Orange County and Palo Alto partner Joshua Jessen and Palo Alto associate Priyanka Rajagopalan are the authors of "1st Circ. Video Privacy Decision Creates Split With 11th Circ." [PDF] published on May 13, 2016 by Law360.
Orange County and Palo Alto partner Joshua Jessen and Palo Alto associate Priyanka Rajagopalan are the authors of "1st Circ. Video Privacy Decision Creates Split With 11th Circ." [PDF] published on May 13, 2016 by Law360.
2013 proved to be another active year in the outsourcing and technology transactions marketplace. We continued to see a steady flow of traditional information technology outsourcing transactions mixed with an ever expanding variety of business process outsourcing transactions. We also saw an increase in the adoption of cloud-based solutions, including SaaS, IaaS and PaaS. Outlined below are a few trends we have observed during the past year and some considerations for the future. Practice Observations on 2013 and Some Thoughts for 2014 S. 744 – Immigration Reform: The U.S. Senate’s proposed "Border Security, Economic Opportunity, and Immigration Modernization Act" (S. 744) H-1B visa reform provisions would have significantly affected the U.S. outsourcing industry and India-based service providers in particular. Among other requirements, S. 744 capped the percentage of an entity’s U.S.-based workforce that could consist of H-1B visa holders, increased the cost of obtaining H-1B visas and prohibited the deployment of H-1B visa holders at customer locations by certain H-1B-dependent service providers. While gridlock in Washington prevented the bill from proceeding through the House, we anticipate that immigration reform generally, and H-1B visa reform in particular, is one area that may be ripe for political compromise in 2014. Data Security: Popular interest in governmental and private sector data collection practices, media attention to data breaches and the correspondingly large notification and remediation costs have raised the stakes for both service providers and customers. In 2013, these factors drove heavy negotiation of provisions allocating responsibility and authority for resolving data breaches, with provisions becoming increasingly customized to particular situations. This trend will likely continue into 2014, and may accelerate if regulators increase enforcement efforts or if the plaintiffs’ bar is able to overcome hurdles to class certification for claims by data subjects. EU Data Privacy: Data protection reform continues to advance in the European Parliament, with proponents hoping to see their 2012 proposal for changes to the EU Data Protection Directive enacted in 2014. The contemplated changes would offer some benefits for global outsourcing deals, such as increased uniformity and "one stop shopping" in the EU (enabling global enterprises to work with a single data protection authority in the EU instead of many). The potential downsides include significantly increased sanctions for non-compliance and the new "right to be forgotten," which may require substantial changes to technology and re-examination of existing agreements to allocate responsibility for implementation. Cloud Computing: The ease of administration and attractive economics of cloud computing have led to more deals with cloud computing components, as even businesses with highly sensitive data are testing the waters with providers and services geared towards their needs. We expect use of cloud computing to further expand in 2014, as more providers work through how to meet the needs of regulated businesses and adopt approaches that address the security challenges faced by their customers. SaaS: Although SaaS providers remain more resistant to negotiating terms and conditions than traditional outsourcing providers, in 2013 we were increasingly successful in negotiating key legal terms for our clients. As more activities migrate towards the SaaS model, we are seeing increased customization of both the services offered and the legal agreements that can be negotiated, and we expect this trend to continue into 2014. Negotiation Results: The notion that there would be a convergence among service providers in the outsourcing marketplace regarding terms and conditions was debunked once again in 2013. We observed a wide-ranging difference in the terms and conditions service providers were willing to accept. Additionally, customers who raised key terms and conditions earlier in the negotiating process (e.g., pre-down select) were generally able to obtain more favorable terms and to move to closing in a more expeditious manner. Solution Mix: In 2013, customers continued to deploy multi-service provider, multi-platform solutions. Moving beyond "anchor" service providers, we observed many clients implementing task-based or process-specific solutions, often leveraging SaaS or other cloud-based offerings. We expect this trend to continue as customers gain comfort with more complex governance and data security concerns associated with the cloud. Disputes: Our outsourcing disputes practice remained active in 2013. The dueling forces of increased focus on contract governance and cost savings by customers and the rapid expansion and margin squeeze experienced by service providers have led to disputes that we have helped resolve successfully through negotiated settlements and restructurings. Gibson Dunn’s Practice Gibson Dunn’s Strategic Sourcing and Technology Transactions Practice in particular enjoyed one of its busiest years ever and represented clients on some of the largest and most complex transactions completed in 2013. In addition, the practice’s team of attorneys continued its steady expansion, adding members at both the partner and associate levels. Below are some highlights regarding the practice in 2013. The practice was ranked by Chambers & Partners in Band 1 nationally. We are very pleased that Shaalu Mehra, as a partner, and three lateral associates, joined the practice in 2013, deepening our expertise in both technology transactions and outsourcing. In 2013, we advised on more than 50 significant strategic sourcing and technology transactions with a total contract value in excess of $2 billion. Our clients came from a wide variety of industries, including Apparel, Automotive, Chemical, Consumer Products, Energy, Financial Services, Food, Government, Healthcare, Hospitality, Insurance, Life Sciences, Pharmaceutical, Publishing and Technology. Within the United States, we represented clients based in California, Colorado, Delaware, Georgia, Maryland, New Jersey, New York, Oregon, Tennessee, Texas, Washington and Wisconsin. Looking outside the U.S., we represented clients based in Bahrain, Canada, Denmark, France, Germany, Ireland, Singapore, Switzerland and the United Kingdom and in several instances transactions that involved more than 65 countries. Consistent with past years, in 2013, we worked with a broad range of clients, from mature public companies (over 35% of our clients were in the Fortune 500), to middle market and emerging growth companies. Last year marked one of our busiest years to date representing clients in technology transactions, including patent portfolio acquisitions, contract manufacturing, technology-related services arrangements and cloud-based services transactions. Below are some of the more notable transactions that Gibson Dunn’s practice handled in 2013. Information Technology Outsourcing Transactions A Fortune 500 hospitality company in a series of global IT outsourcing transactions with Accenture, IBM, Mindtree, TCS and Xerox. A Fortune 500 life sciences company in the renegotiation of a global application development and maintenance transaction with Accenture. A Fortune 500 energy services company in an IT outsourcing transaction. A global specialty chemicals company in a full scope IT outsourcing transaction with HCL. A global financial services and communications company in an application development and maintenance transaction with TCS. An international media company in a renegotiation of an IT infrastructure transaction with HCL. A Fortune 500 IT distributor in multiple enterprise software distribution agreements and telecommunications hardware distribution agreements. A Fortune 500 technology company in the outsourcing of certain application development and maintenance services to Capgemini. Business Process Outsourcing Transactions A Fortune 500 hospitality company in the sale of its captive shared services center and the outsourcing of its back-office support functions to Accenture. A Fortune 500 consumer products company in the outsourcing of certain financial and accounting services to Capgemini. A Fortune 500 insurance company in the outsourcing of certain claims processing services to Alliance-One Services (a subsidiary of CSC). A Fortune 500 financial services company in the outsourcing of its print procurement functions to Williams Lea. A hedge fund in the outsourcing of its back-office asset management services to SEI. A publisher in the outsourcing of its supply chain to RR Donnelley. A Fortune 500 company in the outsourcing of quality assurance services. Cloud/SaaS Transactions An international food distribution company in the implementation of a global cloud-based human resource information system with SuccessFactors Inc. (an SAP company). A Fortune 500 chemicals company in a global, cloud-based enterprise human resources SaaS transaction with Workday. A leading apparel retailer in connection with a cloud-based enterprise human resources SaaS transaction with Workday. A Fortune 500 technology company in its outbound cloud services agreements. A Fortune 500 technology company in a multinational telecommunications services agreement with British Telecom. Other Significant Technology Transactions An investment bank in a global asset management services agreement. A Fortune 500 office technology company in the sale and licensing-back of certain patents and related know-how. A manufacturer of high performance computing solutions in a contract manufacturing transaction with Jabil. A Fortune 500 technology company in multiple enterprise-wide software licenses. Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding the outsourcing and technology transactions marketplace. Please contact the Gibson Dunn lawyer with whom you usually work, or any of the following members of the Strategic Sourcing and Technology Transactions Practice Group: Daniel R. Mummery – Palo Alto (650-849-5318, firstname.lastname@example.org)William J. Peters – Los Angeles (213-229-7515, email@example.com)Stephen D. Nordahl – New York (212-351-2442, firstname.lastname@example.org)Shaalu Mehra – Palo Alto (650-849-5282, email@example.com) © 2014 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Washington, D.C. partner F. Joseph Warin and associates Oleh Vretsona and Lora MacDonald are the authors of "A Practical Guide to the Use of the Commissioned Public Report as an Effective Crisis-Management Tool" [PDF] published in the Notre Dame Journal of Law, Ethics & Public Policy, Volume 29, Issue 1.
Click for PDF This March 2018 edition of Gibson Dunn’s Aerospace and Related Technologies Update discusses newsworthy developments, trends, and key decisions from 2017 and early 2018 that are of interest to aerospace and defense, satellite, and drone companies; and new market entrants in the commercial space and related technology sectors, including the private equity and other financial institutions that support and enable their growth. Specifically, this update covers the following areas: (1) commercial unmanned aircraft systems (“UAS”), or drones; (2) government contracts litigation involving companies in the aerospace and defense industry; (3) the commercial space sector; and (4) cybersecurity and privacy issues related to the national airspace. We discuss each of these areas in turn below. I. COMMERCIAL UNMANNED AIRCRAFT SYSTEMS The commercial drone industry has continued to mature through advancements in technology, government relations, and public perception. Commercial drones are being used for various sensory data collection, building inspections, utility inspections, agriculture monitoring and treatment, railway inspections, pipeline inspections, mapping of mines, and photography. New drone applications are being created on a regular basis. For example, the concept of flying drone taxis was validated in Dubai in September 2017 when an uncrewed two-seater drone successfully conducted its first test flight. Around a year and a half ago, United States regulations governing non-recreational drone operations were finalized. Since then, the Federal Aviation Administration (“FAA”) has issued over 60,000 remote pilot certificates. The FAA has and continues to make efforts to advance its technology, and it recently released a prototype application to provide operators with automatic approval of specific airspace authorizations. The national beta test of this system will launch in 2018, and we will be sure to report back with the results. One of the biggest boons for the industry over the past 15 months was the positive public perception stemming from Hurricane Harvey relief efforts. In the days following the disaster, drones worked in concert with government agencies to support search and rescue missions, inspect roads and railroads, and assess water plants, oil refineries, cell towers, and power lines. Further, major insurance companies used drones to assess claims in a safer, faster, and more efficient manner. The aftermath of this disaster demonstrated the value of drone technology and increasingly has driven a positive public perception of the industry. Indeed, even aside from the disaster relief efforts, media sources continue to carry positive drone stories. For example, in January 2018, Australian lifeguards were testing a drone with the ability to release an inflatable rescue pod; during its testing, the drone was called into action, and rescued two teenagers from drowning. The future is bright, but there are still many obstacles for the industry to overcome before it fully matures, such as clarity around low altitude airspace, privacy concerns, and the risk to people, property, and other aircraft. To get you caught up on 2017 and early 2018 drone developments, we have briefly summarized below: (A) highlights of drone litigation impacting airspace, including highlights from previous years for context; (B) drone registration; (C) privacy issues related to drones; (D) the United States government’s expanded use of drones; (E) drone countermeasures; (F) drone safety studies; and (G) the UAS airspace integration pilot program. A. Litigation Highlights Regarding Airspace Huerta v. Haughwout, No. 3:16-cv-358, Dkt. No. 30 (D. Conn. Jul. 18, 2016) The latter half of 2016 featured an important decision regarding the FAA’s authority over low-level airspace. The 2016 decision, Huerta v. Haughwout—also known as “the flamethrower drone case,” involved two YouTube videos posted by the Haughwouts. One video featured a drone firing an attached handgun, while a second video showed a drone using an attached flamethrower to scorch a turkey. After the videos were publicly uploaded, the FAA served the Haughwouts with an administrative subpoena to acquire further information about the activities featured in the videos. The Haughwouts refused to comply with the FAA’s subpoenas, asserting that their activities were not subject to investigation by the FAA. In response, the FAA sought enforcement of the subpoenas in the District of Connecticut. Judge Jeffrey Meyer found the administrative subpoenas to be valid. Most importantly, however, his order included dicta casting doubt on the FAA’s claim to control all airspace from the ground up: “The FAA believes it has regulatory sovereignty over every inch of outdoor air in the United States…. [T]hat ambition may be difficult to reconcile with the terms of the FAA’s statute that refer to ‘navigable airspace.'” While this dicta addressed the question of where the FAA’s authority begins, Judge Meyer also noted that “the case does not yet require an answer to that question.” Judge Meyer further stated: Congress surely understands that state and local authorities are (usually) well positioned to regulate what people do in their own backyards. The Constitution creates a limited national government in recognition of the traditional police power of state and local government. No clause in the Constitution vests the federal government with a general police power over all of the air or all objects that leave the ground. Although the Commerce Clause allows for broad federal authority over interstate and foreign commerce, it is far from clear that Congress intends–or could constitutionally intend–to regulate all that is airborne on one’s own property and that poses no plausible threat to or substantial effect on air transport or interstate commerce in general. 2017 featured the resolution of another lawsuit where the plaintiff attempted to extend the significance of Haughwout in an effort to get the courts to address the question of what “navigable airspace” means in the context of drones (see discussion of Singer v. City of Newton, infra). Boggs v. Merideth, No. 3:16-cv-00006 (W.D. Ky. Jan. 4, 2016) In Boggs v. Merideth—better known as “the Drone Slayer case”—a landowner shot down an operator’s drone with a shotgun in the Western District of Kentucky. The plaintiff flew his drone roughly 200 feet above the defendant’s property, causing the defendant—the self-anointed “Drone Slayer”—to claim the drone was trespassing and invading his privacy and shoot it down. The plaintiff believed the airspace 200 feet above the ground was federal airspace and therefore the defendant could not claim the drone was trespassing. Following a state judge’s finding that the defendant acted “within his rights,” the drone operator filed a complaint in federal court for declaratory judgment to “define clearly the rights of aircraft operators and property owners.” The case had the potential to be a key decision on the scope of federal authority over the use of airspace. Rather than claiming defense of property, however, the defendant moved to dismiss the complaint on jurisdictional grounds. The plaintiff unsuccessfully attempted to rely on the decision in Huerta v. Haughwout for the proposition that all cases involving the regulation of drone flight should be resolved by federal courts. The court rejected the plaintiff’s argument, noting that Haughwout only concerned the FAA’s ability to exercise subpoena power and enforce subpoenas in federal court. In fact, the district court noted, the court in Haughwout “expressed serious skepticism as to whether all unmanned aircrafts are subject to FAA regulation.” In his March 2017 order, Senior District Court Judge Thomas B. Russell granted the defendant’s motion to dismiss for lack of federal jurisdiction, stating that the issue of whether or not the drone was in protected airspace only arises on the presumption that the defendant would raise the defense that he was defending his property. Consequently, there was no federal question jurisdiction and the case was thrown out without ever reaching its merits. While the answer to what exactly constitutes “navigable airspace” in the drone context remained unanswered in 2017, the year did mark the beginning of federal courts addressing the overlap between conflicting state, local, and federal drone laws. Singer v. City of Newton No. 1:17-cv-10071 (D. Mass. Jan. 17, 2017) On September 21, 2017, a federal judge in the District of Massachusetts held that portions of the City of Newton, Massachusetts’s (“Newton”) ordinance attempting to regulate unmanned aircraft operations within the city were invalid. The case, Singer v. City of Newton, marks the first time a federal court has struck down a local ordinance attempting to regulate drones. The court held the following four city ordinance provisions to be unenforceable: (1) a requirement that all owners register their drones with the city; (2) a ban on all drone operations under 400 feet that are over private property unless done with express permission of the property owner; (3) a ban on all drone operations over public property, regardless of altitude, unless done with the express permission of the city; and (4) a requirement that no drone be operated beyond the visual line of sight of its operator. All four of these provisions of the Newton ordinance were found to be preempted by federal regulations promulgated by the FAA. In the course of holding that the four sections of Newton’s ordinance were each preempted, the court identified the congressional objectives each section inhibited. One relevant congressional objective is to make the FAA the exclusive regulatory authority for registration of drones. The Newton ordinance required the registration of drones with the City of Newton, which impeded Congress’s objective; thus, the court found that section to be preempted. The court also identified a congressional objective for the FAA to develop a comprehensive plan to safely accelerate the integration of drones into the national airspace system. The two sections of the Newton ordinance requiring prior permission to fly above both public and private property within the city effectively eliminated any drone activity without prior permission; thus those sections were held to interfere with the federal objective and were invalidated. Lastly, the court found that the Newton ordinance’s provision barring drone usage beyond the visual line of sight of the operator conflicted with a less restrictive FAA rule allowing such usage if a waiver is obtained or if a separate visual observer can see the drone throughout its flight and assist the operator. The Singer ruling marked the long-anticipated beginning of federal courts addressing overlapping state, local, and federal drone laws. While the ruling is significant for invalidating sections of a local ordinance and thus establishing a framework that federal courts may follow to invalidate state and local drone laws elsewhere, it is important not to overstate the case’s current significance. The court in Singer declined to hold that law relating to airspace was expressly preempted or field preempted, but rather decided it was conflict preempted. Consequently, the case does not provide support for the assertion that all state and local drone laws related to airspace will be preempted by FAA regulations. Further, the court did not opine on the lower limits of the National Airspace and whether it goes to the ground, an issue likely to come up in future litigation. The unchallenged portions of the Newton ordinance still stand, and the closing lines in the opinion recognize that Newton is free to redraft the invalidated portions to avoid direct conflict with FAA regulations. Thus it remains possible, even in the District of Massachusetts, for federal law to coexist with state and local laws in this field. In order to successfully avoid invalidation in the courts, however, state and local lawmakers must draft legislation that allows for compliance with federal regulations, and which does not interfere with any federal objectives. The year 2017 left much to still be determined by the courts. While Newton demonstrated that preemption concerns do and will continue to exist, the case did not address the boundary of the National Airspace. Haughwout did address the boundary—though only through dicta—and suggested that, when the issue is decided, the boundary will likely not extend to the ground. Thus, as was the case at the start of 2017, where the boundary will be drawn remains to be seen. B. Drone Registration: From Mandatory to Optional and Back to Mandatory In December 2015, days before tens of thousands of drones were gifted for the holidays, the FAA adopted rules requiring the registration of drones weighing more than 0.55 pounds prior to operation. This registration requirement only impacted recreational users, as commercial users are required to register under Part 107. This rule was challenged in Taylor v. Huerta, and on May 19, 2017, the U.S. Court of Appeals for the D.C. Circuit vacated the rule. The FAA instituted a program to issue refunds, and recreational pilots enjoyed the freedom of flying unregistered drones for the next seven months. The Circuit Court struck down the rule because the FAA lacked statutory authority to issue such a rule for recreational pilots. Section 336 of the FAA Modernization and Reform Act of 2012 states that the “Administrator of the Federal Aviation Administration may not promulgate any rule or regulation regarding a model aircraft.” The Court held that the FAA’s registration rule “directly violates that clear statutory prohibition” and vacated the rule to the extent it applied to model aircraft. The FAA responded by offering $5 registration fee refunds and the option to have one’s information removed from the federal database, but encouraging recreational operators to voluntarily register their drones. However, in a turn of events, on December 12, 2017, the President signed the National Defense Authorization Act of 2018, which included a provision reinstating the rule: Restoration Of Rules For Registration And Marking Of Unmanned Aircraft.—The rules adopted by the Administrator of the Federal Aviation Administration in the matter of registration and marking requirements for small unmanned aircraft (FAA-2015-7396; published on December 16, 2015) that were vacated by the United States Court of Appeals for the District of Columbia Circuit in Taylor v. Huerta (No. 15-1495; decided on May 19, 2017) shall be restored to effect on the date of enactment of this Act. As a result of the Act, both recreational and commercial pilots are now required to register their drones, and one can do so on the FAA’s website. C. UAS and Privacy 1. Voluntary Best Practices Remain Intact A 2015 Presidential Memorandum issued by then President Obama ordered the National Telecommunications and Information Administration (“NTIA”) of the U.S. Department of Commerce to create a private-sector engagement process to help develop voluntary best practices for privacy and transparency issues regarding commercial and private drone use. Since Part 107 of Title 14 of the Code of Federal Regulations (“Part 107”) does not address privacy, privacy advocates hoped that the NTIA would force the FAA to promulgate privacy regulations. Prior attempts to petition the FAA to consider privacy concerns in its Notice of Proposed Rulemaking (“NPRM”) for Part 107 were unsuccessful. The NTIA issued its voluntary best privacy practices for drones on May 19, 2016. While the final best practices found support from some privacy organizations and most of the commercial drone industry, other privacy groups raised concerns that the best practices neither established nor encouraged binding legal standards. Nonetheless, the best practices offer useful guidelines for companies testing and/or actively conducting drone operations. 2. Litigation Regarding the FAA’s Role in Addressing Privacy As we discussed in an earlier update, the Electronic Privacy Information Center (“EPIC”) challenged the FAA’s decision to exclude privacy regulations from Part 107 in an August 2016 petition for review. In 2012, EPIC petitioned the FAA to promulgate privacy regulations applicable to drone use, which the FAA denied in February 2014. EPIC argued that the FAA Modernization and Reform Act of 2012 required the FAA to consider privacy issues in its NPRM. The FAA argued that while the Act directed the FAA to develop a comprehensive plan to safely integrate drones into the national airspace system, privacy considerations went “beyond the scope” of that plan. The D.C. Circuit dismissed EPIC’s petition for review on two grounds. First, the Court deemed EPIC’s petition for review “time-barred” because EPIC filed 65 days past the time allotted under 49 U.S.C. § 46110(a). Second, the Court held that the FAA’s “conclusion that privacy is beyond the scope of the NPRM” was not a final agency determination subject to judicial review. After the rule became final, EPIC filed a new petition for review asking the court to vacate Part 107 and remand it to the FAA for further proceedings. Consolidated with a related case, Taylor v. FAA, No. 16-1302 (D.C. Cir. filed August 29, 2016), EPIC argues that the FAA violated the Act by: (1) refusing to consider “privacy hazards,” and (2) refusing to “conduct comprehensive drone rulemaking,” which necessarily includes issues related to privacy. The FAA argues: (1) EPIC lacks standing, (2) the FAA reasonably decided not to address privacy concerns, and (3) even if EPIC has standing, Section 333 of the Act does not require the FAA to promulgate privacy regulations. Judge Merrick Garland, Judge David Sentelle, and Judge A. Raymond Randolph heard oral arguments in the consolidated cases on January 25, 2018. All eyes thus remain on the D.C. Circuit to determine whether the FAA must issue regulations covering privacy concerns raised by increased drone use. D. The United States Government Expands Its Use of Drones Four years after the U.S. Department of Defense (“DoD”) issued its 25-year “vision and strategy for the continued development, production, test, training, operation, and sustainment of unmanned [aircraft] systems technology,” the drone defense industry continues to experience rapid growth. A recent market report estimated that commercial and government drone sales will surpass $12 billion by 2021. However, that estimate is likely conservative when considering that the DoD allocated almost $5.7 billion to drone acquisition and research in 2017 alone. Likewise, the DoD allocates almost $7 billion to drone technology in its 2018 fiscal year Defense Budget. Additionally, Goldman Sachs forecasted a $70 billion market opportunity for military drones by 2020. According to Goldman Sachs: “Current drone technology has already surpassed manned aircraft in endurance, range, safety and cost efficiency — but research and development is far from over. The next generation of drones will widen the gap between manned and unmanned flight even further, adding greater stealth, sensory, payload, range, autonomous, and communications capabilities.” It should thus come as no surprise that organizations developing defense-specific drones will expect increased demand for complete systems and parts in the coming years. 1. United States Government’s Domestic Use Drones The U.S. government mostly acquires drones for overseas military operations, a trend dating back to the deployment of the Predator drone in post-9/11 conflict territories. Domestic use of DoD-owned drones remains subject to strict governmental approval, and armed drones are prohibited on U.S. soil. In February 2015, the Deputy Secretary of Defense issued Policy Memorandum 15-002 entitled “Guidance for the Domestic Use of Unmanned Aircraft Systems.” Under the policy, the Secretary of Defense must approve all domestic use of DoD-owned UAVs, with one exception—domestic search and rescue missions overseen by the Air Force Rescue Coordination Center. However, DoD personnel may use drones to surveil U.S. persons where permitted by law and where approved by the Secretary. The policy expired on February 17, 2018, and it remains to be seen how the Trump administration will handle domestic use of DoD-owned drones and the integration of UAVs into day-to-day civilian operations. E. Drone Countermeasures In response to the rapid growth of militarized consumer drones, particularly in ISIS-controlled territories, 2017 saw an increased offering of anti-drone technologies in the U.S. In April 2017, the U.S. Army’s Rapid Equipment Force purchased 50 of Radio Hill Technologies’ “Dronebuster” radar guns. The Dronebuster uses radio frequency technology to interrupt the control of drones by effectively jamming the control frequency or the GPS signal. The end-user can overwhelm the drone and deprive its operator of control or cause the drone to “fall out of the sky.” Handheld radar-type guns like the Dronebuster weigh about five pounds and cost an average of $30,000. The U.S. military also experimented with the Mobile High-Energy Laser-equipped Stryker vehicle. Similar to the Dronebuster, the 5 to 10kW laser overwhelms target drones’ control systems with high bursts of energy. It can shoot down drones 600 meters away, all without making a sound. F. Drone Safety Studies Making UAS operations commonplace in urban airspace will be a big step in the technological and economic advancement of the U.S.; however, there are obstacles to overcome in ensuring the safe operation of drones in urban areas. On April 28, 2017, the Alliance for System Safety of UAS through Research Excellence (“ASSURE”) released the results of a study that explored the severity of a UAS collision with people and property on the ground. First, ASSURE determined the most likely impact scenarios by reviewing various operating environments for UAS and determining their likely exposure to people and other manned aircraft. Then the team conducted crash tests and analyzed crash dynamics by measuring kinetic energy transfer. The results revealed that earlier measurements of the danger of collision grossly overestimate the risk of injury from a drone. ASSURE concluded that the DJI Phantom 3 drone has a 0.03% chance of causing a head injury if it falls on a person’s head. This is a very low probability considering blocks of steel or wood of the same weight have a 99% risk of causing a head injury in the same scenario. The disparity in probability of head injury is largely due to the fact that the DJI Phantom 3 drone absorbs most of the energy resulting from a collision, and therefore less energy is transferred on impact from the drone than from a block of steel or wood in the same collision. In fact there are numerous steps that drone designers and manufacturers can take to reduce the likelihood of injury in the event of a collision. Projectile mass and velocity, as well as stiffness of the UAS, are the primary drivers of impact damage. As such, multi-rotor drones tend to be safer because they fall more slowly due to the drag of the rotors as the drones fall through the air. The study made clear that blade guards should be a design requirement for drones used in close proximity to people in order to minimize the lacerations that can result from a collision. Moreover, ASSURE found that the more flexible the structure of the drone, the more energy the drone retains during impact, causing less harm to the impacted object of the collision. Regarding crashes with other manned aircraft, however, the study revealed that the impact of a drone can be much more severe than the impact of a bird of equivalent size and speed. As such, the structural components of a commercial aircraft that allows it to withstand bird strikes from birds up to eight pounds are not an appropriate guideline for preventing damage from a UAS strike. The study also examined the dangers associated with lithium batteries, which are used to power most drones, in collisions. The major concern is the risk of a battery fire. The study found that typical high-speed impacts cause complete destruction of the battery, eliminating any concerns about battery fires. However, the lower impact crashes, which are mainly associated with take-off and landing, left parts of the battery intact, posing a risk of battery fire. While the ASSURE study is the first of its kind, it certainly marks the need for more studies that analyze the practical aspects of collisions and how to reduce risk to minimize harm. The hazards associated with commonplace drone operation are many. Analysis of the physical impact of a collision is one aspect of minimizing UAS risks. There is still much work to be done in order to minimize other collateral risks, such as the risk of technology failures, which range from UAS platform failures, to failures of hardware or communication links controlling the UAS. Environmental hazards, such as the effect of rain, lightning, and other types of weather remains to be studied. Ways to safeguard against human error or intentional interference is another aspect of UAS safety that has yet to be studied in detail. Data link spoofing, jamming, or hijacking poses significant safety hazards, particularly as incidents of data breaches become more and more common. Before the integration of UAS into national airspace can be fully implemented, industry stakeholders must collaborate to conduct studies that will help inform legislators about what kind of technological requirements and operational regulations are necessary. G. UAS Airspace Integration Pilot Program In October 2017, the U.S. Department of Transportation (“DOT”) announced that it was launching the Unmanned Aircraft Systems Integration Pilot Program. The program, which was established in response to a presidential directive, is meant to accelerate the integration of UAS into the national airspace through the creation of public-private partnerships between UAS operators, governmental entities, and other private stakeholders. The program is designed to establish greater regulatory certainty and stability regarding drone use. After reviewing the applications, DOT will select a minimum of five partnerships with the goal of collaborating with the selected industry stakeholder in order to evaluate certain advanced UAS operational concepts, such as night operations, flights beyond the pilot’s line of sight, detect-and-avoid technologies, flights over people, counter-UAS security operations, package delivery, the integrity and dependability of data links between pilot and aircraft, and cooperation between local authorities and the FAA in overseeing UAS operations. One such application was made by the City of Palo Alto, in partnership with the Stanford Blood Center, Stanford hospital, and Matternet, a private drone company. The City of Palo Alto has proposed the use of drones to deliver units of blood from the Stanford Blood Center to Stanford hospital, which would involve establishing an approved flight path for drones to transfer the units of blood in urgent situations. Matternet has already tested its drones’ capacity for transporting blood and other medical samples in Switzerland. A second project proposed by the City of Palo Alto involves the use of drones in order to monitor the perimeter of the Palo Alto Airport. This project involves a partnership between the city and a company called Multirotor, a German drone company that has experience working with the German army and the Berlin Police Department to integrate UAS as tools for law enforcement activities. The creation of the pilot program has given stakeholders the sense that the current administration is supportive of integrating drones into the national airspace. The support of the government has created the potential for unprecedented growth in an industry that could bring lucrative returns to its stakeholders. The DOT has already received over 2,800 interested party applications. The majority of these applications have come from commercial drone companies, as well as various other stakeholders including energy companies, law enforcement agencies, and insurance providers. The UAS Pilot Program is to last for three years. The projected economic benefit of integrated UAS is estimated to equal $82 billion, creating up to 100,000 jobs. Industries that could see immediate returns from the program include precision agriculture, infrastructure inspection and monitoring, photography, commerce, and crisis management. The advent of established, government-sanctioned rules for the operation of UAS will motivate industry stakeholders both in the public and private sectors to push forward with new and innovative ways to use drones. II. GOVERNMENT CONTRACTS LITIGATION IN THE AEROSPACE AND DEFENSE INDUSTRY Gibson Dunn’s 2017 Year-End Government Contracts Litigation Update and 2017 Mid-Year Government Contracts Litigation Update cover the waterfront of the most important opinions issued by the U.S. Court of Appeals for the Federal Circuit, U.S. Court of Federal Claims, Armed Services Board of Contract Appeals (“ASBCA”), and Civilian Board of Contract Appeals among other tribunals. We invite you to review those publications for a full report on case law developments in the government contracts arena. In this update, we (A) summarize key court decisions related to government contracting from 2017 that involve players in the aerospace and defense industry. The cases discussed herein, and in the Government Contracts Litigation Updates referenced above, address a wide range of issues with which government contractors in the aerospace and defense industry are likely familiar. A. Select Decisions Related to Government Contractors in the Aerospace and Defense Industry Technology Systems, Inc., ASBCA No. 59577 (Jan. 12, 2017) TSI held four cost-plus-fixed-fee contracts with the Navy for research and development. Several years into the contracts, the government disallowed expenses that had not been questioned in prior years. TSI appealed to the ASBCA, arguing that it relied to its detriment on the government’s failure to challenge those same expenses in prior years. The Board (Prouty, A.J.) held that the challenged costs were “largely not allowable” and that “the principle of retroactive disallowance,” which it deemed “a theory for challenging audits whose heyday has come and gone,” did not apply because the same costs had simply not come up in the prior audits. The theory of retroactive disallowance, first articulated in a Court of Claims case in 1971, prevents the government from challenging costs already incurred when the cost previously had been accepted following final audit of historical costs; the contractor reasonably believed that it would continue to be approved; and it detrimentally relied on the prior acceptance. Tracing the precedent discussing the principle, the Board cited the Federal Circuit’s decision in Rumsfeld v. United Technologies Corp., 315 F.3d 1361 (Fed. Cir. 2003), which stated that “affirmative misconduct” on the part of the government would be required for the principle of retroactive disallowance to apply because it is a form of estoppel against the government. The Board “sum[med] up: there is no way to read our recent precedent or the Federal Circuit’s except to include an affirmative misconduct requirement amongst the elements of retroactive disallowance. Period.” Further, the Board held that the government’s failure to challenge the same costs in prior years did not constitute a “course of conduct precluding the government from disallowing the costs in subsequent audits.” Delfasco LLC, ASBCA No. 59153 (Feb. 14, 2017) Delfasco had a contract with the Army for the manufacture and delivery of a specified number of munition suspension lugs. The Army thereafter exercised an option to double the number of lugs required. When Delfasco stopped making deliveries due to an inability to pay its subcontractor, the Army terminated the contract for default. Delfasco appealed to the ASBCA, asserting that the government had waived its right to terminate for untimely performance by allegedly stringing Delfasco along even after the notice of termination. The Board (Prouty, A.J.) set out the test for waiver in a case involving termination for default due to late delivery as follows: “(1) failure to terminate within a reasonable time after the default under circumstances indicating forbearance, and (2) reliance by the contractor on the failure to terminate and continued performance by him under the contract with the Government’s knowledge and implied or express consent.” The Board held that Delfasco failed to satisfy the first prong because the government’s show cause letter placed Delfasco on notice that any continued performance would only be for the purpose of mitigating damages. Moreover, Delfasco failed to satisfy the second prong because Delfasco’s payment to its subcontractor after the show cause letter would have been owed regardless, and was not paid in reliance upon the government’s failure to terminate. Therefore, the Board found that the government had not waived its right to terminate, and denied the appeal. Raytheon Co., ASBCA Nos. 57743 et al. (Apr. 17, 2017) Raytheon appealed from three final decisions determining that an assortment of costs—including those associated with consultants, lobbyists, a corporate development database, and executive aircraft—were expressly unallowable and thus subject to penalties. After a two-week trial, the Board (Scott, A.J.) sided largely with Raytheon in a wide-ranging decision that covers a number of important cost principles issues. First, the Board rejected the government’s argument that the consultant costs were expressly unallowable simply because the government was dissatisfied with the level of written detail of the work product submitted to support the costs. Judge Scott noted that written work product is not a requirement to support a consultant’s services under FAR 31.205-33(f), particularly not where, as here, much of the consultants’ work was delivered orally due to the classified nature of the work performed. The Board found that not only were the consultant costs not expressly unallowable, but indeed were allowable. This is a significant ruling because the documentation of consultant costs is a recurring issue as government auditors frequently make demands concerning the amount of documentation required to support these costs during audits. Second, the government sought to impose penalties for costs that inadvertently were not withdrawn in accordance with an advance agreement between Raytheon and the government concerning two executive aircraft. Raytheon agreed that the costs should have been withdrawn and agreed to withdraw them when the error was brought to its attention, but asserted that the costs were not expressly unallowable and subject to penalty. The Board agreed, holding that the advance agreements did not themselves clearly name and state the costs to be unallowable, and further that advance agreements do not have the ability to create penalties because a cost must be named and stated to be unallowable in a cost principle (not an advance agreement) to be subject to penalties. This ruling could have significance for future disputes arising out of advance agreements. Third, the government alleged that costs associated with the design and development of a database to support the operations of Raytheon’s Corporate Development office were expressly unallowable organizational costs under FAR 31.205-27. The Board disagreed, validating Raytheon’s argument that a significant purpose of the Corporate Development office was allowable generalized long-range management planning under FAR 31.205-12, thus rendering the costs allowable (not expressly unallowable). The only cost for which the Board denied Raytheon’s appeals concerned the salary costs of government relations personnel engaged in lobbying activities. Raytheon presented evidence that it had a robust process for withdrawing these costs as unallowable under FAR 31.205-22, but inadvertently missed certain costs in this instance due to, among other things, “spreadsheet errors.” Raytheon agreed that the costs were unallowable and should be withdrawn, but disputed that the costs of employee compensation (a generally allowable cost) were expressly unallowable and further argued that the contracting officer should have waived penalties under FAR 42.709-5(c) based on expert evidence that Raytheon’s control systems for excluding unallowable costs were “best in class.” The Board found that salary costs associated with unallowable lobbying activities are expressly unallowable and that the contracting officer did not abuse his discretion in denying the penalty waiver. L-3 Comms. Integrated Sys. L.P. v. United States, No. 16-1265C (Fed. Cl. May 31, 2017) L-3 entered an “undefinitized contractual action” (“UCA”) with the Air Force in which it agreed to provide certain training services while still negotiating the terms of the contract. After the parties failed to reach agreement on the prices for two line items in the UCA, the Air Force issued a unilateral contract modification, setting prices for those line items and definitizing the contract. L-3 argued that the Air Force’s price determination was unreasonable, arbitrary and capricious, and in violation of the FAR, and filed suit seeking damages. The government moved to dismiss for lack of subject matter jurisdiction. The Court of Federal Claims (Kaplan, J.) dismissed L-3’s complaint, concurring with the government that L-3 had never presented a certified claim to the contracting officer for payment “of a sum certain to cover the losses it allegedly suffered.” The court found that the proposals L-3 had presented to the Air Force were not “claims,” but rather proposals made during contract negotiations that did not contain the requisite claim certification language. Innoventor, Inc., ASBCA No. 59903 (July 11, 2017) In 2011, the government entered into a fixed-price contract with Innoventor for the design and manufacture of a dynamic brake test stand. As part of the contract’s purchase specifications, the new design had to undergo and pass certain testing. After problems arose in the testing process, Innoventor submitted a proposal to modify certain design components and applied for an equitable adjustment due to “instability of expectations.” The contracting officer denied Innoventor’s request for an equitable adjustment, stating that the government had not issued a modification directing a change that would give rise to such an adjustment. Innoventor submitted a claim, which the contracting officer denied, and Innoventor appealed. The Board (Sweet, A.J.) held that the government was entitled to judgment as a matter of law because there was no evidence that the government changed Innoventor’s performance requirements, let alone that anyone with authority directed any constructive changes. Here, the contract was clear that Innoventor’s design had to pass certain tests, and because it failed some of them, and did not perform pursuant to the contract terms, there was no change in the original contract terms that would give rise to a constructive change. The Board also found that there was no evidence that any person beyond the contracting officer had authority to direct a change because the contract expressly provided that only the contracting officer has authority to change a contract. Accordingly, the Board denied Innoventor’s appeal. L-3 Commc’ns Integrated Sys., L.P., ASBCA Nos. 60713 et al. (Sept. 27, 2017) L-3 appealed from multiple final decisions asserting government claims for the recovery of purportedly unallowable airfare costs. Rather than audit and challenge specific airfare costs, the Defense Contract Audit Agency simply applied a 79% “decrement factor” to all of L-3’s international airfare costs over a specified dollar amount, claiming that this was justified based on prior-year audits. After filing the appeals, L-3 moved to dismiss for lack of jurisdiction on the grounds that the government had failed to provide adequate notice of its claims by failing to identify which specific airfare costs were alleged to be unallowable, as well as the basis for those allegations. The Board (D’Alessandris, A.J.) denied the motion to dismiss, holding that the contracting officer’s final decisions sufficiently stated a claim in that they set forth a sum certain and a basis for such a claim. The Board held that L-3 had enough information to understand how the government reached its claim, and its contention that this was not a valid basis for the disallowance of costs for the year in dispute went to the merits and not the sufficiency of the final decisions. Scott v. United States, No. 17-471 (Fed. Cl. Oct. 24, 2017) Brian X. Scott brought a pro se claim in the Court of Federal Claims seeking monetary and injunctive relief for alleged harms arising from the Air Force’s handling of his unsolicited proposal for contractual work. Scott was an Air Force employee who submitted a proposal for countering the threat of a drone strike at the base where he was stationed. The proposal was rejected, but Scott alleged that portions of the proposal were later partially implemented. Scott sued, claiming that the Air Force failed properly to review his proposal and that his intellectual property was being misappropriated. Scott argued that jurisdiction was proper under the Tucker Act because an implied-in-fact contract arose that prohibited the Air Force from using any data, concept, or idea from his proposal, which was submitted to a contracting officer with a restrictive legend consistent with FAR § 15.608. The Court of Federal Claims (Lettow, J.) found that it had jurisdiction under the Tucker Act because an implied-in-fact contract was formed when the Air Force became obligated to follow the FAR’s regulatory constraints with regard to Scott’s proposal. Nevertheless, the Court granted the government’s motion to dismiss because Scott’s factual allegations, even taken in the light most favorable to him, did not plausibly establish that the government acted unreasonably or failed to properly evaluate his unsolicited proposal by using concepts from the proposal where Scott’s proposal addressed a previously published agency requirement. III. COMMERCIAL SPACE SECTOR A. Overview of Private Space Launches and Significant Milestones Space exploration is always fascinating—2017 and early 2018 was no exception. Starting off in February 2017, India’s Polar Satellite Launch Vehicle launched 104 satellites, setting a record for the number of satellites launched from a single rocket. In June, NASA finally unveiled its 12 chosen candidates for its astronaut program out of a pool of over 18,000 applicants, which was a record-breaking number. A few months later, NASA’s Cassini spacecraft was intentionally plunged into Saturn, ending over a decade’s worth of service. President Donald Trump also signed Space Policy Directive 1, which instructs NASA to send astronauts back to the moon, which President Trump noted would help establish a foundation for an eventual mission to Mars. In what was widely expected to be a record year for private space launches, SpaceX and other private space companies clearly delivered. In 2017, SpaceX, the company founded and run by Elon Musk, flew a record 18 missions utilizing the Falcon 9 rocket. Blue Origin, the company founded by Jeff Bezos, also made significant progress. It was able to launch a new version of its New Shepard vehicle on its first flight, which Bezos hopes will lay the foundation for potential crewed missions. Then, in late December, California startup Made in Space sent a machine designed to make exotic ZBLAN optical fiber to the International Space Station. Without a doubt, 2017 played witness to many significant milestones in space exploration. Additional milestones have already been surpassed in early 2018. February 6, 2018 was a historic date for Space technology and exploration—SpaceX’s Falcon Heavy had its maiden launch. The Falcon Heavy can carry payloads larger than any available commercial rocket, and it has the potential to launch payloads outside of Earth’s orbit. In fact, the Falcon Heavy did just that by launching a Tesla Roadster, driven by “Starman” into interplanetary space. Starman will likely continue driving its orbit for millions of years. It is only a matter of time until Starman is replaced with astronauts and the destination becomes Mars—SpaceX plans to launch such a mission in 2024. B. Update on Outer Space Treaty and Surrounding Debate The Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, otherwise known as the Outer Space Treaty, recently celebrated its 50th anniversary. Signed in 1967 and designed to prevent a new form of colonial competition, the Treaty was lauded for its principal framework on international space law. Indeed, shortly after the Treaty was entered into force, the United States and the Soviet Union successfully collaborated on many space missions and exercises. The Treaty is not complex. Consisting of 17 short articles, the Treaty obligates its signatories to perform space exploration “for the benefit and interest of all countries” and to not “place in orbit around the Earth any objects carrying nuclear weapons or any other kinds of weapons of mass destruction.” Having been in force for over 50 years, there have recently been discussions regarding whether the Treaty is ripe for an update. Only as far back as half a decade ago, experts met in Australia to discuss moon-mining of anything from water and fuel to rare minerals in what was then a world’s first “Off-Earth Mining Forum.” Discussion surrounded the legality of such mining under the Treaty. Then in 2014, NASA accepted applications from companies that desired to mine rare moon minerals in a program called “Lunar Cargo Transportation and Landing by Soft Touchdown.” This once again sparked a debate on the legality of such actions, specifically lunar property rights. In 2017, the focus turned toward private and commercial space flight, and spurred conversation as to whether the 50-year-old treaty needed an update. For one, the Treaty was designed, and has been entirely focused, on only individual countries. Thus, there is an argument that the Treaty does not apply to private appropriation of celestial territory. Second, the quaint nature of the Treaty has spawned efforts at tackling the private appropriation issues. For instance, the United States passed the Space Act of 2015, which provides for private commercial “exploration and exploitation of space resources.” The Act has incited further debate on the various legal loopholes that inherently afflict the Treaty and its ban on countries owning celestial territory. Meanwhile, the U.S. government has continued to find methods of regulation, specifically those involving the FAA and the Federal Communications Commission (“FCC”), among others. Now, lawmakers are purportedly discussing legislation that would provide a regulatory framework for private commercial space travel to adhere to the Treaty, as there currently does not exist a framework for the U.S. government to oversee the launch of private space stations. Moreover, Senator Ted Cruz (R-TX) has been leading the charge on updating the Treaty to address issues related to modern spaceflight, where private commercial entities are playing an ever-increasing role. In May, Senator Cruz, the chairman of the Subcommittee on Space, Science, and Competitiveness, convened a hearing to “examine U.S. government obligations under the [Treaty]” and to also “explore the Treaty’s potential impacts on expansion of our nation’s commerce and settlement in space.” Featuring a panel of legal experts and a panel of commercial space business leaders, the hearing raised a number of different viewpoints with one apparently unifying message: the Treaty should not be amended. One of the panel members, Peter Marquez, while acknowledging that the Treaty is not perfect, expressed concern that opening up the Treaty to modifications would leave the space industry worse off, and would be a detriment to national and international security. One area of particular interest was Article VI of the Treaty, which provides that nations authorize and supervise space activities performed by non-governmental entities, such as a private commercial space company. The CEO of Moon Express, Bob Richards, noted that while the Treaty should remain unchanged, the U.S. should adopt a streamlined regulatory procedure and process to make approvals for space activities more efficient and clear. One of the legal experts sitting on the panel, Laura Montgomery, expressed her belief that the U.S. need not further regulate new commercial space because a close reading of the Treaty would indicate that mining and other similar activities do not require such governmental approvals. While the ultimate general consensus appeared to be that no change to the Treaty was necessary to accomplish the goals of private commercial space enterprises, the hearing did bring to light the issues that currently confront modern space protocols. C. The American Space Commerce Free Enterprise Act of 2017, Which Seeks to Overhaul U.S. Commercial Space Licensing Regime, Passes Committee but Stalls in House On June 7, 2017, House members led by Rep. Lamar Smith (R-TX), Chairman of the U.S. House Science, Space, and Technology Committee, introduced H.R. 2809—the American Space, Commerce, and Free Enterprise Act of 2017 (“ASCFEA”). The bill, if adopted, would amend Title 51 of the United States Code to liberalize licensing requirements to conduct a variety of commercial space activities, while consolidating the licensing approval process for such activities under the authority of the U.S. Department of Commerce (“DOC”). The regulation of commercial space activities historically has been distributed among a variety of agencies—with the National Oceanic and Atmospheric Administration (“NOAA”) governing remote sensing, the FCC governing communications satellites, and the FAA/AST regulating launch, reentry, and some other non-traditional activities. But with that patchwork of authority, proponents of the Act believe there exists a regulatory gap for overseeing and authorizing new and innovative space activities. A primary goal of the Act is to address this perceived uncertainty, and in so doing, resolve long-standing questions associated with the United States’ responsibility to regulate commercial space activities under the Outer Space Treaty, which the bill’s text references extensively. In its current form, the bill would grant the Office of Space Commerce (within the DOC) “the authority to issue certifications to U.S. nationals and nongovernmental entities for the operation of: (1) specified human-made objects manufactured or assembled in outer space . . . and (2) all items carried on such objects that are intended for use in outer space.” The bill further eliminates the Commercial Remote Sensing Regulatory Affairs Office of the NOAA, and vests authority to issue permits for remote sensing systems, again, in the DOC. The bill also creates a certification process for other “commercial payloads not otherwise licensed by the government,” thereby providing fallback legislation for “non-traditional applications like satellite servicing, commercial space stations and lunar landers.” The DOC hence would occupy all the regulatory authority for commercial space activities, except for the FCC and FAA/AST’s current authority, which those agencies would maintain. The commercial space industry supports the bill, and in particular the bill’s apparent presumption in favor of regulatory approval. Industry also supports the bill’s overhaul of the regulation of remote sensing—for example, the bill requires the DOC to issue a certification decision within just 60 days (or else the application is granted), provide an explanation for any rejections, and grant every application that seeks authorization for activities involving “the same or substantially similar capabilities, derived data, products, or services are already commercially available or reasonably expected to be made available in the next 3 years in the international or domestic marketplace.” Some opponents of the bill contend that the consolidation of regulatory approval will limit interagency review, which is important because the DoD, State Department, and the intelligence community currently play some regulatory role in the review of aspects of new commercial space activities that are perceived to potentially pose a threat to national security. Others contend that the Office of Space Commerce has inadequate resources and experience to handle the regulatory approvals. The bill seeks to ameliorate these concerns by authorizing $5 million in funding for the Office in 2018. The Department of Justice also has voiced some constitutional concerns. The House referred the bill to the House Committee on Science, Space, and Technology, which on June 8, 2017 passed three amendments by voice vote. Since being marked up in committee, the bill has seen no further action by the House. The DOC currently is seeking public input on possible changes to commercial space operations licensing more broadly. D. Industry and Government Regulators Call for Changes to NOAA’s Licensing of Remote Sensing Technology ASCFEA’s effort to strip NOAA of its authority to regulate remote sensing technology coincides with a growing number of complaints from the remote sensing industry and government regulators concerning NOAA’s ability to handle an increased number of licensing applications. The Land Remote Sensing Policy Act of 1992 authorized the Secretary of Commerce to “license private sector parties to operate private remote sensing space systems.” But despite a sea change in remote sensing technology and activities since 1992, that law remains the main source of authority for remote sensing licensing, and Congress has made few modifications to the law since its inception. Given the speed of technological change, and increased industry competition, remote sensing companies are advocating for NOAA to adopt a “permissive” approach to licensing, akin to the language proposed in the ASCFEA. NOAA’s issues have been exacerbated by the fact that license applications are now more varied and complex than they were previously. Representatives from NOAA describe how prior to 2011, it took an average of 51 days to review license applications, since many applications sought permission for similar concepts for satellite systems. Even though the Land Remote Sensing Policy Act of 1992 calls for a 120-day approval window, in practice, applications now extend far longer than that—and further, NOAA sometimes provides little to no explanation about why it rejects particular applications. Under the ASCFEA, the DOC would be required to approve applications using the “same or substantially similar capabilities, derived data, products, or services as are already commercially available or reasonably expected to be made available in the next 3 years in the international or domestic marketplace.” Another complexity is that many companies develop technology that do not solely or traditionally perform remote sensing functions, but have remote sensing capabilities. The ASCFEA addresses this problem by offering exceptions for “De Minimis” uses of remote sensing technology. E. Commercial Space Policy in the Trump Era On December 11, 2017, President Trump signed White House Space Policy Directive 1, entitled “Reinvigorating America’s Human Space Exploration Program.” As the subject suggests, the Directive’s goal is to bring a renewed focus on human space flight at a time when the United States lacks an organic capability to send American astronauts into low-Earth orbit, let alone beyond. Fittingly, President Trump signed the directive on the forty-fifth anniversary of the lunar landing of Apollo 17, with Apollo 17 astronaut Senator Harrison Schmitt present at the ceremony. According to the Directive, the United States will “[l]ead an innovative and sustainable program of exploration with commercial and international partners to enable human expansion across the solar system….” The directive calls for missions beyond low-Earth orbit, with the United States “lead[ing] the return of humans to the Moon for long-term exploration and utilization, followed by human missions to Mars and other destinations.” NASA is already working with several commercial entities to develop transportation to and from low-Earth orbit, as well as to the International Space Station. And a call for a return to the moon for use as a stepping-stone to other destinations is not new with President Trump; previous administrations have expressed a similar desire. What remains to be seen is how this “long-term exploration” will be funded, with a good indicator being what “will be reflected in NASA’s FISCAL Year 2019 budget request.” Until then, “No bucks, no Buck Rogers.” F. Updates on Space Law in Luxembourg, India, and Australia Luxembourg Continues its Push for Commercial Space Prominence The small country of Luxembourg, a signatory to the Outer Space Treaty, has major commercial space ambitions. In 2016, Luxembourg passed a law to set aside €200 million to fund commercial space mining activities, and also offered to help interested companies obtain private financing. On July 13, 2017, following the United States’ lead, Luxembourg passed a law that gives qualifying companies the right to own any space resources they extract from celestial bodies including asteroids. The law further outlines a regulatory framework for “the government to authorize and supervise resource extraction and other space activities,” except for communications satellites, which a different Luxembourg agency regulates. To qualify for a space mining license, companies must be centrally administered and own a registered office in Luxembourg, and also must obtain regulatory approval. It is as of now unclear whether the Luxembourg law (as well as the U.S.’s analogous law) violate the Outer Space Treaty, which prohibits companies from claiming territory on celestial bodies, but does not clarify whether that prohibition extends to materials extracted from those celestial bodies. India Unveils Draft of New Commercial Space Law; Sets Satellite Launch Record In November 2017, the India Department of Space released and sought comments for the “Space Activities Act, 2017.” The stated goal of the bill is to “encourage enhanced participation of non-governmental/private sector agencies in space activities in India.” The bill as currently drafted vests authority in the Indian Government to formulate a licensing scheme for any and all “Commercial Space Activity,” and states that licenses may be granted if the sought activity does not jeopardize public health or safety, and does not violate India’s international treaty obligations, such as the Outer Space Treaty, to which India is a signatory. India’s space agency also made headlines this year when it sent 104 satellites into space in 18 minutes—purportedly tripling the prior record for single-day satellite launches. The New York Times reports that satellite and other orbital companies closely scrutinized the launch, since India’s space agency is cheaper to employ for satellite launches than its European and North American counterparts. Australia Announced that It Will Create a Space Agency; Details Pending In September 2017, Australia’s Acting Minister for Industry, Innovation and Science announced that Australia will create a national space agency. While details are still pending, Australia’s goal purportedly is to take advantage of the $300-$400 billion space economy, while creating Australian jobs in the process. IV. CYBERSECURITY AND PRIVACY ISSUES IN THE NATIONAL AIRSPACE A. Cybersecurity Issues The Federal Aviation Administration (FAA) has lagged behind other sectors in establishing robust cybersecurity and privacy safeguards in the national airspace, although federal policy identifies the transportation sector (which includes the aviation industry) as one of the 16 “critical infrastructure” sectors that have the ability to impact significantly the nation’s security, economy, and public health and safety. The need for the FAA to establish robust safeguards is obvious, as the catastrophic impact of a cyber attack on the national airspace is not hard to imagine post-9/11. Recently, one hacker claimed he compromised the cabin-based in-flight entertainment system to control a commercial airline engine in flight. One development of note is the reintroduction of the Cybersecurity Standards for Aircraft to Improve Resilience Act of 2017 by U.S. Senators Edward Markey and Richard Blumenthal. Senator Markey first introduced legislation aimed at improving aircraft cyber security protection in April 2016, following a 2015 survey of U.S. airline CEOs to discover standard cybersecurity protocols used by the aviation industry. If signed into law, the bill would require the U.S. Department of Transportation to work with DoD, Homeland Security, the Director of National Intelligence, and the FCC to incorporate requirements relating to cybersecurity into the requirements for certification. Additionally, the bill would establish standard protections for all “entry points” to the electronic systems of aircraft operating in the U.S. This would include the use of isolation measures to separate critical software systems from noncritical software systems. B. UAS Privacy Concerns UAS are equipped with highly sophisticated surveillance technology with the ability to collect personal information, including physical location. Senator Ayotte, Chair of the Subcommittee on Aviation Operations, Safety, and Security, summarized the privacy concerns drones pose as follows: “Unlimited surveillance by government or private actors is not something that our society is ready or willing or should accept. Because [drones] can significantly lower the threshold for observation, the risk of abuse and the risk of abusive surveillance increases.” We describe below several recent federal and state efforts to address this issue. 1. State Legislation Addressing Privacy Concerns At least five out of the twenty-one states that either passed legislation or adopted resolutions related to UAS in 2017 specifically addressed privacy concerns. Colorado HB 1070 requires the center of excellence within the department of public safety to perform a study that identifies ways to integrate UAS within local and state government functions relating to firefighting, search and rescue, accident reconstruction, crime scene documentation, emergency management, and emergencies involving significant property loss, injury or death. The study must consider privacy concerns, in addition to costs and timeliness of deployment, for each of these uses. New Jersey SB 3370 allows UAS operation that is consistent with federal law, but also creates criminal offenses for certain UAS surveillance and privacy violations. For example, using a UAS to conduct surveillance of a correction facility is a third degree crime. Additionally, the law also applies the operation of UAS to limitations within restraining orders and specifies that convictions under the law are separate from other convictions such as harassment, stalking, and invasion of privacy. South Dakota SB 22 also prohibits operation of drones over the grounds of correctional and military facilities, making such operation a class 1 misdemeanor. Further, the law modifies the crime of unlawful surveillance to include intentional use of a drone to observe, photograph or record someone in a private place with a reasonable expectation of privacy, and landing a drone on the property of an individual without that person’s consent. Such purportedly unlawful surveillance is a class 1 misdemeanor unless the individual is operating the drone for commercial or agricultural purposes, or the individual is acting within his or her capacity as an emergency management worker. Utah HB 217 modifies criminal trespass to include drones entering and remaining unlawfully over property with specified intent. Depending on the intent, a violation is either a class B misdemeanor, a class A misdemeanor, or an infraction, unless the person is operating a UAS for legitimate commercial or educational purposes consistent with FAA regulations. Utah HB 217 also modifies the offense of voyeurism, a class B misdemeanor, to include the use of any type of technology, including UAS, to secretly record video of a person in certain instances. Virginia HB 2350 makes it a Class 1 misdemeanor to use UAS to trespass upon the property of another for the purpose of secretly or furtively peeping, spying, or attempting to peep or spy into a dwelling or occupied building located on such property. 2. UAS Identification and Tracking Report The FAA chartered an Aviation Rulemaking Committee (“ARC”) in June 2017 to provide recommendations on the technologies available for remote identification and tracking of UAS, and how remote identification may be implemented. However, the ARC’s 213 page final report, dated September 30, 2017, notes that the ARC lacked sufficient time to fully address privacy and data protection concerns, and that therefore those topics were not addressed: [T]he ARC also lacks sufficient time to perform an exhaustive analysis of all the privacy implications of remote ID, tracking, or UTM, and did not specifically engage with privacy experts, from industry or otherwise, during this ARC. These members agree, however, that it is fundamentally important that privacy be fully considered and that appropriate privacy protections are in place before data collection and sharing by any party (either through remote ID and/or UTM) is required for operations. A non-exhaustive list of important privacy considerations include, amongst other issues, any data collection, retention, sharing, use and access. Privacy must be considered with regard to both PII and historical tracking information. The privacy of all individuals (including operators and customers) should be addressed, and privacy should be a consideration during the rulemaking for remote ID and tracking. Accordingly, the ARC recognizes the fundamental importance of fully addressing privacy and data protection concerns, and we anticipate that future rulemaking will address these issues. IV. CONCLUSION We will continue to keep you informed on these and other related issues as they develop.  See Huerta, No. 3:16-cv-358, Dkt. No. 30.  Id.  Id.  See Boggs, No. 3:16-cv-00006, Dkt. No. 1 (W.D. Ky. Jan. 4, 2016).  See id.  See Boggs, No. 3:16-cv-00006, Dkt. No. 20 (W.D. Ky. Jan. 4, 2016).  See id.  See Singer, No. 1:17-cv-10071, Dkt. N. 63 (D. Mass. Jan. 17, 2017).  See id.  See id.  See id.  See id.  See Taylor v. Huerta, 856 F.3d 1089 (D.C. Cir. 2017).  See Pub. L. No. 112–95, § 336(a), 126 Stat. 11, 77 (2012) (codified at 49 U.S.C. § 40101 note).  See Taylor, 856 F.3d at 1090.  See Pub. L. No. 115–91, § 3 1092(d), (2017).  The White House, Office of the Press Secretary, Presidential Memorandum: Promoting Economic Competitiveness While Safeguarding Privacy, Civil Rights, and Civil Liberties in Domestic Use of Unmanned Aircraft Systems, Feb. 15, 2015, available at https://obamawhitehouse.archives.gov/the-press-office/2015/02/15/presidential-memorandum-promoting-economic-competitiveness-while-safegua.  Operation and Certification of Small Unmanned Aircraft Systems, 81 Fed. Reg. 42064 (June 28, 2016).  Electronic Privacy Information Center (“EPIC”), EPIC v. FAA: Challenging the FAA’s Failure to Establish Drone Privacy Rules, https://epic.org/privacy/litigation/apa/faa/drones/ (last visited Jan. 18, 2018).  See generally Electronic Privacy Information Center v. FAA (EPIC I), 821 F.3d 39, 41-42 (D.C. Cir. 2016) (noting that FAA denied EPIC’s petition for rulemaking requesting that the FAA consider privacy concerns).  Voluntary Best Practices for UAS Privacy, Transparency, and Accountability, NTIA-Convened Multistakeholder Process (May 18, 2016), https://www.ntia.doc.gov/files/ntia/publications/ uas_privacy_best_practices_6-21-16.pdf.  EPIC, supra, note xix.  EPIC I, supra, note xx, at 41.  Id. 41-42.  Id.  Id.  Id. at 42-43.  Id. at 42.  Id. at 43.  Pet. For Review, Electronic Privacy Information Center v. FAA (EPIC II), Nos. 16-1297, 16-1302 (Filed Aug. 22, 2016), https://epic.org/privacy/litigation/apa/faa/drones/EPIC-Petition-08222016.pdf.  Appellant Opening Br., EPIC II, Nos. 16-1297, 16-1302 (Filed Feb. 28, 2017), https://epic.org/privacy/litigation/apa/faa/drones/1663292-EPIC-Brief.pdf.  Appellee Reply Br., EPIC II, Nos. 16-1297, 16-1302 (Filed April 27, 2017), https://epic.org/privacy/litigation/apa/faa/drones/1673002-FAA-Reply-Brief.pdf.  United States Court of Appeals District of Columbia Circuit, Oral Argument Calendar, https://www.cadc.uscourts.gov/internet/sixtyday.nsf/fullcalendar?OpenView&count=1000 (last visited Jan. 18, 2018).  United States Department of Defense, Unmanned Systems Integrated Roadmap (2013), https://www.defense.gov/Portals/1/Documents/pubs/DOD-USRM-2013.pdf.  Andrew Meola, Drone Marker Shows Positive Outlook with Strong Industry Growth and Trends, Business Insider, July 13, 2017, available at http://www.businessinsider.com/drone-industry-analysis-market-trends-growth-forecasts-2017-7.  Office of the Under Secretary of Defense, U.S. Department of Defense Fiscal Year 2017 Budget Request (Feb. 2016).  Office of the Under Secretary of Defense, U.S. Department of Defense Fiscal Year 2018 Budget Request (May 2017).  Goldman Sachs, Drones: Reporting for Work, http://www.goldmansachs.com/our-thinking/technology-driving-innovation/drones/ (last visited Jan. 18, 2017).  Id.  Chris Woods, The Story of America’s Very First Drone Strike, The Atlantic, May 30, 2016, available at https://www.theatlantic.com/international/archive/2015/05/america-first-drone-strike-afghanistan/394463/.  Deputy Secretary of Defense, Policy Memorandum 15-002, “Guidance for the Domestic Use of Unmanned Aircraft Systems” (Feb. 17, 2015), https://www.defense.gov/Portals/1/Documents/Policy%20Memorandum%2015-002%20_Guidance%20for%20the%20Domestic%20Use%20of%20Unmanned%20Aircraft%20Systems_.pdf.  Id.  Id.  Id.  Id.  Id.  Eric Schmitt, Pentagon Tests Lasers and Nets to Combat Vexing Foe: ISIS Drones, N.Y. Times, Sept. 23, 2017, available at https://www.nytimes.com/2017/09/23/world/middleeast/isis-drones-pentagon-experiments.html.  Id.  Christopher Woody, The Pentagon is Getting Better at Stopping Enemy Drones—and Testing Its Own for Delivering Gear to the Battlefield, Business Insider, Apr. 24, 2017, available at https://www.businessinsider.com/military-adding-drones-and-drone-defense-to-its-arensal-2017-4.  Id.  Radio Hill Technology, Birth of the Dronebuster, http://www.radiohill.com/product/ (last visited Jan. 18, 2018).  Id.  Kyle Mizokami, The Army’s Drone-Killing Lasers are Getting a Tenfold Power Boost, Popular Mechanics, July 18, 2017, available at http://www.popularmechanics.com/military/research/news/a27381/us-army-drone-killing-laser-power/.  Sydney J. Freedberg Jr., Drone Killing Laser Stars in Army Field Test, Breaking Defense, May 11, 2017, available at https://breakingdefense.com/2017/05/drone-killing-laser-stars-in-army-field-test/.  Mizokami, supra, note lv.  ASSURE, UAS Ground Collision Severity Evaluation Final Report, United States (2017), available at http://www.assureuas.org/projects/deliverables/sUASGroundCollisionReport.php?Code=230 (ASSURE Study).  Id.  Id.  Id.  DJI, DJI Welcomes FAA-Commissioned Report Analyzing Drone Safety Near People, Newsroom News, Apr. 28, 2017, available at https://www.dji.com/newsroom/news/dji-welcomes-faa-commissioned-report-analyzing-drone-safety-near-people.  Id.  Id.  ASSURE Study, supra note lviii.  Id.  Id.  Id.  Id.  ASSURE, FAA and Assure Announce Results of Air-to-Air Collision Study, ASSURE: Alliance for System Safety of UAS through Research Excellence, Nov. 27, 2017, available at https://pr.cirlot.com/faa-and-assure-announce-results-of-air-to-air-collision-study/.  Id.  ASSURE Study, supra note lviii.  Id.  Id.  Id.  See Pathiyil, et al., Issues of Safety and Risk management for Unmanned Aircraft Operations in Urban Airspace, 2017 Workshop on Research, Education and Development of Unmanned Aerial Systems (RED-UAS), Oct. 3, 2017, available at http://ieeexplore.ieee.org/stamp/stamp.jsp?arnumber=8101671.  Id.  Id.  Id.  Id.  Patrick C. Miller, 2,800 Interested Parties Apply for UAS Integration Pilot Program, UAS Magazine, Jan. 3, 2018, available at http://www.uasmagazine.com/articles/1801/2-800-interested-parties-apply-for-uas-integration-pilot-program.  Unmanned Aircraft Systems Integration Pilot Program, 82 Fed. Reg. 50,301 (Oct. 25, 2017) (Presidential directive creating the program); see also Unmanned Aircraft Systems Integration Pilot Program—Announcement of Establishment of Program and Request for Applications, 82 Fed. Reg. 215 (Nov. 8, 2017) (Department of Transportation Notice of the UAS Pilot Program).  See id.  See id.  Elaine Goodman, Blood Deliveries by Drone Proposed—City Submits Unique Ideas to FAA, Daily Post, Jan. 5, 2018, available at http://padailypost.com/2018/01/05/blood-deliveries-by-drone-proposed-city-submits-unique-ideas-to-faa/.  Id.  Id.  Id.  Id.  Miller, supra note lxxxi.  Id.  Id.  Id.  Id.  NASA Spaceflight, India’s PSLV deploys a record 104 satellites (Feb. 14, 2017), available at https://www.nasaspaceflight.com/2017/02/indias-pslv-record-104-satellites/.  NASA, NASA’s Newest Astronaut Recruits to Conduct Research off the Earth, For the Earth and Deep Space Missions (June 7, 2017), available at https://www.nasa.gov/press-release/nasa-s-newest-astronaut-recruits-to-conduct-research-off-the-earth-for-the-earth-and.  NASA, Cassini Spacecraft Ends Its Historic Exploration of Saturn (Sept. 15, 2017), available at https://www.nasa.gov/press-release/nasa-s-cassini-spacecraft-ends-its-historic-exploration-of-saturn.  NASA, New Space Policy Directive Calls for Human Expansion Across Solar System (Dec. 11, 2017), available at https://www.nasa.gov/press-release/new-space-policy-directive-calls-for-human-expansion-across-solar-system.  TechCrunch, SpaceX caps a record year with 18th successful launch of 2017 (Dec. 22, 2017), available at https://techcrunch.com/2017/12/22/spacex-caps-a-record-year-with-18th-successful-launch-of-2017/.  The Verge, After a year away from test flights, Blue Origin launches and lands its rocket again (Dec. 12, 2017), available at https://www.theverge.com/2017/12/12/16759934/blue-origin-new-shepard-test-flight-launch-landing.  Space.com, SpaceX Launches (and Lands) Used Rocket on Historic NASA Cargo Mission (Dec. 15, 2017), available at https://www.space.com/39063-spacex-launches-used-rocket-dragon-spacecraft-for-nasa.html.  U.S. Department of State, Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, available at https://www.state.gov/t/isn/5181.htm#treaty.  NTI, Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies (Outer Space Treaty) (Feb. 1, 2017), available at http://www.nti.org/learn/treaties-and-regimes/treaty-principles-governing-activities-states-exploration-and-use-outer-space-including-moon-and-other-celestial-bodies-outer-space-treaty/.  PHYS.ORG, Space likely for rare earth search, scientists say (Feb. 20, 2013), available at https://phys.org/news/2013-02-space-rare-earths-scientists.html.  NASA, Lunar CATALYST (Jan. 16, 2014), available at https://www.nasa.gov/content/lunar-catalyst/#.WmLx1qinGHs.  The Conversation, The Outer Space Treaty has been remarkably successful – but is it fit for the modern age? (Jan. 27, 2017), available at http://theconversation.com/the-outer-space-treaty-has-been-remarkably-successful-but-is-it-fit-for-the-modern-age-71381.  The Verge, How an international treaty signed 50 years ago became the backbone for space law (Jan. 27, 2017), available at https://www.theverge.com/2017/1/27/14398492/outer-space-treaty-50-anniversary-exploration-guidelines.  Id.  The Space Review, Is it time to update the Outer Space Treaty? (June 5, 2017), available at http://www.thespacereview.com/article/3256/1.  U.S. Senate, Reopening the American Frontier: Exploring How the Outer Space Treaty Will Impact American Commerce and Settlement in Space (May 23, 2017), available at https://www.commerce.senate.gov/public/index.cfm/hearings?ID=5A91CD95-CDA5-46F2-8E18-2D2DFCAE4355.  The Space Review, supra note cxvi.  Id.  Id.  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809. The other primary sponsors of the bill are Brian Babin (R-TX), chairman of the space subcommittee; and Rep. Jim Bridenstine (R-OK).  Sandy Mazza, Space exploration regulations need overhaul, new report says, Daily Breeze (Dec. 2, 2017), https://www.dailybreeze.com/2017/12/02/space-exploration-regulations-need-overhaul-new-report-says/. The Act’s stated purpose is to “provide greater transparency, greater efficiency, and less administrative burden for nongovernmental entities of the United States seeking to conduct space activities.” H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809 (Section 2(c)).  Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/.  Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/.  Under the Obama administration, many in government and industry presumed that the regulation of new space activities would fall to FAA/AST. See Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/ (In fact, the agency heads of the FAA/AST, and the Office of Science and Technology Policy, recommended the same).  Marcia Smith, Companies Agree FAA Best Agency to Regulate Non-Traditional Space Activities, Space Policy Online (Nov. 15, 2017), https://spacepolicyonline.com/news/companies-agree-faa-best-agency-to-regulate-non-traditional-space-activities/.  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809.  Id.  Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/.  Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/.  Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/; Marcia Smith, Companies Agree FAA Best Agency to Regulate Non-Traditional Space Activities, Space Policy Online (Nov. 15, 2017), https://spacepolicyonline.com/news/companies-agree-faa-best-agency-to-regulate-non-traditional-space-activities/. The bill, for example, requires e the Secretary of Commerce to issue certifications or permits for commercial space activities, unless, for example, the Secretary finds by “clear and convincing evidence” that the permit would violate the Outer Space Treaty. Bob Zimmerman, What You Need To Know About The Space Law Congress Is Considering, The Federalist (July 11, 2017), http://thefederalist.com/2017/07/11/need-know-space-law-congress-considering/. Indeed, the policy section of the bill finds that “United States citizens and entities are free to explore and use space, including the utilization of outer space and resources contained therein, without conditions or limitations” and “this freedom is only to be limited when necessary to assure United States national security interests are met” or fulfill treaty obligations. H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809.  Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/.  Joshua Hampson, The American Space Commerce Free Enterprise Act, Niskanen Center (June 15, 2017), https://niskanencenter.org/blog/american-space-commerce-free-enterprise-act/.  Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/.  Jeff Foust, House bill seeks to streamline oversight of commercial space activities, Space News (June 8, 2017), http://spacenews.com/house-bill-seeks-to-streamline-oversight-of-commercial-space-activities/; Congressional Budget Office Cost Estimate, Congressional Budget Office (July 7, 2017), https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr2809.pdf.  Samuel R. Ramer, Letter from the Office of the Assistant Attorney General, Justice Department (July 17, 2017), https://www.justice.gov/ola/page/file/995646/download.  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809/all-actions.  Marcia Smith, New Commercial Space Bill Clears House Committee, Space Policy Online (June 8, 2017), https://spacepolicyonline.com/news/new-commercial-space-bill-clears-house-committee/.  Jeffrey Hill, Congressman Babin Hints that Cybersecurity Could be Included in Larger Commercial Space Legislative Package, Satellite Today (Nov. 7, 2017), http://www.satellitetoday.com/government/2017/11/07/cybersecurity-featured-space-commerce-act/.  Commerce Department Now Accepting Public Inputs on Regulatory Streamlining, Space Commerce (Oct. 27, 2017), http://www.space.commerce.gov/commerce-department-now-accepting-public-inputs-on-regulatory-streamlining/; Sandy Mazza, Space exploration regulations need overhaul, new report says, Daily Breeze (Dec. 2, 2017), https://www.dailybreeze.com/2017/12/02/space-exploration-regulations-need-overhaul-new-report-says/.  Sean Kelly, The new national security strategy prioritizes space, The Hill (Jan. 3, 2018), http://thehill.com/opinion/national-security/367240-the-new-national-security-strategy-prioritizes-space; Jeff Foust, House panel criticizes commercial remote sensing licensing, Space News (Sept. 8, 2016), http://spacenews.com/house-panel-criticizes-commercial-remote-sensing-licensing/. Critics argue that the NOAA’s approval pace is harming U.S. companies to the benefit of foreign competitors. Randy Showstack, Remote Sensing Regulations Come Under Congressional Scrutiny, EOS (Sept. 14, 2016), https://eos.org/articles/remote-sensing-regulations-come-under-congressional-scrutiny.  H.R. Rep No. 6133 (1992), available at https://www.congress.gov/bill/102nd-congress/house-bill/6133.  Randy Showstack, Remote Sensing Regulations Come Under Congressional Scrutiny, EOS (Sept. 14, 2016), https://eos.org/articles/remote-sensing-regulations-come-under-congressional-scrutiny. Indeed, the Commercial Space Launch Competitiveness Act, signed into law in November 2016, requires the Department of Commerce to analyze possible statutory updates to the remote sensing licensing scheme. Jeff Foust, House panel criticizes commercial remote sensing licensing, Space News (Sept. 8, 2016), http://spacenews.com/house-panel-criticizes-commercial-remote-sensing-licensing/. The text of the ASCFEA also recognizes that since “the passage of the Land Remote Sensing Policy Act of 1992, the National Oceanic and Atmospheric Administration’s Office of Commercial Remote Sensing has experienced a significant increase in applications for private remote sensing space system licenses . . .” H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809.  Joshua Hampson, The American Space Commerce Free Enterprise Act, Niskanen Center (June 15, 2017), https://niskanencenter.org/blog/american-space-commerce-free-enterprise-act/. The ASCFEA defines a Space-Based Remote Sensing System as “a space object in Earth orbit that is “(A) designed to image the Earth; or (B) capable of imaging a space object in Earth orbit operated by the Federal Government.” H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809.  Jeff Foust, Commercial remote sensing companies seek streamlined regulations, Space News (Mar. 17, 2017), http://spacenews.com/commercial-remote-sensing-companies-seek-streamlined-regulations/.  Id.  Jeff Foust, House panel criticizes commercial remote sensing licensing, Space News (Sept. 8, 2016), http://spacenews.com/house-panel-criticizes-commercial-remote-sensing-licensing/.  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809 (Chapter 8012 § 80202(e)(1)).  Jeff Foust, Commercial remote sensing companies seek streamlined regulations, Space News (Mar. 17, 2017), http://spacenews.com/commercial-remote-sensing-companies-seek-streamlined-regulations/.  H.R. Rep No. 2809 (2017), available at https://www.congress.gov/bill/115th-congress/house-bill/2809 (Chapter 802 § 80201(d)).  Reinvigorating America’s Human Space Exploration Program, 82 Fed. Reg. 59501 (Dec. 11, 2017)  Nell Greenfieldboyce, President Trump Is Sending NASA Back to the Moon (Dec. 11, 2017) available at https://www.npr.org/sections/thetwo-way/2017/12/11/569936446/president-trump-is-sending-nasa-back-to-the-moon.  See Press Release, NASA, New Space Policy Directive Calls for Human Expansion Across Solar System (Dec. 11, 2017); see also NASA, https://www.nasa.gov/mission_pages/apollo/missions/apollo17.html (last visited Jan. 21, 2018).  Reinvigorating America’s Human Space Exploration Program, supra note clii.  Id.  NASA, Commercial Crew Program – The Essentials, available at https://www.nasa.gov/content/commercial-crew-program-the-essentials/#.VjOJ3berRaT.  Michael Sheetz, Trump Orders NASA to Send American Astronauts to the Moon, Mars, CNBC (Dec. 11, 2017) available at https://www.cnbc.com/2017/12/11/trump-orders-nasa-to-send-american-astronauts-to-the-moon-mars.html.  See New Space Policy Directive Calls for Human Expansion Across Solar System, supra note cv; see also Christian Davenport, Trump Vows Americans Will Return to the Moon. The Question Is How?, (Dec. 11, 2017) available at https://www.washingtonpost.com/news/the-switch/wp/2017/12/11/trump-vows-americans-will-return-to-the-moon-the-question-is-how/?utm_term=.4ceb20131cdf.  The Right Stuff (The Ladd Company 1983).  Laurent Thailly and Fiona Schneider, Luxembourg set to become Europe’s commercial space exploration hub with new Space law, Ogier (Jan. 8, 2017), https://www.ogier.com/news/the-luxembourg-space-law.  Reuters Staff, Luxembourg sets aside 200 million euros to fund space mining ventures, Reuters (June 3, 2016), https://www.reuters.com/article/us-luxembourg-space-mining/luxembourg-sets-aside-200-million-euros-to-fund-space-mining-ventures-idUSKCN0YP22H; Laurent Thailly and Fiona Schneider, Luxembourg set to become Europe’s commercial space exploration hub with new Space law, Ogier (Jan. 8, 2017), https://www.ogier.com/news/the-luxembourg-space-law. Luxembourg invested €23 million in U.S. company Planetary Resources, and now owns a 10% share in the company. Kenneth Chang, If no one owns the moon, can anyone make money up there?, The Independent (Dec. 4, 2017), http://www.independent.co.uk/news/long_reads/if-no-one-owns-the-moon-can-anyone-make-money-up-there-space-astronomy-a8087126.html.  In 2015, the U.S. passed the Commercial Space Launch Competitiveness Act, which clarified that companies that extract materials from celestial bodies can own those materials. Andrew Silver, Luxembourg passes first EU space mining law. One can possess the Spice, The Register (July 14, 2017), https://www.theregister.co.uk/2017/07/14/luxembourg_passes_space_mining_law/.  Jeff Foust, Luxembourg adopts space resources law, Space News (July 17, 2017), http://spacenews.com/luxembourg-adopts-space-resources-law/.  Jeff Foust, Luxembourg adopts space resources law, Space News (July 17, 2017), http://spacenews.com/luxembourg-adopts-space-resources-law; Paul Zenners, Press Release, Space Resources (July 13, 2017), http://www.spaceresources.public.lu/content/dam/spaceresources/press-release/2017/2017_07_13%20PressRelease_Law_Space_Resources_EN.pdf.  Laurent Thailly and Fiona Schneider, Luxembourg set to become Europe’s commercial space exploration hub with new Space law, Ogier (Jan. 8, 2017), https://www.ogier.com/news/the-luxembourg-space-law. Reportedly, two American companies already plan to move to Luxembourg: Deep Space Industries and Planetary Resources. Vasudevan Mukunth, Fiat Luxembourg: How a Tiny European Nation is Leading the Evolution of Space Law, The Wire (July 15, 2017), https://thewire.in/157687/luxembourg-space-asteroid-mining-dsi/.  Andrew Silver, Luxembourg passes first EU space mining law. One can possess the Spice, The Register (July 14, 2017), https://www.theregister.co.uk/2017/07/14/luxembourg_passes_space_mining_law/; Mark Kaufman, Luxembourg’s Asteroid Mining is Legal Says Space Law Expert, inverse.com (Aug. 1, 2017), https://www.inverse.com/article/34935-luxembourg-s-asteroid-mining-is-legal-says-space-law-expert.  Antariksh Bhavan, Seeking comments on Draft “Space Activities Bill, 2017” from the stake holders/public-regarding, ISRO (Nov. 21, 2017), https://www.isro.gov.in/update/21-nov-2017/seeking-comments-draft-space-activities-bill-2017-stake-holders-public-regarding; Special Correspondent, Govt. unveils draft of law to regulate space sector, The Hindu (Nov. 22, 2017), http://www.thehindu.com/sci-tech/science/govt-unveils-draft-of-law-to-regulate-space-sector/article20629386.ece; Raghu Krishnan & T E Narasimhan, Draft space law gives private firms a grip on rocket, satellite making, Business Standard (Nov. 22, 2017), http://www.business-standard.com/article/economy-policy/draft-space-law-gives-private-firms-a-grip-on-rocket-satellite-making-117112101234_1.html.  Antariksh Bhavan, Seeking comments on Draft “Space Activities Bill, 2017” from the stake holders/public-regarding, ISRO (Nov. 21, 2017), https://www.isro.gov.in/update/21-nov-2017/seeking-comments-draft-space-activities-bill-2017-stake-holders-public-regarding.  Id.  Ellen Barry, India Launches 104 Satellites From a Single Rocket, Ramping Up a Space Race, The New York Times (Feb. 15, 2017), https://www.nytimes.com/2017/02/15/world/asia/india-satellites-rocket.html.  Id.  Yes, Australia will have a space agency. What does this mean? Experts respond, The Conversation (Sept. 25, 2017), http://theconversation.com/yes-australia-will-have-a-space-agency-what-does-this-mean-experts-respond-84588; Jordan Chong, Better late than never, Australia heads (back) to space, Australian Aviation (Dec. 29, 2017), http://australianaviation.com.au/2017/12/better-late-than-never-australia-heads-back-to-space/.  Andrew Griffin, Australia launches brand new space agency in attempt to flee the Earth, The Independent (Sept. 25, 2017), http://www.independent.co.uk/news/science/australia-space-agency-nasa-earth-roscosmos-malcolm-turnbull-economy-a7966751.html; Henry Belot, Australian space agency to employ thousands and tap $420b industry, Government says, ABC (Sept. 25, 2017), http://www.abc.net.au/news/2017-09-25/government-to-establish-national-space-agency/8980268.  White House, Critical Infrastructure Security and Resilience, Presidential Policy Directive/PPD-21 (Feb. 12, 2013).  Woodrow Bellamy III, Senators Reintroduce Aircraft Cyber Security Legislation, Aviation Today (Mar. 24, 2017), http://www.aviationtoday.com/2017/03/24/senators-reintroduce-aircraft-cyber-security-legislation/.  The eighteen states that passed UAS legislation in 2017 were Colorado, Connecticut, Florida, Georgia, Indiana, Kentucky, Louisiana, Minnesota, Montana, Nevada, New Jersey, North Carolina, Oregon, South Dakota, Texas, Utah, Virginia and Wyoming. The three states that passed resolutions related to UAS were Alaska, North Dakota and Utah.  Under Section 2202 of the FAA Extension, Safety, and Security Act of 2016, Pub. L. 114-190, Congress directed the FAA to convene industry stakeholders to facilitate the development of consensus standards for identifying operators and UAS owners. The final report identifies the following as the ARC’s stated objectives: The stated objectives of the ARC charter were: to identify, categorize and recommend available and emerging technology for the remote identification and tracking of UAS; to identify the requirements for meeting the security and public safety needs of the law enforcement, homeland defense, and national security communities for the remote identification and tracking of UAS; and to evaluate the feasibility and affordability of available technical solutions, and determine how well those technologies address the needs of the law enforcement and air traffic control communities. The final ARC report is available at: https://www.faa.gov/regulations_policies/rulemaking/committees/documents/media/UAS%20ID%20ARC%20Final%20Report%20with%20Appendices.pdf. Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding the issues discussed above. 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Gibson Dunn previously issued several client alerts regarding President Trump’s January 27, 2017, Executive Order restricting entry into the United States for individuals from certain nations and making other immigration-related policy changes. This client alert addresses the replacement Executive Order entitled "Protecting the Nation from Foreign Terrorist Entry into the United States," signed on March 6, 2017. It also addresses a recent announcement suspending expedited processing of H-1B visas. I. Overview of March 6, 2017 Replacement Executive Order The new order is in some regards narrower than the prior order, and its scope appears to be more clearly defined. However, there is still some ambiguity as to the process for obtaining waivers, and the order continues to provide for the possible extension or expansion of the travel ban. The order and the accompanying official statements also include considerably more material seeking to justify the provisions than contained in the prior order. The Department of Homeland Security has released detailed Q&As and a fact sheet regarding the new order; additional guidance from the Department of State is expected. Key features of the new order include: Effective Date. The effective date of the order is deferred for 10 days; the order goes into effect at 12:01 am ET on March 16, 2017. Sec. 14. Status of Prior Order. The new order fully rescinds and replaces the January 27 order. Sec. 13. Travel Ban For 6 Countries. Like the prior order, the new order suspends for 90 days entry for nationals of a number of Muslim-majority countries: Iran, Libya, Somalia, Sudan, Syria, and Yemen. Sec. 1(e). Exclusions and Exceptions to Travel Ban. The travel ban and related provisions have been narrowed and clarified in various respects: Iraq. Iraq is no longer identified among the affected countries. The other six nations designated in the original order are still covered. However, the order specifically calls for additional review when an Iraqi national who holds a visa applies for "admission," meaning upon arrival to the U.S. Secs. 1(g), 4. Lawful Permanent Residents. Lawful permanent residents (green-card holders) are explicitly excluded from the order. Sec. 3(b)(i). Current Visa Holders. Existing visas are not revoked by the order, and they can be used during the 90-day period otherwise covered by the order by the visa-holders under their existing terms, regardless of whether the visa-holder has previously been to the United States or is arriving for the first time. Those who had a visa physically marked as cancelled as result of the January order are also entitled to admission. Secs. 3(a), 12(c)-(d); Q&As 3, 5, 7. Dual-Citizens. Dual citizens of one of the designated nations are also explicitly excluded from the order provided that they are travelling on a passport of a country other than the six designated. For example, a dual-citizen of Somalia and the United Kingdom would still be eligible for admission to the United States if travelling on his U.K. passport. Sec. 3(b)(iv). Refugees, Asylees, and Convention Against Torture. Foreign nationals who are granted asylum status prior to the March 16 effective date, refugees already admitted, and those granted withholding of removal, advance parole, or protection under the Convention Against Torture are not barred from entry into the U.S. Sec. 3(b)(vi). Note, however, that under existing law, individuals with those statuses may need certain advance permission or authorization if they wish to leave and return to the United States without jeopardizing that status. Certain Diplomatic and Related Visas. As in the January order, diplomatic and diplomatic-type visas, NATO visas, C-2 (United Nations) visas, and G-1 through G-4 visas are excluded from the order. Sec. 3(b)(v) Travel Ban Waivers. The new order provides authority to certain Department of State and Homeland Security officials to grant waivers to the travel ban’s limitations on a case-by-case basis. The new order identifies nine scenarios in which such treatment "could be appropriate." These include a variety of hardship scenarios which arose under the January order, such as those needing urgent medical care or those who can document that they have "provided faithful and valuable service" to the United States government (e.g. foreign translators). Sec. 3(c). Importantly, these are still case-by-case waivers, not automatic exemptions. It is also not yet clear if individuals seeking waivers will be allowed to board flights to the U.S. Suspension of Visa Interview Waiver Program. As before, the Visa Interview Waiver program (often used by repeat business travelers from certain nations) is suspended. Sec. 9. Suspension of Refugee Admission Program. As in the January order, the Refugee Admission Program is suspended for 120 days, with a cap of 50,000 entrants for the current fiscal year upon resumption. Sec. 6. Unlike the January order, the new order does not indefinitely halt refugee admissions from Syria or prioritize religious minorities upon resumption. The treatment of those already granted refugee status but not yet in the United States is somewhat unclear. The DHS Q&A says such individuals "whose travel was already formally scheduled by the Department of State … are permitted to travel to the United States and seek admission," and they are covered by the text of the carve-out in Section 3(b)(vi). See Q&A 10. But the Q&A also says those individuals "are exempt from the Executive Order." Q&A 27. Admission thus may require a case-by-case waiver. Possible Expansion and Extension. Like the prior order, this order requires a global review to identify categories of individuals appropriate for further limitations. Secs. 2(e)-(f). Another provision requires re-alignment of any visa reciprocity programs, under which the United States offers visas of similar validity period and type (e.g. multiple-entry) on the basis of those offered to U.S. citizens. Sec. 10. II. Impact on Current Litigation There are approximately 20 active lawsuits challenging aspects of the January order. Additional, key parts of that Order are currently subject to a preliminary injunction issued by the United States District Court for the Western District of Washington. The Ninth Circuit declined to temporarily stay that injunction pending a fuller appeal. The Eastern District of Virginia has also issued a preliminary injunction against certain parts of the January order as it applies to Virginia residents and institutions. There are hearings and briefing deadlines scheduled in both the Washington and Ninth Circuit proceedings, as well as in many of the other cases. Because the new order rescinds the old order, effective March 16, those challenges may become moot, and the Department of Justice has said it will be seeking dismissal. However, it is highly likely that some of the existing complaints and requests for relief will be amended to challenge the new ban. New challenges to the newly announced Executive Order are also anticipated. It is difficult to predict how the courts will approach litigation, either substantively or procedurally. Given that the new order does not go into effect until March 16, there will be opportunity for more substantive (although expedited) proceedings than was the case with the original order. Gibson Dunn will continue to monitor challenges for possible impacts on the new order. III. Issues for Companies to Consider As with the January order, there is no "one size fits all" approach for companies addressing employee and business issues related to the new Executive Order. Accordingly, companies should again evaluate whether they will need to develop strategies to deal with the impact of the replacement Executive Order, both internally and as it relates to potential shareholder and business relations. In the immediate term, companies should consider outreach to their employees, particularly those who are or may be affected by the Executive Order. Companies should also consider whether plans or policies are needed for travel by executives, employees, or other stakeholders. In many ways, the new order is clearer than the January order, but as we describe in more detail below it not clear how all aspects of the order will be implemented. Accordingly, employers may want to consider the following: Outreach to employees who may be affected. Companies should consider proactively identifying and reaching out to all employees who may be affected. As noted above, the Executive Order, on its face, applies to both immigrants and non-immigrants from the six covered countries. Thus, employees traveling for business or leisure may be equally affected. Note that different employees’ immigration statuses may compel differing guidance on how to approach any issues that arise in the enforcement of the Order. Outreach to employees who may have family members affected. It is important to remember that some of your employees, even if not directly impacted by the Executive Order, will have family and loved ones who are or may be impacted. Companies may consider providing counseling and support for employees with these concerns. Communicating with employees. Companies should consider identifying employees who frequently travel to and from the affected countries or who are visa holders from affected countries, to explain company plans with respect to the Executive Order. Given issues that arose for travelers in connection with the implementation of the original Executive Order in January, employees from affected countries who are currently outside the United States, but have a legal right to enter, should be advised to stay in communication with individuals in the United States about their travel plans, in the event they have difficulty re-entering the country, and have a plan to obtain appropriate assistance in that event. Identifying a point of contact. Consider identifying a contact point for any employee questions or concerns regarding the Executive Order. Furthermore, ensure that this contact is prepared to field questions from affected or potentially affected employees, to discuss visa renewal or travel to and from the affected countries, and to refer employees with specific issues to the appropriate resources. Communicating with shareholders, business partners and other stakeholders. Companies should consider whether communications with shareholders, business partners or other stakeholders regarding potential impacts on business as a result of enforcement of the Executive Order are appropriate. Modifying travel and meeting obligations. Companies should consider modifying (or allowing for employee choice regarding) employee travel obligations, as appropriate to the company’s business needs, to avoid potential difficulties with travel to and from the United States. Likewise, if companies have board members or executives affected by the Executive Order, or business stakeholders who will not be able to enter the United States due to the Executive Order, consider whether meetings can be conducted remotely or outside the United States. Companies involved in pending litigation that may require employee travel to the United States should consider seeking the advice of litigation counsel to determine what, if any, notice to the relevant court or parties may be advisable at this stage. Reviewing non-discrimination policies. Companies may wish to send reminders of applicable equal employment policies. Many employers included such statements in communications regarding the original Order. Companies may also wish to consider how their policies apply to employment and hiring decisions in light of travel restrictions. This list addresses just some of the issues that companies will face in light of the Executive Order. Gibson, Dunn & Crutcher’s lawyers, including its employment, securities, administrative law, constitutional law, and sanctions teams, are available to assist clients with navigating these and other issues that arise with respect to enforcement of the March 6 Order. IV. Suspension of Expedited Processing for H-1B Visas On March 3, U.S. Citizen and Immigration Services (USCIS) announced it will suspend "premium processing" of applications for H-1B visas. This change is effective April 3, 2017, the first date for filing FY18 applications. The agency says that this is necessary to process back-logged petitions. It also says that "expedited" processing is still available for applications meeting certain criteria, and subject to "the discretion of office leadership." Applications that remain eligible for premium processing include those involving: Severe financial loss to company or person; Emergency situation; Humanitarian reasons; Nonprofit organization whose request is in furtherance of the cultural and social interests of the United States; Department of Defense or national interest situation; USCIS error; or compelling interest of USCIS. * * * Gibson Dunn will continue to monitor these rapidly developing issues closely.  "Executive Order Protecting The Nation From Foreign Terrorist Entry Into The United States," Mar. 6, 2017, https://www.whitehouse.gov/the-press-office/2017/03/06/executive-order-protecting-nation-foreign-terrorist-entry-united-states.  See, e.g., Letter from Attorney General and Sec’y of Homeland Security, Mar. 6, 2017, https://www.dhs.gov/sites/default/files/publications/17_0306_S1_DHS-DOJ-POTUS-letter.pdf  U.S. Dep’t of Homeland Security, "Q&A: Protecting the Nation From Foreign Terrorist Entry To The United States," Mar. 6, 2017, https://www.dhs.gov/news/2017/03/06/qa-protecting-nation-foreign-terrorist-entry-united-states.  U.S. Dep’t of Homeland Security, "Fact Sheet: Protecting the Nation From Foreign Terrorist Entry To The United States," Mar. 6, 2017, https://www.dhs.gov/news/2017/03/06/fact-sheet-protecting-nation-foreign-terrorist-entry-united-states.  U.S. Dep’t of State, "Executive Order on Visas," Mar. 6, 2017, https://travel.state.gov/content/travel/en/news/important-announcement.html.  http://cdn.ca9.uscourts.gov/datastore/general/2017/02/27/17-35105%20-%20Motion%20Denied.pdf; https://cdn.ca9.uscourts.gov/datastore/opinions/2017/02/09/17-35105.pdf.  http://www.politico.com/story/2017/03/trump-releases-new-travel-ban-executive-order-235720.  U.S. Citizenship and Immigration Services, "USCIS Will Temporarily Suspend Premium Processing for All H-1B Petitions," Mar. 3, 2017 https://www.uscis.gov/news/alerts/uscis-will-temporarily-suspend-premium-processing-all-h-1b-petitions.  U.S. Citizenship and Immigration Services, "Expedite Criteria," https://www.uscis.gov/forms/expedite-criteria. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work or any of the following: Theodore J. Boutrous, Jr. – Los Angeles (+1 213-229-7000, email@example.com)Rachel S. Brass – San Francisco (+1 415-393-8293, firstname.lastname@example.org)Anne M. Champion – New York (+1 212-351-5361, email@example.com)Ethan Dettmer – San Francisco (+1 415-393-8292, firstname.lastname@example.org) Theane Evangelis – Los Angeles (+1 213-229-7726, email@example.com) Kirsten Galler – Los Angeles (+1 213-229-7681, firstname.lastname@example.org) Ronald Kirk – Dallas (+1 214-698-3295, email@example.com)Joshua S. Lipshutz – Washington D.C. (+1 202-955-8217, firstname.lastname@example.org) Katie Marquart, Pro Bono Counsel & Director – New York (+1 212-351-5261, email@example.com) Samuel A. Newman – Los Angeles (+1 213-229-7644, firstname.lastname@example.org) Jason C. Schwartz – Washington D.C. (+1 202-955-8242, email@example.com) Kahn A. 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Click for PDF We are pleased to provide the following update on recent legal developments in the areas of artificial intelligence, machine learning, and autonomous systems (or “AI” for short), and their implications for companies developing or using products based on these technologies. As the spread of AI rapidly increases, legal scrutiny in the U.S. of the potential uses and effects of these technologies (both beneficial and harmful) has also been increasing. While we have chosen to highlight below several governmental and legislative actions from the past quarter, the area is rapidly evolving and we will continue to monitor further actions in these and related areas to provide future updates of potential interest on a regular basis. I. Increasing Federal Government Interest in AI Technologies The Trump Administration and Congress have recently taken a number of steps aimed at pushing AI forward on the U.S. agenda, while also treating with caution foreign involvement in U.S.-based AI technologies. Some of these actions may mean additional hurdles for cross-border transactions involving AI technology. On the other hand, there may also be opportunities for companies engaged in the pursuit of AI technologies to influence the direction of future legislation at an early stage. A. White House Studies AI In May, the Trump Administration kicked off what is becoming an active year in AI for the federal government by hosting an “Artificial Intelligence for American Industry” summit as part of its designation of AI as an “Administration R&D priority.” During the summit, the White House also announced the establishment of a “Select Committee on Artificial Intelligence” to advise the President on research and development priorities and explore partnerships within the government and with industry. This Select Committee is housed within the National Science and Technology Council, and is chaired by Office of Science and Technology Policy leadership. Administration officials have said that a focus of the Select Committee will be to look at opportunities for increasing federal funds into AI research in the private sector, to ensure that the U.S. has (or maintains) a technological advantage in AI over other countries. In addition, the Committee is to look at possible uses of the government’s vast store of taxpayer-funded data to promote the development of advanced AI technologies, without compromising security or individual privacy. While it is believed that there will be opportunities for private stakeholders to have input into the Select Committee’s deliberations, the inaugural meeting of the Committee, which occurred in late June, was not open to the public for input. B. AI in the NDAA for 2019 More recently, on August 13th, President Trump signed into law the John S. McCain National Defense Authorization Act (NDAA) for 2019, which specifically authorizes the Department of Defense to appoint a senior official to coordinate activities relating to the development of AI technologies for the military, as well as to create a strategic plan for incorporating a number of AI technologies into its defense arsenal. In addition, the NDAA includes the Foreign Investment Risk Review Modernization Act (FIRRMA) and the Export Control Reform Act (ECRA), both of which require the government to scrutinize cross-border transactions involving certain new technologies, likely including AI-related technologies. FIRRMA modifies the review process currently used by the Committee on Foreign Investment in the United States (CFIUS), an interagency committee that reviews the national security implications of investments by foreign entities in the United States. With FIRRMA’s enactment, the scope of the transactions that CFIUS can review is expanded to include those involving “emerging and foundational technologies,” defined as those that are critical for maintaining the national security technological advantage of the United States. While the changes to the CFIUS process are still fresh and untested, increased scrutiny under FIRRMA will likely have an impact on available foreign investment in the development and use of AI, at least where the AI technology involved is deemed such a critical technology and is sought to be purchased or licensed by foreign investors. Similarly, ECRA requires the President to establish an interagency review process with various agencies including the Departments of Defense, Energy, State and the head of other agencies “as appropriate,” to identify emerging and foundational technologies essential to national security in order to impose appropriate export controls. Export licenses are to be denied if the proposed export would have a “significant negative impact” on the U.S. defense industrial base. The terms “emerging and foundational technologies” are not expressly defined, but it is likely that AI technologies, which are of course “emerging,” would receive a close look under ECRA and that ECRA might also curtail whether certain AI technologies can be sold or licensed to foreign entities. The NDAA also established a National Security Commission on Artificial Intelligence “to review advances in artificial intelligence, related machine learning developments, and associated technologies.” The Commission, made up of certain senior members of Congress as well as the Secretaries of Defense and Commerce, will function independently from other such panels established by the Trump Administration and will review developments in AI along with assessing risks related to AI and related technologies to consider how those methods relate to the national security and defense needs of the United States. The Commission will focus on technologies that provide the U.S. with a competitive AI advantage, and will look at the need for AI research and investment as well as consider the legal and ethical risks associated with the use of AI. Members are to be appointed within 90 days of the Commission being established and an initial report to the President and Congress is to be submitted by early February 2019. C. Additional Congressional Interest in AI/Automation While a number of existing bills with potential impacts on the development of AI technologies remain stalled in Congress, two more recently-introduced pieces of legislation are also worth monitoring as they progress through the legislative process. In late June, Senator Feinstein (D-CA) sponsored the “Bot Disclosure and Accountability Act of 2018,” which is intended to address some of the concerns over the use of automated systems for distributing content through social media. As introduced, the bill seeks to prohibit certain types of bot or other automated activity directed to political advertising, at least where such automated activity appears to impersonate human activity. The bill would also require the Federal Trade Commission to establish and enforce regulations to require public disclosure of the use of bots, defined as any “automated software program or process intended to impersonate or replicate human activity online.” The bill provides that any such regulations are to be aimed at the “social media provider,” and would place the burden of compliance on such providers of social media websites and other outlets. Specifically, the FTC is to promulgate regulations requiring the provider to take steps to ensure that any users of a social media website owned or operated by the provider would receive “clear and conspicuous notice” of the use of bots and similar automated systems. FTC regulations would also require social media providers to police their systems, removing non-compliant postings and/or taking other actions (including suspension or removal) against users that violate such regulations. While there are significant differences, the Feinstein bill is nevertheless similar in many ways to California’s recently-enacted Bot disclosure law (S.B. 1001), discussed more fully in our previous client alert located here. Also of note, on September 26th, a bipartisan group of Senators introduced the “Artificial Intelligence in Government Act,” which seeks to provide the federal government with additional resources to incorporate AI technologies in the government’s operations. As written, this new bill would require the General Services Administration to bring on technical experts to advise other government agencies, conduct research into future federal AI policy, and promote inter-agency cooperation with regard to AI technologies. The bill would also create yet another federal advisory board to advise government agencies on AI policy opportunities and concerns. In addition, the newly-introduced legislation seeks to require the Office of Management and Budget to identify ways for the federal government to invest in and utilize AI technologies and tasks the Office of Personal Management with anticipating and providing training for the skills and competencies the government requires going-forward for incorporating AI into its overall data strategy. II. Potential Impact on AI Technology of Recent California Privacy Legislation Interestingly, in the related area of data privacy regulation, the federal government has been slower to respond, and it is the state legislatures that are leading the charge. Most machine learning algorithms depend on the availability of large data sets for purpose of training, testing, and refinement. Typically, the larger and more complete the datasets available, the better. However, these datasets often include highly personal information about consumers, patients, or others of interest—data that can sometimes be used to predict information specific to a particular person even if attempts are made to keep the source of such data anonymous. The European Union’s General Data Protection Regulation, or GDPR, which went into force on May 25, 2018, has deservedly garnered a great deal of press as one of the first, most comprehensive collections of data privacy protections. While we’re only months into its effective period, the full impact and enforcement of the GDPR’s provisions have yet to be felt. Still, many U.S. companies, forced to take steps to comply with the provisions of GDPR at least with regard to EU citizens, have opted to take many of those same steps here in the U.S., despite the fact that no direct U.S. federal analogue to the GDPR yet exists. Rather than wait for the federal government to act, several states have opted to follow the lead of the GDPR and enact their own versions of comprehensive data privacy laws. Perhaps the most significant of these state-legislated omnibus privacy laws is the California Consumer Privacy Act (“CCPA”), signed into law on June 28, 2108, and slated to take effect on January 1, 2020. The CCPA is not identical to the GDPR, differing in a number of key respects. However there are many similarities, in that the CCPA also has broadly defined definitions of personal information/data, and seeks to provide a right to notice of data collection, a right of access to and correction of collected data, a right to be forgotten, and a right to data portability. But how do the CCPA’s requirements differ from the GDPR for companies engaged in the development and use of AI technologies? While there are many issues to consider, below we examine several of the key differences of the CCPA and their impact on machine learning and other AI-based processing of collected data. A. Inferences Drawn from Personal Information The GDPR defines personal data as “any information relating to an identified or identifiable natural person,” such as “a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identify of that nature person.” Under the GDPR, personal data has implications in the AI space beyond just the data that is actually collected from an individual. AI technology can be and often is used to generate additional information about a person from collected data, e.g., spending habits, facial features, risk of disease, or other inferences that can be made from the collected data. Such inferences, or derivative data, may well constitute “personal data” under a broad view of the GDPR, although there is no specific mention of derivative data in the definition. By contrast, the CCPA goes farther and specifically includes “inferences drawn from any of the information identified in this subdivision to create a profile about a consumer reflecting the consumer’s preferences, characteristics, psychological trends, preferences, predispositions, behavior, attitudes, intelligence, abilities and aptitudes.” An “inference” is defined as “the derivation of information, data, assumptions, or conclusions from evidence, or another source of information or data.” Arguably the primary purpose of many AI systems is to draw inferences from a user’s information, by mining data, looking for patterns, and generating analysis. Although the CCPA does limit inferences to those drawn “to create a profile about a consumer,” the term “profile” is not defined in the CCPA. However, the use of consumer information that is “deidentified” or “aggregated” is permitted by the CCPA. Thus, one possible solution may be to take steps to “anonymize” any personal data used to derive any inferences. As a result, when looking to CCPA compliance, companies may want to carefully consider the derivative/processed data that they are storing about a user, and consider additional steps that may be required for CCPA compliance. B. Identifying Categories of Personal Information The CCPA also requires disclosures of the categories of personal information being collected, the categories of sources from which personal information is collected, the purpose for collecting and selling personal information, and the categories of third parties with whom the business shares personal information.  Although these categories are likely known and definable for static data collection, it may be more difficult to specifically disclose the purpose and categories for certain information when dynamic machine learning algorithms are used. This is particularly true when, as discussed above, inferences about a user are included as personal information. In order to meet these disclosure requirements, companies may need to carefully consider how they will define all of the categories of personal information collected or the purposes of use of that information, particularly when machine learning algorithms are used to generate additional inferences from, or derivatives of, personal data. C. Personal Data Includes Households The CCPA’s definition of “personal data” also includes information pertaining to non-individuals, such as “households” – a term that the CCPA does not further define. In the absence of an explicit definition, the term “household” would seem to target information collected about a home and its inhabits through smart home devices, such as thermostats, cameras, lights, TVs, and so on. When looking to the types of personal data being collected, the CCPA may also encompass information about each of these smart home devices, such as name, location, usage, and special instructions (e.g., temperature controls, light timers, and motion sensing). Furthermore, any inferences or derivative information generated by AI algorithms from the information collected from these smart home devices may also be covered as personal information. Arguably, this could include information such as conversations with voice assistants or even information about when people are likely to be home determined via cameras or motion sensors. Companies developing smart home, or other Internet of Things, devices thus should carefully consider whether the scope and use they make of any information collected from “households” falls under the CCPA requirements for disclosure or other restrictions. III. Continuing Efforts to Regulate Autonomous Vehicles Much like the potential for a comprehensive U.S. data privacy law, and despite a flurry of legislative activity in Congress in 2017 and early 2018 towards such a national regulatory framework, autonomous vehicles continue to operate under a complex patchwork of state and local rules with limited federal oversight. We previously provided an update (located here) discussing the Safely Ensuring Lives Future Deployment and Research In Vehicle Evolution (SELF DRIVE) Act, which passed the U.S. House of Representatives by voice vote in September 2017 and its companion bill (the American Vision for Safer Transportation through Advancement of Revolutionary Technologies (AV START) Act). Both bills have since stalled in the Senate, and with them the anticipated implementation of a uniform regulatory framework for the development, testing and deployment of autonomous vehicles. As the two bills languish in Congress, ‘chaperoned’ autonomous vehicles have already begun coexisting on roads alongside human drivers. The accelerating pace of policy proposals—and debate surrounding them—looks set to continue in late 2018 as virtually every major automaker is placing more autonomous vehicles on the road for testing and some manufacturers prepare to launch commercial services such as self-driving taxi ride-shares into a national regulatory vacuum. A. “Light-touch” Regulation The delineation of federal and state regulatory authority has emerged as a key issue because autonomous vehicles do not fit neatly into the existing regulatory structure. One of the key aspects of the proposed federal legislation is that it empowers the National Highway Traffic Safety Administration (NHTSA) with the oversight of manufacturers of self-driving cars through enactment of future rules and regulations that will set the standards for safety and govern areas of privacy and cybersecurity relating to such vehicles. The intention is to have a single body (the NHTSA) develop a consistent set of rules and regulations for manufacturers, rather than continuing to allow the states to adopt a web of potentially widely differing rules and regulations that may ultimately inhibit development and deployment of autonomous vehicles. This approach was echoed by safety guidelines released by the Department of Transportation (DoT) for autonomous vehicles. Through the guidelines (“a nonregulatory approach to automated vehicle technology safety”), the DoT avoids any compliance requirement or enforcement mechanism, at least for the time being, as the scope of the guidance is expressly to support the industry as it develops best practices in the design, development, testing, and deployment of automated vehicle technologies. Under the proposed federal legislation, the states can still regulate autonomous vehicles, but the guidance encourages states not to pass laws that would “place unnecessary burdens on competition and innovation by limiting [autonomous vehicle] testing or deployment to motor vehicle manufacturers only.” The third iteration of the DoT’s federal guidance, published on October 4, 2018, builds upon—but does not replace—the existing guidance, and reiterates that the federal government is placing the onus for safety on companies developing the technologies rather than on government regulation.  The guidelines, which now include buses, transit and trucks in addition to cars, remain voluntary. B. Safety Much of the delay in enacting a regulatory framework is a result of policymakers’ struggle to balance the industry’s desire to speed both the development and deployment of autonomous vehicle technologies with the safety and security concerns of consumer advocates. The AV START bill requires that NHTSA must construct comprehensive safety regulations for AVs with a mandated, accelerated timeline for rulemaking, and the bill puts in place an interim regulatory framework that requires manufacturers to submit a Safety Evaluation Report addressing a range of key areas at least 90 days before testing, selling, or commercialization of an driverless cars. But some lawmakers and consumer advocates remain skeptical in the wake of highly publicized setbacks in autonomous vehicle testing. Although the National Safety Transportation Board (NSTB) has authority to investigate auto accidents, there is still no federal regulatory framework governing liability for individuals and states. There are also ongoing concerns over cybersecurity risks, the use of forced arbitration clauses by autonomous vehicle manufacturers, and miscellaneous engineering problems that revolve around the way in which autonomous vehicles interact with obstacles commonly faced by human drivers, such as emergency vehicles, graffiti on road signs or even raindrops and tree shadows. In August 2018, the Governors Highway Safety Association (GHSA) published a report outlining the key questions that manufacturers should urgently address. The report suggested that states seek to encourage “responsible” autonomous car testing and deployment while protecting public safety and that lawmakers “review all traffic laws.” The report also notes that public debate often blurs the boundaries between the different levels of automation the NHTSA has defined (ranging from level 0 (no automation) to level 5 (fully self-driving without the need for human occupants)), remarking that “most AVs for the foreseeable future will be Levels 2 through 4. Perhaps they should be called ‘occasionally self-driving.'” C. State Laws Currently, 21 states and the District of Columbia have passed laws regulating the deployment and testing of self-driving cars, and governors in 10 states have issued executive orders related to them. For example, California expanded its testing rules in April 2018 to allow for remote monitoring instead of a safety driver inside the vehicle. However, state laws differ on basic terminology, such as the definition of “vehicle operator.” Tennessee SB 151 points to the autonomous driving system (ADS) while Texas SB 2205 designates a “natural person” riding in the vehicle. Meanwhile, Georgia SB 219 identifies the operator as the person who causes the ADS to engage, which might happen remotely in a vehicle fleet. These distinctions will affect how states license both human drivers and autonomous vehicles going forward. Companies operating in this space accordingly need to stay abreast of legal developments in states in which they are developing or testing autonomous vehicles, while understanding that any new federal regulations may ultimately preempt those states’ authorities to determine, for example, crash protocols or how they handle their passengers’ data. D. ‘Rest of the World’ While the U.S. was the first country to legislate for the testing of automated vehicles on public roads, the absence of a national regulatory framework risks impeding innovation and development. In the meantime, other countries are vying for pole position among manufacturers looking to test vehicles on roads. KPMG’s 2018 Autonomous Vehicles Readiness Index ranks 20 countries’ preparedness for an autonomous vehicle future. The Netherlands took the top spot, outperforming the U.S. (3rd) and China (16th). Japan and Australia plan to have self-driving cars on public roads by 2020. The U.K. government has announced that it expects to see fully autonomous vehicles on U.K. roads by 2021, and is introducing legislation—the Automated and Electric Vehicles Act 2018—which installs an insurance framework addressing product liability issues arising out of accidents involving autonomous cars, including those wholly caused by an autonomous vehicle “when driving itself.” E. Looking Ahead While autonomous vehicles operating on public roads are likely to remain subject to both federal and state regulation, the federal government is facing increasing pressure to adopt a federal regulatory scheme for autonomous vehicles in 2018. Almost exactly one year after the House passed the SELF DRIVE Act, House Energy and Commerce Committee leaders called on the Senate to advance automated vehicle legislation, stating that “[a]fter a year of delays, forcing automakers and innovators to develop in a state-by-state patchwork of rules, the Senate must act to support this critical safety innovation and secure America’s place as a global leader in technology.” The continued absence of federal regulation renders the DoT’s informal guidance increasingly important. The DoT has indicated that it will enact “flexible and technology-neutral” policies—rather than prescriptive performance-based standards—to encourage regulatory harmony and consistency as well as competition and innovation. Companies searching for more tangible guidance on safety standards at federal level may find it useful to review the recent guidance issued alongside the DoT’s announcement that it is developing (and seeking public input into) a pilot program for ‘highly or fully’ autonomous vehicles on U.S. roads. The safety standards being considered include technology disabling the vehicle if a sensor fails or barring vehicles from traveling above safe speeds, as well as a requirement that NHTSA be notified of any accident within 24 hours.  See https://www.whitehouse.gov/wp-content/uploads/2018/05/Summary-Report-of-White-House-AI-Summit.pdf; note also that the Trump Administration’s efforts in studying AI technologies follow, but appear largely separate from, several workshops on AI held by the Obama Administration in 2016, which resulted in two reports issued in late 2016 (see Preparing for the Future of Artificial Intelligence, and Artificial Intelligence, Automation, and the Economy).  Id. at Appendix A.  See https://www.mccain.senate.gov/public/index.cfm/2018/8/senate-passes-the-john-s-mccain-national-defense-authorization-act-for-fiscal-year-2019. The full text of the NDAA is available at https://www.congress.gov/bill/115th-congress/house-bill/5515/text. For additional information on CFIUS reform implemented by the NDAA, please see Gibson Dunn’s previous client update at https://www.gibsondunn.com/cfius-reform-our-analysis/.  See id.; see also https://www.treasury.gov/resource-center/international/Documents/FIRRMA-FAQs.pdf.  See https://foreignaffairs.house.gov/wp-content/uploads/2018/02/HR-5040-Section-by-Section.pdf.  See, e.g. infra., Section III discussion of SELF DRIVE and AV START Acts, among others.  S.3127, 115th Congress (2018).  https://www.gibsondunn.com/new-california-security-of-connected-devices-law-and-ccpa-amendments/.  S.3502, 115th Congress (2018).  See also, infra., Section III for more discussion of specific regulatory efforts for autonomous vehicles.  However, as 2018 has already seen a fair number of hearings before Congress relating to digital data privacy issues, including appearances by key executives from many major tech companies, it seems likely that it may not be long before we see the introduction of a “GDPR-like” comprehensive data privacy bill. Whether any resulting federal legislation would actually pre-empt state-enacted privacy laws to establish a unified federal framework is itself a hotly-contested issue, and remains to be seen.  AB 375 (2018); Cal. Civ. Code §1798.100, et seq.  Regulation (EU) 2016/679 (General Data Protection Regulation), Article 4 (1).  Cal. Civ. Code §1798.140(o)(1)(K).  Id.. at §1798.140(m).  Id. at §1798.110(c).  Id. at §1798.140(o)(1).  https://www.gibsondunn.com/accelerating-progress-toward-a-long-awaited-federal-regulatory-framework-for-autonomous-vehicles-in-the-united-states/.  H.R. 3388, 115th Cong. (2017).  U.S. Senate Committee on Commerce, Science and Transportation, Press Release, Oct. 24, 2017, available at https://www.commerce.senate.gov/public/index.cfm/pressreleases?ID=BA5E2D29-2BF3-4FC7-A79D-58B9E186412C.  Sean O’Kane, Mercedes-Benz Self-Driving Taxi Pilot Coming to Silicon Valley in 2019, The Verge, Jul. 11, 2018, available at https://www.theverge.com/2018/7/11/17555274/mercedes-benz-self-driving-taxi-pilot-silicon-valley-2019.  U.S. Dept. of Transp., Automated Driving Systems 2.0: A Vision for Safety 2.0, Sept. 2017, https://www.nhtsa.gov/sites/nhtsa.dot.gov/files/documents/13069a-ads2.0_090617_v9a_tag.pdf.  Id., at para 2.  U.S. DEPT. OF TRANSP., Preparing for the Future of Transportation: Automated Vehicles 3.0, Oct. 4, 2018, https://www.transportation.gov/sites/dot.gov/files/docs/policy-initiatives/automated-vehicles/320711/preparing-future-transportation-automated-vehicle-30.pdf.  Sasha Lekach, Waymo’s Self-Driving Taxi Service Could Have Some Major Issues, Mashable, Aug. 28, 2018, available at https://mashable.com/2018/08/28/waymo-self-driving-taxi-problems/#dWzwp.UAEsqM.  Robert L. Rabin, Uber Self-Driving Cars, Liability, and Regulation, Stanford Law School Blog, Mar. 20, 2018, available at https://law.stanford.edu/2018/03/20/uber-self-driving-cars-liability-regulation/.  David Shephardson, U.S. Regulators Grappling with Self-Driving Vehicle Security, Reuters. Jul. 10, 2018, available at https://www.reuters.com/article/us-autos-selfdriving/us-regulators-grappling-with-self-driving-vehicle-security-idUSKBN1K02OD.  Richard Blumenthal, Press Release, Ten Senators Seek Information from Autonomous Vehicle Manufacturers on Their Use of Forced Arbitration Clauses, Mar. 23, 2018, available at https://www.blumenthal.senate.gov/newsroom/press/release/ten-senators-seek-information-from-autonomous-vehicle-manufacturers-on-their-use-of-forced-arbitration-clauses.  Kevin Krewell, How Will Autonomous Cars Respond to Emergency Vehicles, Forbes, Jul. 31, 2018, available at https://www.forbes.com/sites/tiriasresearch/2018/07/31/how-will-autonomous-cars-respond-to-emergency-vehicles/#3eed571627ef.  Michael J. Coren, All The Things That Still Baffle Self-Driving Cars, Starting With Seagulls, Quartz, Sept. 23, 2018, available at https://qz.com/1397504/all-the-things-that-still-baffle-self-driving-cars-starting-with-seagulls/.  ghsa, Preparing For Automated Vehicles: Traffic Safety Issues For States, Aug. 2018, available at https://www.ghsa.org/sites/default/files/2018-08/Final_AVs2018.pdf.  Id., at 7.  Brookings, The State of Self-Driving Car Laws Across the U.S., May 1, 2018, available at https://www.brookings.edu/blog/techtank/2018/05/01/the-state-of-self-driving-car-laws-across-the-u-s/.  Aarian Marshall, Fully Self-Driving Cars Are Really Truly Coming to California, Wired, Feb. 26, 2018, available at, https://www.wired.com/story/california-self-driving-car-laws/; State of California, Department of Motor Vehicles, Autonomous Vehicles in California, available at https://www.dmv.ca.gov/portal/dmv/detail/vr/autonomous/bkgd.  SB 151, available at http://www.capitol.tn.gov/Bills/110/Bill/SB0151.pdf.  SB 2205, available at https://legiscan.com/TX/text/SB2205/2017.  SB 219, available at http://www.legis.ga.gov/Legislation/en-US/display/20172018/SB/219.  Tony Peng & Michael Sarazen, Global Survey of Autonomous Vehicle Regulations, Medium, Mar. 15, 2018, available at https://medium.com/syncedreview/global-survey-of-autonomous-vehicle-regulations-6b8608f205f9.  KPMG, Autonomous Vehicles Readiness Index: Assessing Countries’ Openness and Preparedness for Autonomous Vehicles, 2018, (“The US has a highly innovative but largely disparate environment with little predictability regarding the uniform adoption of national standards for AVs. Therefore the prospect of widespread driverless vehicles is unlikely in the near future. However, federal policy and regulatory guidance could certainly accelerate early adoption . . .”), p. 17, available at https://assets.kpmg.com/content/dam/kpmg/nl/pdf/2018/sector/automotive/autonomous-vehicles-readiness-index.pdf.  Stanley White, Japan Looks to Launch Autonomous Car System in Tokyo by 2020, Automotive News, Jun. 4, 2018, available at http://www.autonews.com/article/20180604/MOBILITY/180609906/japan-self-driving-car; National Transport Commission Australia, Automated vehicles in Australia, available at https://www.ntc.gov.au/roads/technology/automated-vehicles-in-australia/.  The Automated and Electric Vehicles Act 2018, available at http://www.legislation.gov.uk/ukpga/2018/18/contents/enacted; Lexology, Muddy Road Ahead Part II: Liability Legislation for Autonomous Vehicles in the United Kingdom, Sept. 21, 2018, https://www.lexology.com/library/detail.aspx?g=89029292-ad7b-4c89-8ac9-eedec3d9113a; see further Anne Perkins, Government to Review Law Before Self-Driving Cars Arrive on UK Roads, The Guardian, Mar. 6, 2018, available at https://www.theguardian.com/technology/2018/mar/06/self-driving-cars-in-uk-riding-on-legal-review.  Michaela Ross, Code & Conduit Podcast: Rep. Bob Latta Eyes Self-Driving Car Compromise This Year, Bloomberg Law, Jul. 26, 2018, available at https://www.bna.com/code-conduit-podcast-b73014481132/.  Freight Waves, House Committee Urges Senate to Advance Self-Driving Vehicle Legislation, Sept. 10, 2018, available at https://www.freightwaves.com/news/house-committee-urges-senate-to-advance-self-driving-vehicle-legislation; House Energy and Commerce Committee, Press Release, Sept. 5, 2018, available at https://energycommerce.house.gov/news/press-release/media-advisory-walden-ec-leaders-to-call-on-senate-to-pass-self-driving-car-legislation/.  See supra n. 24, U.S. DEPT. OF TRANSP., Preparing for the Future of Transportation: Automated Vehicles 3.0, Oct. 4, 2018, iv.  David Shephardson, Self-driving cars may hit U.S. roads in pilot program, NHTSA says, Automotive News, Oct. 9, 2018, available at http://www.autonews.com/article/20181009/MOBILITY/181009630/self-driving-cars-may-hit-u.s.-roads-in-pilot-program-nhtsa-says. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, or the authors: H. Mark Lyon – Palo Alto (+1 650-849-5307, email@example.com) Claudia M. Barrett – Washington, D.C. (+1 202-887-3642, firstname.lastname@example.org) Frances Annika Smithson – Los Angeles (+1 213-229-7914, email@example.com) Ryan K. Iwahashi – Palo Alto (+1 650-849-5367, firstname.lastname@example.org) Please also feel free to contact any of the following: Automotive/Transportation: Theodore J. Boutrous, Jr. – Los Angeles (+1 213-229-7000, email@example.com) Christopher Chorba – Los Angeles (+1 213-229-7396, firstname.lastname@example.org) Theane Evangelis – Los Angeles (+1 213-229-7726, email@example.com) Privacy, Cybersecurity and Consumer Protection: Alexander H. Southwell – New York (+1 212-351-3981, firstname.lastname@example.org) Public Policy: Michael D. Bopp – Washington, D.C. (+1 202-955-8256, email@example.com) Mylan L. Denerstein – New York (+1 212-351-3850, firstname.lastname@example.org) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Orange County partner Nicola Hanna, Los Angeles partner Michael Farhang, Washington, D.C. associate Pedro Soto and Orange Country associate Caitlin Peters are the authors of "Channeling the Channel-Partner Risk: Addressing Anti-Corruption Risk with Channel Partners in the Technology Sector," [PDF] published in FCPA Report on June 21, 2017.
Orange County associate Jared Greenberg is the author of "Commercial Drone Industry May Be Ready For Takeoff Soon" [PDF] published on February 18, 2016 by Law360.
Click for PDF On March 2, 2018, the United States Court of Appeals for the D.C. Circuit decided an important case addressing two separate, still unsettled questions about the scope of copyright infringement liability. See Spanski Enterprises v. Telewizja Polska, S.A., No. 17-7051 (D.C. Cir. Mar. 2, 2018). In brief, the court held that the defendant infringed the plaintiff’s exclusive public performance right when, without authorization, it made copyright-protected television programming available to stream inside the United States, even though the stream was hosted outside the United States. This was the first time a federal court of appeals considered whether streaming content originating extraterritorially is subject to U.S. copyright liability. Separately, though the defendant insisted that it could not face liability unless it “volitionally” selected the content delivered to each user, the court held that operating a video-on-demand system which allowed members of the public to receive a copyright-protected performance constituted copyright infringement. Spanski Enterprises involved a longstanding licensing agreement between Telewizja Polska (TVP), the national broadcasting company of Poland, and Spanski Enterprises, a Canadian corporation in the business of distributing Polish-language programming. A 2009 settlement agreement between the parties established that Spanski alone could distribute the programming at issue in North and South America, whether over the Internet or otherwise. TVP continued to distribute its programming everywhere else in the world, including by offering episodes for streaming on its website, but used geoblocking technology to ensure that no IP address associated with North or South America could access any programming to which Spanski held the license. However, in 2011 attorneys for Spanski discovered that users in North and South America could still access programming that should have been geoblocked. Spanski sued TVP for infringement and, after a five-day bench trial, Judge Tanya Chutkan of the United States District Court for the District of Columbia found TVP liable. On appeal, TVP raised two main challenges to the district court’s ruling. First, it argued that it could not commit copyright infringement because none of its conduct took place within the United States, and the Copyright Act does not apply extraterritorially. Second, it argued that a defendant only faces copyright liability if its “conduct was volitional.” Because TVP merely operated an “automatic content delivery system” from which the user “selects the content it will view” without TVP’s involvement in processing that request, TVP insisted it had not violated the law. The United States filed an amicus brief on behalf of Spanski, urging the court to reject both TVP’s arguments. In an opinion written by Judge Tatel and joined by Judges Griffith and Wilkins, the court of appeals affirmed, holding TVP liable for infringing Spanski’s exclusive rights. Applying the Copyright Act to TVP’s conduct is not an impermissible extraterritorial application, the Court explained, because “the infringing performances—and consequent violation of Spanski’s copyrights—occurred on the computer screens in the United States on which the episode’s images were shown.” TVP argued that when a performance originates internationally but is shown to the public within the country, only the domestic viewer was liable for copyright infringement. The court disagreed, holding that a broadcaster remains liable for “the infringing display of copyrighted images on the viewer’s screen” whenever such a performance occurs “in the United States,” no matter where the broadcaster is located. The court also held that an unauthorized performance via a video-on-demand system like TVP’s infringed Spanski’s exclusive rights, even without proof that TVP took a “volitional” act, because TVP made it possible for end users to select copyright-protected content. The text of the Copyright Act, the court explained, imposes liability whenever a defendant makes it possible for “members of the public” to “receive the performance” of copyrighted content. The court found it unnecessary to decide whether a “volitional conduct” requirement exists at all or how far it extends, holding that TVP’s conduct constitutes infringement “whatever the scope of any such requirement might otherwise be.” In rejecting TVP’s “volitional conduct” argument, the court of appeals relied heavily on the Supreme Court’s 2014 decision in American Broadcasting Cos. v. Aereo, Inc., 134 S. Ct. 2498 (2014). In Aereo, the Supreme Court held that an intermediary service that automatically captured and retransmitted broadcast television signals infringed the public performance right, even where the end user and not the service selected which content to capture. The D.C. Circuit concluded that Aereo “forecloses [TVP’s] argument that the automated nature of its video-on-demand system or the end user’s role in selecting which content to access insulates it from Copyright Act liability.” The court noted that TVP’s video-on-demand service involved TVP itself even more directly in the infringing performances than did the system in Aereo: unlike in Aereo, TVP itself selected and uploaded the content its system made available. Both holdings are important developments. No other federal court of appeals has yet squarely held that U.S. copyright law applies to performances originating internationally that can be viewed inside the United States—though, as Professor Nimmer puts it in his copyright treatise, it requires only “a straightforward application of the statute” to hold that such performances are actionable. 5 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 17.02 (rev. ed. 2017). This holding will prevent would-be infringers from evading liability simply by relocating across a border. Separately, though the court refused to decide whether a “volitional conduct” requirement exists, its application of Aereo to TVP’s on-demand system adds fuel to the ongoing debate over the Copyright Act’s scope. Several courts of appeals, both before and since the Supreme Court’s Aereo decision, have held that the Copyright Act only applies to “volitional conduct.” BWP Media USA, Inc. v. T & S Software Associates, Inc., 852 F.3d 436 (5th Cir. 2017); Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657 (9th Cir. 2017); CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004); Parker v. Google, Inc., 242 F. App’x 833 (3d Cir. 2007). In its amicus brief, however, the Government argued that Aereo “rejected” a volitional-conduct argument. Thus, it will be up to future courts to decide the ultimate fate of the defense. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, or the authors: Howard S. Hogan – Washington, D.C. (+1 202-887-3640, email@example.com) Connor S. Sullivan* – New York (+1 212-351-2459, firstname.lastname@example.org) *Prior to joining the firm, Connor Sullivan contributed to an amicus curiae brief filed in this appeal in support of Spanski Enterprises. Please also feel free to contact the following practice group leaders: Intellectual Property Group: Wayne Barsky – Los Angeles (+1 310-552-8500, email@example.com) Josh Krevitt – New York (+1 212-351-4000, firstname.lastname@example.org) Mark Reiter – Dallas (+1 214-698-3100, email@example.com) Media, Entertainment and Technology Group: Scott A. Edelman – Los Angeles (+1 310-557-8061, firstname.lastname@example.org) Ruth E. Fisher – Los Angeles (+1 310-557-8057, email@example.com) Orin Snyder– New York (+1 212-351-2400, firstname.lastname@example.org) Appellate and Constitutional Law Group: Mark A. Perry – Washington, D.C. (+1 202-887-3667, email@example.com) Caitlin J. Halligan – New York (+1 212-351-4000, firstname.lastname@example.org) Nicole A. Saharsky – Washington, D.C. (+1 202-887-3669, email@example.com) Technology Transactions Group: David H. Kennedy – Palo Alto (+1 650-849-5304, firstname.lastname@example.org) Daniel Angel – New York (+1 212-351-2329, email@example.com) Shaalu Mehra – Palo Alto (+1 650-849-5282, firstname.lastname@example.org) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Gibson, Dunn & Crutcher LLP’s Media & Entertainment Group is pleased to announce its representation of Vivendi in connection with the proposed combination of the businesses of Vivendi Games and Activision which will create Activision Blizzard, which will be the largest pure-play video game publisher. The transaction is valued at $18.9 billion. Upon consummation of the transaction, Vivendi will hold a 52% ownership interest in the combined business, which percentage could increase to as much as 68% depending on the results of a post-closing self-tender offer by Activision Blizzard. The management of both companies hosted a joint conference call and live webcast on Monday, December 3, 2007. An audio replay of the call will be available through December 17, 2007 by calling (888) 203-1112 in the U.S. or (719) 457-0820 outside the U.S. and entering the pass-code: 5648597. In addition, a webcast replay also will be archived on the Investor Relations section of each company’s website. Gibson Dunn’s team is led by Ruth Fisher, Co-Chair of the firm’s Media & Entertainment Practice Group, and includes Mark Lahive, Mary Ruth Hughes, Kristin Blazewicz and Ciara Stephens for corporate, Hatef Behnia and Afshin Beyzaee for tax, Ron Ben-Yehuda for intellectual property, Sean Feller for employment and employee benefits, and Sandy Pfunder, Joel Sanders and Rebecca Justice Lazarus for antitrust. Details of this transaction are available on the Vivendi website. Gibson Dunn’s Media & Entertainment Group comprises talented lawyers across our firm and practice areas who are among the most highly regarded in the converging media, entertainment and technology industries, offering a single "new media" platform that is unmatched in depth and scope among large law firms. For additional information on this matter, please contact the Gibson Dunn attorney with whom you work, Ruth Fisher (310-557-8057, email@example.com) or Mark Lahive (310-552-8580, firstname.lastname@example.org) in Gibson Dunn’s Century City office, or any member of the firm’s Media & Entertainment Practice Group. © 2007 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Los Angeles of counsel Eric D. Vandevelde and Orange County associate Jared Greenberg are the authors of "Drone Privacy: Voluntary Best Practices Released by Multi-Stakeholder Group" [PDF] published in the June 13, 2016 issue of the Privacy and Security Law Report.
On 12 September 2006, the European Court of Justice (ECJ) delivered an important judgment on the interplay between national and EU copyright law, a judgment which also has implications for the interplay between IP and antitrust in the EU. The Laserdisken case concerned the import and sale in Denmark of DVDs lawfully marketed outside the European Economic Area (EEA). The key legal provision is Article 4(1) of EU Copyright Directive (2001/29) which enshrines the exclusive right for authors, in respect of the original of their works or of copies thereof, to authorise or prohibit any form of distribution to the public by sale or otherwise. Article 4(2) of the Directive provides that the distribution right is not to be exhausted except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent. It follows that for the right in question to be exhausted, two conditions must be fulfilled: first, the original of a work or copies thereof must have been placed on the market by the rightholder or with his consent and, second, they must have been placed on the market in the Community. The ECJ found that Article 4(2) of the Directive did not leave it open to the Member States to introduce or maintain in their respective national laws a rule of exhaustion in respect of works placed on the market not only in the Community but also in non-member countries. The WIPO Copyright Treaty does not affect the contracting parties’ power to determine the conditions governing how exhaustion of that exclusive right may apply after the first sale. The harmonisation of national copyright laws promotes competition in the internal market. The rule of exhaustion in the Community is not a disproportionate measure in view of the fact that legal protection of intellectual property rights is necessary in order to guarantee an appropriate reward for the use of works and to provide the opportunity for satisfactory returns on investment, and is a way of ensuring that European cultural creativity and production receive the necessary resources and of safeguarding the independence and dignity of artistic creators and performers. That the principle of equal treatment does not apply as between a producer and a licence holder established in a non-member country and a producer and a licence holder established in the Community, since the two are manifestly not comparable. Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work or David Wood (+32 2 554 7210; email@example.com) in the firm’s Brussels office. © 2006 Gibson, Dunn & Crutcher LLP The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
On March 12, 2013, the Federal Trade Commission ("FTC") updated its advertising disclosure guidelines for mobile and other online advertisers. The new guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, explains how advertisers can make disclosures "clear and conspicuous" to avoid deceiving consumers. In particular, the guidance addresses the expanding use of mobile devices with small screens and the rise of social media marketing. In this regard, the guidance includes a helpful appendix of twenty-two illustrative mock advertisements. The guidance emphasizes that the consumer protection laws embodied in the FTC Act apply equally to advertisements across all media, whether those advertisements appear via desktop computer, mobile device, or more traditional media such as print, television, telephone, or radio. Disclosures that are required to prevent an advertisement from being deceptive, unfair, or otherwise violative of an FTC rule must be presented "clearly and conspicuously." Thus, under the new guidance, advertisers must ensure that disclosures are clear and conspicuous across all devices and platforms that consumers may use to view a given advertisement. If a particular platform does not provide an opportunity to make clear and conspicuous disclosures, advertisers should avoid that platform when disseminating advertisements that require disclosures. Whether a disclosure meets the clear and conspicuous standard is measured by the disclosure’s "performance–that is, how consumers actually perceive and understand the disclosure within the context of the entire ad." The guidance points to a number of factors in this regard. For example, advertisers should consider: the placement of the disclosure in the advertisement and its proximity to the claim it qualifies; the prominence of the disclosure; whether the disclosure is unavoidable; the extent to which items in other parts of the advertisement might distract attention from the disclosure; whether the disclosure needs to be repeated several times in order to be effectively communicated, or because consumers may enter the site at different locations or travel through the site on paths that cause them to miss the disclosure; whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience. The new guidance provides a number of warnings and recommendations for advertisers using space-constrained advertisements, such as those appearing on mobile devices with smaller screens and those appearing on social media platforms. For example, where consumers must scroll in order to view a disclosure, the guidance suggests that advertisers "use text or visual cues to encourage consumers to scroll" to the disclosures. In addition, the guidance provides a number of considerations for evaluating the effectiveness of using hyperlinks to provide consumers additional information where disclosures are too complex to describe adjacent to the "triggering" claim. The guidance also suggests that advertisers avoid disclosing necessary information using pop-ups or Adobe Flash because consumer web browsers and mobile devices may be configured to block or otherwise cannot display such content. Importantly, the guidance points out that "[d]isclosures must be effectively communicated to consumers before they make a purchase or incur a financial obligation." Thus, "[w]hen a product advertised online can be purchased from brick-and-mortar stores or from online retailers other than the advertiser itself, necessary disclosures should be made in the ad." Advertisers may not rely on disclosures made by a third-party retailer that is promoted in the ad — even if the ad links directly to those disclosures on the third-party retailer’s website — because consumers may choose to purchase the product from a brick-and-mortar store or other unaffiliated online retailer. In that case, consumers may not see the disclosures prior to making their purchases. The same advice applies to "space-constrained ads," including sponsored "tweets." The guidance further provides that "[i]f the disclosure needs to be in the ad itself but it does not fit, the ad should be modified so it does not require such a disclosure or, if that is not possible, the space-constrained ad should not be used." Gibson Dunn recommends that companies advertising online carefully review their policies and practices to ensure compliance with the updated FTC guidance.  The FTC released its initial guidance, entitled Dot Com Disclosures: Information about Online Advertising, over a decade ago, in 2000.  Although the 2000 guidance defined proximity as "near, and when possible, on the same screen," and stated that advertisers should "draw attention to" disclosures, the new guidance states that disclosures should be "as close as possible" to the claim it qualifies. Gibson Dunn’s Information Technology and Data Privacy Practice Group has counseled leading businesses across the country on a wide range of privacy and cybersecurity issues, including preventing, anticipating, and responding to security breach incidents, providing guidance on the legal implications of high-priority business actions, and representing clients in matters of privacy-related regulatory scrutiny, litigation, and law enforcement interest. The Fashion, Retail and Consumer Products Practice Group includes a team of legal experts who focus on the complex and unique issues facing fashion designers, luxury goods companies, retail companies and manufacturing companies, including a broad range of corporate transactions, litigation, intellectual property, tax and real estate matters. Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn lawyer with whom you work, or any of the following: Information Technology and Data Privacy Practice Group: S. Ashlie Beringer – Palo Alto (650-849-5219, firstname.lastname@example.org)Howard S. Hogan - Washington, D.C. (202-887-3640, email@example.com)Karl G. Nelson – Dallas (214-698-3203, firstname.lastname@example.org)M. Sean Royall – Dallas (214-698-3256, email@example.com)Alexander H. Southwell – New York (212-351-3981, firstname.lastname@example.org)Debra Wong Yang – Los Angeles (213-229-7472, email@example.com)Scott H. Mellon – Dallas (214-698-3199, firstname.lastname@example.org) Fashion, Retail and Consumer Products Practice Group:Lois F. Herzeca – New York (212-351-2688, email@example.com)David M. Wilf – New York (212-351-4027, firstname.lastname@example.org) © 2013 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Los Angeles associate Nathaniel Bach is the author of "How The Fight For Streaming Royalties Is Going Over The Top" [PDF] published on May 3, 2016 by Law360.
The Indian economy continues to be an attractive investment destination due to its sustained stable growth and implementation of further liberalization policies by the Government of India ("Government"). The Government’s focus remains on improving the ease of doing business in India and many effective steps have been taken in this direction. Following our nine-month update dated October 21, 2015 (which sets out an overview of key legal and regulatory developments in India from January 1, 2015 to September 30, 2015), this update provides a brief overview of the key legal and regulatory developments in India from October 1, 2015 to April 30, 2016. Key Legal and Regulatory Developments Foreign Direct Investment Policy 1. November 2015 Amendments to the Foreign Direct Investment Policy: On November 24, 2015, the Government effected several important amendments to India’s consolidated foreign direct investment policy ("FDI Policy"). These amendments enable increased levels of foreign direct investment in a number of business sectors and simplify various sector-specific conditions under the FDI Policy. For a detailed analysis, please refer to our client alert dated December 8, 2015 at http://www.gibsondunn.com/publications/pages/Indian-Government-Amends-Foreign-Direct-Investment-Policy-Dec2015.aspx. 2. Foreign Direct Investment in Insurance: Total foreign investment ownership through any means, including portfolio investment, in an Indian insurance company (which includes insurance brokers, insurance third party administrators, surveyors and loss assessors), directly or indirectly (through one or more holding companies), is now permitted up to 49% without the prior approval of the Government ("Automatic Route"). Previously, foreign investment not exceeding 26% was permitted under the Automatic Route and foreign investment beyond 26% and up to 49% required the prior approval of the Government (through the Foreign Investment Promotion Board ("FIPB"). Prior approval of the Insurance Regulatory and Development Authority is required in all circumstances where there is any change in shareholding of an Indian insurance company. The ownership and control of an Indian insurance company (including the appointment of the CEO) must remain in the hands of resident Indians at all times. "Control" is defined to mean the right to appoint a majority of the directors on the board of the company or the power to control the management or policy decisions of a company by virtue of shareholding, management rights, shareholders agreements or voting rights agreements. 3. Foreign Direct Investment in Pension Funds: In line with the policy on foreign investment in the insurance sector, the Government has permitted foreign investment in Indian pension funds up to 49% under the Automatic Route . Previously, 26% was permitted under the Automatic Route and foreign investment beyond 26% and up to 49% required the prior approval of the Government (through the FIPB). Foreign investment in the Indian pension sector continues to be subject to the conditions set out in the Pension Fund Regulatory and Development Authority Act, 2013. 4. Foreign Investment in E-Commerce Activities: The Government, on March 29, 2016, has clarified the position on foreign direct investment in e-commerce trading entities and e-commerce market place entities. There is no restriction on foreign investment in companies engaged in B2B e-commerce activities. In respect of companies engaged in B2C e-commerce activities, the key provisions are as follows: (a) E-commerce has now been defined as the buying and selling of goods and services, including digital products, through a digital and electronic network. (b) The term ‘digital and electronic network’ has been defined to include a ‘network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles, etc.‘ (c) The Government has drawn a distinction between an ‘inventory-based’ model of e-commerce ("Inventory Model") and a ‘marketplace based’ model of e-commerce ("Marketplace Model"). Inventory Model has been defined as an e-commerce business model where the inventory of goods and services is owned by an e-commerce entity and is sold to the consumers directly. Marketplace Model has been defined as the provision of an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between a buyer and a seller. (d) The Government has clarified that foreign investment of up to 100% is permitted under the Automatic Route in companies that have a Marketplace Model. No foreign investment is permitted in companies that have an Inventory Model. (e) Some of the key conditions that companies operating the Marketplace Model must comply with are: (i) Not more than 25% of the total sales of the company can be undertaken on its marketplace by a single vendor or such vendor’s group companies; (ii) The company is permitted to provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centres, payment collection and other similar services; and (iii) The company cannot directly or indirectly influence the sale price of goods or services and are obligated to maintain a level playing field. While the above clarifications have removed ambiguities in relation to foreign investment in entities engaged in B2C ecommerce activities, there are certain grey areas that have arisen as a result of these clarifications. For example, (a) services have now been included within the definition of e-commerce – the presumption earlier was that this only includes goods, (b) there is also no guidance on what constitutes ‘influencing the sale price of goods directly or indirectly’ or how a ‘level playing field’ should be maintained by companies that have a Marketplace Model. Further clarity is required on these aspects. 5. Foreign Investment in Asset Reconstruction Companies: The Government has permitted foreign investment in asset reconstruction companies up to 100% under the Automatic Route. Previously, foreign investment of up to 49% was permitted under the Automatic Route and foreign investment beyond 49% and up to 100% required the prior approval of the Government (through the FIPB). Insurance On October 19, 2015, the Insurance Regulatory and Development Authority issued the "Guidelines on Indian Owned and Controlled" Insurance Companies (the "Guidelines") to further clarify the requirements with regard to Indian ownership and control of Indian insurance companies. The Guidelines apply to all Indian insurance companies that receive foreign investment. The Guidelines state that the ownership and control of an Indian insurance company (including the appointment of the CEO) must remain in the hands of resident Indians at all times. "Control" is defined to mean the right to appoint a majority of the directors on the board of the company or the power to control the management or policy decisions of a company by virtue of shareholding, management rights, shareholders agreements or voting rights agreements. For detailed analysis, please refer to our client alert dated October 22, 2015 at http://www.gibsondunn.com/publications/pages/Ownership-and-Control-of-Indian-Insurance-Companies-with-Foreign-Investment.aspx. Financing The Reserve Bank of India ("RBI") has promulgated the External Commercial Borrowings ("ECB") Policy-Revised Framework ("Revised Framework"). The Revised Framework lays down a more liberal approach for ECBs, whether they are long-term foreign currency denominated ECBs or Indian Rupee denominated ECBs. The Revised Framework expands the list of eligible borrowers, recognised lenders and reduces the restrictions on use of proceeds (i.e., end-use of the ECB). The Revised Framework became effective on December 2, 2015 with the publication of the relevant regulatory notifications in the Official Gazette of India. Borrowers were permitted to receive ECBs under the previous ECB regime until March 31, 2016 (if they had already executed the ECB agreement prior to the date of effectiveness of the Revised Framework). Additionally, borrowers that were in negotiations with lenders (at the time the Revised Framework became effective) were also permitted to execute ECB agreements under the previous ECB regime until March 31, 2016 for certain specific purposes such as working capital for airlines, loans for low cost affordable housing projects, etc. For detailed analysis, please refer to our client alert dated January 4, 2016 at http://www.gibsondunn.com/publications/Pages/Reserve-Bank-of-India-Introduces-Revised-ECB-Framework.aspx. Start-ups 1. The Government launched a new initiative on January 17, 2016 aimed at providing various benefits to start-up companies in India. The following are key provisions in relation to start-up companies: (a) A "start-up" has been defined to mean an entity incorporated/ registered in India (i) for a period of up to 5 years from the date of its incorporation/ registration and (ii) its turnover in any financial year has not exceeded INR 250,000,000 (approx. USD 3.67 Million) and (iii) it is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. (b) The Government has clarified that a business would be considered a start-up only if it aims to develop and commercialize (i) a new product or service or (ii) significantly improves an existing product, service or process that will create and add value for customers. (c) The RBI has made appropriate amendments to its foreign exchange regulations to state that Foreign Venture Capital Investors ("FVCIs") are now permitted to invest in all start-ups, regardless of the sector that the start-up is engaged in. Prior to this amendment, FVCIs were permitted to only invest in a list of permissible sectors. Certain other benefits announced by the RBI for start-ups include (i) transfer of shares with deferred consideration, escrow or indemnity arrangements for a period of 18 months; (ii) simplification of the process for dealing with delayed reporting of FDI; (iii) easing access to rupee denominated loans under the ECB framework; and (iv) easing operational restrictions on overseas subsidiaries of start-ups. (d) Start-ups are also exempted from certain statutory provisions relating to inspection under certain labour legislations in India by self-certifying compliance with such legislations. (e) Eligible start-ups (established between April 2016 and March 2019) are entitled to a tax deduction of one hundred per cent of the profits and gains derived by them, for a period of three years, from a business involving innovation development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property. Real Estate The Real Estate (Regulation and Development) Act, 2013 ("RERA") was notified on March 27, 2016. RERA seeks to establish a regulatory framework to govern transactions between buyers and promoters/sellers of real estate projects. It establishes state level regulatory authorities with the objective of (a) ensuring that residential projects are registered, and their details uploaded on the authorities’ website; (b) ensuring that buyers, sellers, and agents comply with obligations under the RERA; and (c) advising the government on matters related to the development of real estate. RERA also imposes a requirement that at least 70% of the funds collected for a particular real estate project from buyers will be invested solely in such project. It seeks to protect buyers by prohibiting advertisements promoting real estate projects which have not obtained all regulatory approvals along with an additional provision for penalties for delay in construction. Antitrust On March 4, 2016, the Government, through the Ministry of Corporate Affairs issued a number of notifications (the "Notifications") which have substantially (a) amended and increased the merger control thresholds and, (b) amended as well as extended the existing target based exemption under the merger control regulations in India for another five years. 1. Target Based Exemption: On March 4, 2011, the Government had introduced a de minimis target based exemption (i.e., based on the valuation of assets or turnover of the target company) which excluded certain transactions from the provisions of Section 5 of the [Indian] Competition Act, 2002 (the "Competition Act") for a period of five years. Transactions that fell below the threshold did not have to be notified to the Competition Commission of India ("CCI"). The Government, through the Notifications has extended the exemption for another five-year period, i.e., until March 4, 2021. The values of asset/turnover thresholds under this exemption have also been raised. 2. Merger Control Thresholds: Section 5 of the Competition Act sets out the asset and turnover thresholds that are required to be satisfied for a transaction to qualify as a "combination". A qualifying combination is required to be mandatorily notified to the CCI for prior approval, unless the target based-exemption discussed above is applicable. The Notifications have amended and increased these thresholds. Please refer to our client alert dated March 15, 2016 for more details, including these revised thresholds: http://www.gibsondunn.com/publications/Pages/Indian-Government-Amends-Merger-Control-Regulations.aspx. Arbitration The Arbitration & Conciliation (Amendment) Ordinance, 2015 ("Ordinance") was promulgated on October 23, 2015 to introduce substantial changes to the [Indian] Arbitration & Conciliation Act, 1996 (the "Arbitration Act"). The Ordinance was approved by both houses of the Indian Parliament and was published in the official gazette on January 1, 2016 after receiving Presidential assent as the Arbitration and Conciliation (Amendment) Act, 2015 ("Amendment Act"). The primary objective of the Amendment Act is to encourage expeditious resolution of disputes and transparency in arbitration proceedings. The Amendment Act has reformed domestic arbitrations, foreign seated international commercial arbitrations (in so far as the Arbitration Act applies to them) and international commercial arbitrations seated in India by reducing delays and limiting the scope of judicial intervention. For detailed analysis, please refer to our client alert dated November 10, 2015 at http://www.gibsondunn.com/publications/pages/Government-of-India-Amends-Indian-Arbitration-and-Conciliation-Act–1996.aspx.  http://dipp.nic.in/English/acts_rules/Press_Notes/pn12_2015.pdf  http://dipp.nic.in/English/acts_rules/Press_Notes/pn1_2016.pdf  http://dipp.nic.in/English/acts_rules/Press_Notes/pn2_2016.pdf  http://dipp.nic.in/English/acts_rules/Press_Notes/pn3_2016.pdf  http://dipp.nic.in/English/acts_rules/Press_Notes/pn4_2016.pdf Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. For further details, please contact the Gibson Dunn lawyer with whom you usually work or the following authors in thefirm’s Singapore office: India Team:Jai S. Pathak (+65 6507 3683, email@example.com)Priya Mehra (+65 6507 3671, firstname.lastname@example.org)Bharat Bahadur (+65 6507 3634, email@example.com)Karthik Ashwin Thiagarajan (+65 6507 3636, firstname.lastname@example.org)Sidhant Kumar (+65 6507 3661, email@example.com) © 2016 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Los Angeles partner Blaine H. Evanson and associate Lali Madduri are the authors of "Judicial campaign rules go to court" [PDF] published in the December 23, 2014 issue of the Daily Journal.
The Federal Trade Commission (“FTC”) is increasingly focusing on the advertising, data privacy/security, and e-commerce processes of prominent companies marketing legitimate, valuable products and services, as compared to the types of fraudsters and shams that have been a central focus of FTC attention in the past. The FTC’s recently concluded action against DirecTV is emblematic of this trend. In FTC v. DirecTV, the FTC alleged that DirecTV’s marketing failed to adequately disclose that (a) the introductory discounted price lasted only twelve months while subscribers were bound to a 24-month commitment; (b) subscribers who cancelled early would be charged a cancellation fee; and (c) subscribers would automatically incur monthly charges if they did not cancel a premium channel package after a free three-month promotional period. On August 16, 2017, after hearing the FTC’s case-in-chief, Judge Gilliam of the U.S. District Court for the Northern District of California granted judgment for DirecTV on the majority of these claims. And earlier this week, the FTC agreed to voluntarily dismiss the remainder of its case with prejudice. Gibson Dunn partners Sean Royall and Rich Cunningham and associates Brett Rosenthal and Emily Riff recently published an article titled Lessons from FTC’s Loss in, and Subsequent Abandonment of, DirecTV Advertising Case in the Washington Legal Foundation’s The Legal Pulse blog. The article describes the case, the FTC’s evidence, and key takeaways for companies crafting advertising and marketing disclosures. Lessons from FTC’s Loss in, and Subsequent Abandonment of, DirecTV Advertising Case (click on link) © 2018, Washington Legal Foundation, The Legal Pulse, October 23, 2018. Reprinted with permission. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the authors of this Client Alert, the Gibson Dunn lawyer with whom you usually work, or one of the leaders and members of the firm’s Antitrust and Competition or Privacy, Cybersecurity and Consumer Protection practice groups: Washington, D.C. Scott D. Hammond (+1 202-887-3684, firstname.lastname@example.org) D. Jarrett Arp (+1 202-955-8678, email@example.com) Adam Di Vincenzo (+1 202-887-3704, firstname.lastname@example.org) Howard S. Hogan (+1 202-887-3640, email@example.com) Joseph Kattan P.C. (+1 202-955-8239, firstname.lastname@example.org) Joshua Lipton (+1 202-955-8226, email@example.com) Cynthia Richman (+1 202-955-8234, firstname.lastname@example.org) New York Alexander H. Southwell (+1 212-351-3981, email@example.com) Eric J. Stock (+1 212-351-2301, firstname.lastname@example.org) Los Angeles Daniel G. Swanson (+1 213-229-7430, email@example.com) Debra Wong Yang (+1 213-229-7472, firstname.lastname@example.org) Samuel G. Liversidge (+1 213-229-7420, email@example.com) Jay P. Srinivasan (+1 213-229-7296, firstname.lastname@example.org) Rod J. Stone (+1 213-229-7256, email@example.com) Eric D. Vandevelde (+1 213-229-7186, firstname.lastname@example.org) San Francisco Rachel S. Brass (+1 415-393-8293, email@example.com) Dallas M. Sean Royall (+1 214-698-3256, firstname.lastname@example.org) Veronica S. Lewis (+1 214-698-3320, email@example.com) Brian Robison (+1 214-698-3370, firstname.lastname@example.org) Robert C. Walters (+1 214-698-3114, email@example.com) Denver Richard H. Cunningham (+1 303-298-5752, firstname.lastname@example.org) Ryan T. Bergsieker (+1 303-298-5774, email@example.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.
Orange County associates Jared Greenberg and Brett Long are the authors of “Local Drone Law Preempted in First-of-its-Kind Ruling,” [PDF] published by The Daily Journal on October 5, 2017.