included Germany, Italy, the Netherlands, Spain, and multiple unnamed countries in Latin America.
These developments have led some to question the trajectory of the FCPA enforcement landscape for the duration of the Trump administration. That said, speculation that FCPA enforcement would be relatively non-existent appears to be overstated at this point given that although the federal government has refrained from proceeding with some pending FCPA trials, they have proceeded with others. As for state enforcement actions in this area, it remains to be seen just how robust those actions can be given restrictions such as jurisdictional limitations and limited state resources (which are already stretched in numerous areas currently).
Given these considerations, the International Anti-Corruption Prosecutorial Taskforce is poised to have a significant impact on the anti-bribery/anti-corruption enforcement landscape. If additional countries join (which it appears that at least some number of countries may join or otherwise assist the taskforce), then the taskforce’s impact in this sector will be heightened. It would not be surprising to see the taskforce take on a role similar to the role the federal government held in prior years with respect to anti-bribery/anti-corruption investigations that encompass multiple countries. Companies should thus ensure they continue to maintain robust compliance programs, and properly functioning compliance programs are even more essential for those companies operating overseas.
Cross-Border Catch-Up: Understanding Chile’s Karin Law on Harassment and Violence [Podcast]
In this episode of our Cross-Border Catch-Up podcast series, Goli Rahimi (Chicago) and Lina Fernandez (Boston) discuss Chile’s new Karin Law, officially known as Law Number 21.647, and break down the law’s key provisions and its implications for employers. Lina and Goli explain how this comprehensive legislation aims to prevent and address workplace harassment and violence by establishing clear definitions, procedures, and preventive measures to promote safer and more respectful work environments. They also outline the responsibilities of employers to create internal protocols, educate employees on how to report misconduct, and investigate complaints in a timely manner.
TPS Program Updates (May 13, 2025)
This post serves as a regularly updated resource to keep employers informed regarding TPS designations, extensions, cancellations, and other policy changes. This post was last updated on April 2, 2025.
Afghanistan
DHS Secretary Kristin Noem determined that the country conditions in Afghanistan no longer merit Temporary Protected Status (TPS) in the United States and that designation will not be renewed. The program will expire on May 20, 2025. Afghani citizens holding TPS will revert to the status they held prior to their grant of TPS status, unless they have acquired another immigration status allowing them to lawfully remain in the United States.
Cameroon
DHS Secretary Kristin Noem determined that the country conditions in Cameroon no longer merit Temporary Protected Status (TPS) in the United States and that designation will not be renewed. The program will expire on June 7, 2025. Citizens of Cameroon holding TPS will revert to the status they held prior to their grant of TPS status, unless they have acquired another immigration status allowing them to lawfully remain in the United States.
Our previous discussions about TPS can be found in our original blog entry.
Trump Administration: TPS for Afghanistan Will Terminate July 12, 2025
On May 12, 2025, Department of Homeland Security (DHS) Secretary Kristi Noem announced that she will not renew Afghanistan’s Temporary Protected Status (TPS) designation, meaning that the designation, including work authorization documents, will expire July 12, 2025.
Secretary Noem said, “Afghanistan has had an improved security situation, and its stabilizing economy no longer prevent them from returning to their home country. Additionally, the termination furthers the national interest as DHS records indicate that there are recipients who have been under investigation for fraud and threatening our public safety and national security. Reviewing TPS designations is a key part of restoring integrity in our immigration system.”
Prior to publication of the May 13 DHS notice in the Federal Register (which provides a July 14, 2025 termination date), Citizens Assisting and Sheltering the Abused (CASA) de Maryland, an immigrant advocacy group, filed suit on May 7, 2025 in U.S. District Court for the District of Maryland to prevent termination of Afghanistan TPS and Cameroon TPS in anticipation of a Federal Register notice being published terminating TPS for both countries.
In its complaint, CASA states, “A TPS designation cannot be terminated in this manner.… Instead, Congress established a strict process for terminating TPS designations, one that required [DHS] Secretary [Kristi] Noem to publish notice of her decision in the Federal Register at least 60 days before the current designation period ends.… The statute further prescribes what happens when the Secretary fails to follow that process: the TPS designation is automatically extended for at least another six months.”
The group also said the decision was made in part based on “racial animus,” pointing to plans to lift protections for immigrants from non-white nations, while opening the refugee program to Afrikaners in South Africa.
Similar legal challenges were brought against Secretary Noem’s efforts to terminate TPS for Haiti and Venezuela. (See New Lawsuit Challenges Trump Administration’s Termination of TPS for Haiti and Venezuela and Judge Blocks DHS Secretary Noem’s Termination of Venezuelan TPS.)
Understanding the Scope of “Artificial Intelligence (AI) System” Definition: Key Insights From The European Commission’s Guidelines
With the entry into force of the AI Act (Regulation 2024/1689) in August 2024, a pioneering framework of AI was established.
On February 2, 2025, the first provisions of the AI Act became applicable, including the AI system definition, AI literacy and a limited number of prohibited AI practices. In line with article 96 of the AI Act, the European Commission released detailed guidelines on the application of the definition of an AI system on February 6, 2025.
These non-binding guidelines are of high practical relevance, as they seek to bring legal clarity to one of the most fundamental aspects of the act – what qualifies as an “AI system” under EU law. Their publication offers critical guidance for developers, providers, deployers and regulatory authorities aiming to understand the scope of the AI Act and assess whether specific systems fall within it.
“AI System” Definition Elements
Article 3(1) of the AI Act defines an AI system as a machine-based system designed to operate with varying levels of autonomy, that may exhibit adaptiveness after deployment and that, for explicit or implicit objectives, infers from the input it receives how to generate output, such as predictions, content, recommendations or decisions that can influence physical or virtual environments.
The European Commission emphasizes that this definition is based on a lifecycle perspective, covering both the building phase (pre-deployment) and the usage phase (post-deployment). Importantly, not all definitional elements must always be present—some may only appear at one stage, making the definition adaptable to a wide range of technologies, in line with the AI Act’s future-proof approach.
Machine-based System
The guidelines reaffirm that all AI systems must operate through machines – comprised of both hardware (e.g., processors, memory and interfaces) and software (e.g., code, algorithms and models) components. This includes not only traditional digital systems, but also advanced platforms such as quantum computing and biological computing, provided they possess computational capacity.
Autonomy
Another essential requirement is autonomy, described as a system´s capacity to function with some degree of independence from human control. This does not necessarily imply full automation, but may include systems capable of operating based on indirect human input or supervision. Systems that are designed to operate solely with full manual human involvement and intervention
Adaptiveness
An AI system may, but is not required to, exhibit adaptiveness – meaning it can modify its behavior post-deployment based on new data or experiences. Importantly, adaptiveness is optional and systems without learning capabilities can still qualify as AI if other criteria are met. However, this characteristic is crucial in differentiating dynamic AI systems from static software.
Systems Objectives
AI systems are designated to achieve specific objectives, which can be either explicit (clearly programmed) or implicit (derivate from training data or system behavior). These internal objectives are different from the intended purpose, which is externally defined by its provider and context of use.
Inferencing Capabilities
It is the capacity to infer how to generate output based on input data that defines an AI system. This distinguishes them from the traditional rule-based or deterministic software. According to the guidelines, “inferencing” encompasses both the use phase, where the outputs such as predictions, decisions or recommendations are generated, as well as the building phase, where models or algorithms are derived using AI techniques.
Output That Can Influence Physical or Virtual Environments
The output of an AI system (predictions, content, recommendations or decisions) must be capable of influencing physical or virtual environments. This captures the wide functionality of modern AI, from autonomous vehicles and language models to recommendation engines. Systems that only process or visualize data without influencing any outcome fall outside the definition.
Environmental Interaction
Finally, AI systems must be able to interact with their environment, either physical (e.g., robotic systems) or virtual (e.g., digital assistants). This element underscores the practical impact of AI systems and further distinguishes them from purely passive or isolated software.
Systems Excluded from the AI System Definition
In addition to the wide explanation of AI systems elements of definition, these guidelines provide clarity on what is not considered AI under AI Act, even if some systems show rudimentary inferencing traits:
Systems for improving mathematical optimization – Systems, such as certain machine learning tools, that are used purely to improve computational performance (e.g., to enhance simulation speeds or bandwidth allocation) fall outside the scope unless they involve intelligent decision-making.
Basic data processing tools – Systems that execute pre-defined instructions or calculations (e.g., spreadsheets, dashboards and databases) without learning, reasoning or modelling are not considered AI systems.
Classical heuristic systems – Rule-based problem-solving systems that do not evolve through data or experience, such as chess programs based solely on minimax algorithms, are also excluded.
Simple prediction engines – Tools using basic statistical methods (e.g., average-based predictors) for benchmarking or forecasting, without complex pattern recognition or inference, do not meet the definition’s threshold.
The European Commission concludes by highlighting the following aspects:
It must be noted that the definition of an AI system in the AI Act is broad and must be assessed based on how each system works in practice
There is not an exhaustive list of what is considered AI, each case depends on the system’s features
Not all AI systems are subject to regulatory obligations and oversight under the AI Act
Only those that present higher risks, such as those covered by the rules on prohibited or high-risk AI, will be under legal obligations
These guidelines play an important role in supporting the effective implementation of the AI Act. By clarifying what is meant by an AI system, they provide greater legal certainty and help all relevant stakeholders such as regulators, providers and users understand how the rules apply in practice. Their functional and flexible approach reflects the diversity of AI technologies and offers a practical basis for distinguishing AI systems from traditional software. As such, the guidelines contribute to a more consistent and reliable application of the regulation across the EU.
Beyond the Forest: Navigating the EU’s Deforestation Rules
On 15 April 2025, the European Commission (the “Commission”) released new simplification measures relating to the EU Deforestation Regulation (“EUDR”) with the promise of ensuring a “simple, fair and cost-efficient implementation”. This is part of the Commission’s broader agenda for economic competitiveness and to reduce reporting burdens on businesses.
We recap in this alert what the EUDR is, its journey so far and the latest simplification proposals.
What is the EUDR?
The EUDR formerly replaced the EU Timber Regulations on 29 June 2023, broadening the scope of commodities and obligations that would be placed on companies that operate within these markets. The EUDR now covers the regulation of commodities ranging from cattle, cocoa, coffee, palm oil, soya, rubber and wood. The obligations also extend to products that are derived from these commodities, such as beef, chocolate, printed paper, furniture and other derivative products.
Which companies are in scope?
The EUDR applies to both EU and non-EU companies that import to, place on, make available or export within the EU market relating to the specific commodities described under the EUDR.
The current thresholds for companies to be in scope of this regulation include:
Larger companies – Those with 250 employees or more and/or an annual turnover of more than €50 million, and/or a balance sheet total of more than €25 million.
Smaller companies – Those with fewer than 50 employed and either a turnover or balance sheet of less than €10 million.
The expected deadline for compliance is currently 30 December 2025 for larger companies and 30 June 2026 for smaller companies.
What is the legal framework around EUDR?
The EUDR is a directly applicable Regulation that does not need to be transposed. The EUDR itself currently sets extensive due diligence requirements for companies to ensure compliance with the Regulation. Following feedback from regulators and stakeholders, the Commission published updated guidance annexed to the EUDR (detailed below) on 15 April 2025, in addition to a draft of the Delegated Act and Implementation Regulation to accompany EUDR. It is expected that these will be introduced by 30 June 2025. The purpose of this additional layer of regulation is to allow for consistent implementation of EUDR across all EU Member States and to address the specific needs of different stakeholders, including businesses and regulatory authorities with respect to the application of EUDR.
What are the key requirements for companies under EUDR?
In-scope companies are obligated to submit electronic due diligence statements to an EUDR Information System (a digital platform) which are then checked internally by a registry, Member States and regulatory authorities. Key information to be captured in the due diligence statements that are submitted range from confirmation of the deforestation-free status of their products to demonstrating compliance with the applicable legal frameworks in the country of origin. Additionally, they must conduct and document comprehensive risk assessments outlining the measures taken to mitigate deforestation risks within their supply chains, and ensure full transparency by tracing all products to their precise location of production.
How will companies evidence this with due diligence?
Companies will be expected to collect extensive data to demonstrate their compliance with EUDR. The relevant data will extend from geolocations, relevant commodity information, traceability of products to description of the suppliers and goods being produced.
A risk assessment will need to be conducted for each product to evaluate the likelihood of non-compliance with the EUDR. Based on the outcome, companies are expected to implement appropriate risk mitigation measures, which may include commissioning independent audits, collecting supplementary documentation, or collaborating with suppliers to address capacity gaps and ensure the necessary steps are taken to achieve compliance.
What are the potential sanctions for companies that are non-compliant?
Penalties will include fines of at least four percent of EU-derived turnover, temporary exclusion from public procurement and public funding, confiscation of noncompliant products and associated revenues. There could be one or a combination of these penalties. Where there are instances of repeated offences of non-compliance, this could result in prevention of marketing/exporting the relevant commodities and prohibition of the use of the EUDR simplification measures.
What are the new EUDR simplification measures?
The recent simplification measures from the European Commission provide further guidance on the application and compliance in respect of the scope of the EUDR. The Commission noted that these new guidelines address commercial concerns of application and adherence as well as administrative burdens which could see an estimated 30% reduction in the costs of complying with EUDR.
Under the new guidance, the simplification measures include:
large companies can reuse existing due diligence statements relating to goods previously placed on the EU market that are reimported;
authorised representatives can submit a due diligence statement on behalf of a group set of companies; and
companies will be allowed to submit due diligence statements annually (instead of for every shipment or batch placed on the EU market).
The simplifications in the guidance are accompanied by a draft Delegated Act, with the feedback window ending on 13 May 2025.
What should companies do now to align to the new EUDR standards?
As a pre-emptive measure, companies within these markets are recommended to consider a range of actions such as to map their supply chains to identify high-risk areas, implement traceability systems, prepare their due diligence documentation, and continue to monitor further updates from the Commission including country specific risk clarifications.
AI Governance Remains Critical Despite Political Pendulum Swings
Businesses increasingly rely on AI and generative AI for myriad uses. A new body of “AI law” is forming—and some legal requirements are now live. AI governance is a mandatory compliance function right now rather than next quarter or next year.
AI law is a patchwork across jurisdictions and can be hard to pin down. While some jurisdictions are enacting new laws, others are pulling back. As the political pendulum continues to swing, regulatory retrenchment is among the key themes coming into focus in 2025.
Some hardline AI regulatory regimes that dominated headlines in 2024 are being walked back. For example, at the U.S. federal level, the Trump administration has undone Biden-era AI executive orders, and federal agencies are recalibrating enforcement priorities accordingly. Consistent with broader deregulation impacts, observers expect that the FTC, SEC, and other agencies will focus primarily on clear cases of fraud, rather than pursuing broader or more innovative regulatory actions.
At the state level, the Colorado AI Act is under scrutiny for possible amendments, including through a new bill introduced in April 2025. Meanwhile, the governors of California and Virginia recently vetoed high-profile AI bills. And the U.S. House Energy and Commerce Committee proposed a 10-year moratorium on the enforcement of state AI laws in a recent draft budget reconciliation bill. Across the pond, the EU Commission recently withdrew the draft AI Liability Directive and is reportedly considering amendments to the EU AI Act to soften certain requirements.
But AI regulation is not dead. Newly enacted state laws in the U.S. (e.g., California, Illinois, New York, Utah) address algorithmic discrimination and automated decision-making; disclosure of AI use; impersonation, digital replicas, and deepfakes; watermarking of AI-generated content; data privacy and biometric data; and more. State attorneys general (e.g., California, New Jersey, Oregon) have reiterated that they will enforce existing laws against unlawful uses of AI. And, of course, the AI “copyright war”—testing the boundaries of copyright infringement and fair use for AI training and outputs—wages on in dozens of lawsuits in the U.S. and elsewhere.
The first requirements of the EU AI Act went live in February 2025. For example, companies using AI within the EU are now subject to the “AI literacy” requirement mandating “measures to ensure, to their best extent, a sufficient level of AI literacy” for employees or others who operate or use AI systems. The AI Act is extraterritorial. It applies to U.S. companies using AI systems within the EU or whose AI systems produce outputs intended for use in the EU. Employee training regarding the responsible use of AI is now mandatory for such companies.
Bottom line: while there may be a trend towards softening AI regulation in some areas, this is not a universal truth, and enterprise AI governance remains essential. Some new “AI law” requirements are now live, while others will be soon. In addition, regulators, state AGs, and plaintiffs will seek to apply existing laws to new technology. And, of course, there’s the potential self-inflicted wounds (like data leakage) and the reputational and public relations risks from an AI-powered snafu.
Luckily, there are some common threads in the AI regulatory thicket, and established guidance may ease the governance burden. Voluntary AI compliance frameworks like the NIST AI RMF and ISO/IEC 42001:2023 not only provide useful, detailed guidance for responsible AI governance, but they also form the basis of statutory safe harbors or affirmative defenses under laws like the Colorado AI Act. They provide a wise starting point for compliance programs, in addition to choosing AI model providers, models, and use cases wisely.
Luckily, there are some common threads in the AI regulatory thicket, and established guidance may ease the governance burden.
A Quest Against Middle-earth: Lord of the Fries Successfully Registers LORD OF THE Mark
The intellectual property rights owner of The Lord of the Rings franchise, Middle-earth Enterprises, LLC (Middle-earth Enterprises) has renewed its pursuit against Lord of the Fries IP Pty Ltd (Lord of the Fries), having recently appealed the Australian Trade Marks Office’s decision allowing the registration of the word mark LORD OF THE filed by Lord of the Fries. We discuss below the key issues in dispute in the trade mark opposition filed by Middle-earth Enterprises.1
Lord of the Fries, a well-known Australian vegan fast-food chain, applied to register the word mark LORD OF THE in classes 29 and 30 for foodstuffs.
Middle-earth Enterprises opposed the LORD OF THE mark on multiple bases, including that the mark was deceptively similar to its LORD OF THE RINGS word mark registered in class 30. Middle-earth Enterprises also sought to rely on the reputation of its The Lord of the Rings franchise, alleging that registration of LORD OF THE as a trade mark would cause confusion, that the mark was registered in bad faith and that the trade mark is contrary to consumer law.2
This case highlights how the overall impression conveyed by the mark is central to the question of deceptive similarity—the fact that LORD OF THE was wholly incorporated in LORD OF THE RINGS was not determinative. The decision also reinforces how general brand recognition and reputation alone is not enough to create a blanket protection across all goods and services. The approach is consistent with other recent decisions of IP Australia.
LORD OF THE vs LORD OF THE RINGS—Not Substantially Identical or Deceptively Similar
An application must be rejected if the mark is substantially identical with or deceptively similar to an earlier registration in respect of similar goods or closely related services.
Adopting the well-accepted side-by-side analysis, the Delegate considered that LORD OF THE was not substantially identical to LORD OF THE RINGS. The absence of the term “rings,” which was an obvious essential feature of Middle-earth Enterprises’ mark, created a total impression of dissimilarity.
On the question of deceptive similarity, the Delegate affirmed that the reputation of LORD OF THE RINGS was not a relevant factor.3 Central to the finding against deceptive similarity was the meaning of the phrase “LORD OF THE.” At [34] the Delegate stated:
The phrase ‘lord of the’ has a meaning of having power, authority or mastery over a particular domain. The number of possible domains are essentially infinite, noting though the popular uses of the domains ‘flies’ (as in the book), ‘dance’ (the popular Irish dance company) and ‘fries’ (the use by [Lord of the Fries]). It does not obviously bring to mind any particular domain, let alone ‘rings’.
THE LORD OF THE RINGS’ Reputation was not Enough
Middle-earth Enterprises produced extensive evidence relating to the significant and substantial reputation acquired in its THE LORD OF THE RINGS mark in Australia. However, the Delegate determined that such reputation was limited to books, movies and video games, and did not extend to foodstuffs (class 30). In fact, the only evidence of use provided by Middle-earth Enterprises in connection to foodstuffs in Australia was “a single marketing campaign to promote the movie series that took place approximately 20 years before the relevant date.”4
Accordingly, Middle-earth Enterprises sought to rely on the reputation and fame of LORD OF THE RINGS generally to support its argument of consumer confusion. Rejecting Middle-earth Enterprises’ contention, the Delegate considered that such an approach would implicitly afford the owner of a famous mark a monopoly far beyond the scope of the trade marks system.
Middle-earth Enterprises’ insufficient reputation in class 30 saw the Delegate find that consumer confusion was “highly unlikely to arise” in the present case, as there was “no realistic prospect” that a consumer faced with fries branded as LORD OF THE “would be caused to wonder if [Middle-earth Enterprises] had expanded into fast food.”5 The Delegate observed that “a sufficient degree of respect” must be afforded to the consuming public’s ability “to determine the difference between a piece of licensed intellectual property and an indicator of the source of their fast food.”6
The Delegate also considered and ultimately dismissed the opposition grounds relating to ownership, bad faith, and misleading and deceptive conduct.
Footnotes
1 Middle-earth Enterprises, LLC v LORD OF THE FRIES IP PTY LTD [2025] ATMO 48 (4 March 2025) (Middle-earth v LORD OF THE FRIES), accessible at https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/ATMO/2025/48.html.
2 see sections 42(b), 60 and 62A of the Trade Marks Act 1995 (Cth).
3 at [30]-[32] of Middle-earth v LORD OF THE FRIES, citing Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8, [49].
4 at [49] of Middle-earth v LORD OF THE FRIES.
5 at [55] of Middle-earth v LORD OF THE FRIES.
6 at [55] of Middle-earth v LORD OF THE FRIES.
Use of AI in Recruitment and Hiring – Considerations for EU and US Companies
1. Use of AI in Recruitment and Hiring
AI is transforming the recruitment landscape across the globe, making processes such as resume screening and candidate engagement more efficient by:
using keyword searches to automatically rank and eliminate candidates from a pool of applicants with minimal human oversight;
performing recruitment tasks via chatbots that interact with candidates;
formulating skills and aptitude tests; and
analyzing video interviews to assess a candidate’s suitability for a particular position.
In addition to maximizing efficiency, AI may also be used to make automated, substantive decisions related to recruitment, hiring, and performance through the use of predictive analytics that forecast a candidate’s success in a specific role.
2. Regulation of AI Use in the European Union and United States
The European Union has taken a united approach to AI regulation, and all EU member states are currently governed by the EU Regulation on Artificial Intelligence (EU AI Regulation), which took effect on Aug. 1, 2024. The EU AI Regulation’s scope applies to all providers and deployers based in the EU, as well as those that place an AI system on the EU market or use the results of an AI system in the EU. Parties located outside the EU should therefore be aware that the EU AI Regulation may apply to them, as well.
The EU AI Regulation categorizes AI systems into different risk categories, with the applicable rules becoming stricter as the risk to health, safety, and fundamental rights increases (for example, “minimal” regulation for spam filters; “limited” regulation for chatbots; “high” regulation for use in recruitment; and “unacceptable” use of AI for social scoring and facial recognition). HR tools are considered high-risk AI systems if they (1) are used for recruiting or selecting candidates; and/or (2) provide the basis for HR employment-related decisions, e.g., promoting or terminating employment or monitoring and evaluating performance and behavior.
As of Feb. 2, 2025, the EU AI Regulation requires companies to eliminate “unacceptable” AI systems (as defined by the law) and to thoroughly and comprehensively train all employees using AI systems with respect to compliant AI use under the regulation.
In contrast to the EU, the United States does not currently have uniform AI regulations on a federal level. Though the Biden administration had tasked government agencies such as the Department of Labor and the Equal Employment Opportunity Commission with monitoring the use of AI tools and issuing guidance to enhance compliance with anti-discrimination and privacy laws, in January 2025, President Trump expressed his support for deregulation, issuing an executive order entitled “Removing Barriers to American Leadership in Artificial Intelligence Issues.” Federal agencies have since removed all previously issued guidance on AI use.
In response to the executive order advocating for AI deregulation, regulations governing the use of AI have been introduced and passed on the state level. However, legislation passed does not always become legally binding. For example, in February 2025, the Virginia legislature passed the High-Risk Artificial Intelligence Developer and Deployer Act, which would have required companies creating or using “high-risk” AI systems in employment as well as other areas to implement safeguards against “algorithmic discrimination” for such systems. However, the governor vetoed the Act on March 24, 2025, and so the Act does not currently apply.
3. AI Use May Trigger Other Legal Violations
Aside from complying with laws such as the EU AI Regulation, which specifically regulates the use of AI, companies using AI in their recruiting and hiring processes should be careful such use does not trigger a violation of other laws. For example:
Bias and Discrimination: Algorithms used by AI in recruitment and hiring may inadvertently perpetuate bias, leading to discrimination against candidates based on race, gender, age, or other protected characteristics. Discrimination is prohibited in the EU under Council Directive 2000/78/EC, which bans discrimination in employment, education, and public safety, as well in the United States via more than one hundred federal, state, and local anti-discrimination laws.
Data Security and Ownership: Companies that enter the personal data of potential candidates into an AI system have certain legal obligations with respect to maintaining the security of such data, as well as considerations with respect to the ownership of such data. Such obligations are governed by the EU General Data Protection Regulation (GDPR), which took effect on May 25, 2018. In the United States, more than 20 jurisdictions have passed laws imposing obligations on employers that use AI to collect and process candidate and employee data.
Invasion of Privacy: Employers that collect candidate and/or employee data via AI tools may inadvertently be invading the privacy of such candidates and employees, and should be mindful of applicable privacy laws, which may require the company to obtain consent from the candidate or employee prior to running certain searches.
4. Penalties for Non-Compliance
An EU employer that violates the above discrimination, data security, and privacy laws risks significant (yet lower than U.S.) damage awards, as well as high administrative penalties from agencies such as the European AI Office and national data protection authorities.
Damages claims for individual breaches can vary significantly between jurisdictions, and EU member states retain national autonomy in determining award sums. However, European Court of Justice (ECJ) landmark judgments emphasize the importance of issuing awards that correspond to the nature and extent of the EU-protected rights violated.
Certain European nations, such as Estonia, Hungary, Ireland, Sweden, Austria, and Finland, have established statutory or customary upper limits on awardable damages to employees in the event a company fails to comply with applicable anti-discrimination regulations, with such damages ranging from the payment of EUR 500 to 104 weeks’ pay. In contrast, in Poland, Germany, and the Netherlands, damages are not formally limited, although in practice the awards are relatively low compared to the United States. The national laws of some European countries, such as UK, provide for punitive damages, which would further increase the sum of damages awarded.
In addition to the above, administrative fines for data security and privacy law violations under GDPR may reach up to the higher of EUR 20,000,000, or 4% of a company’s annual worldwide turnover for the preceding financial year.
Under the EU AI Regulation, both an EU employer and a non-EU employer using the results of an AI system in the EU can be fined up to the higher of EUR 35,000,000 or 7% of a company’s annual worldwide turnover for the preceding financial year. In the United States, penalties range depending on the jurisdiction. In New York City, for example, an employer may incur a fine of up to $500 for a first violation, and between $500 and $1,500 per day for each subsequent or continuing violation.
5. Considerations for Employers
To minimize exposure, employers should consider taking the following steps:
For the EU (including non-EU companies subject to EU laws as provided above):
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Eliminate AI use deemed to be “unacceptable” under the EU AI Regulation.
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Train employees to use AI in accordance with the EU AI Regulation, applicable data security and privacy laws, and company policies.
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Prepare for additional new requirements scheduled to take effect in August 2026.
For the United States:
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Inform candidates when using AI in recruiting and hiring and obtain informed written consent from a candidate prior to using AI for processing sensitive data.
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Provide an alternate method of screening should the candidate decline the use of AI.
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Use AI systems (including testing procedures) that provide clear parameters that can later be verified.
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Conduct periodic independent bias testing of AI systems and recruitment tools.
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Include human oversight in the decision-making process.
Thilo Ullrich and Dorothee von Einem also contributed to this article.