- On March 6, 2024, the U.S. Food and Drug Administration (FDA) sent a letter to all cinnamon manufacturers, processors, distributors, and facility operators in the US, reminding them of the requirement to implement controls to prevent contamination from potential chemical hazards in food, including ground cinnamon products. The Agency also recommended the voluntary recall of certain ground cinnamon products sold by a number of brands at six different retail chains that were found to contain levels of lead.
- This letter follows the recent incidents associated with certain cinnamon apple sauce pouches that resulted in lead poisoning in young children. As we have previously blogged, FDA’s investigation into the contaminated apple sauce pouches traced the contamination back to a manufacturer and cinnamon supplier in Ecuador.
- FDA notified the distributors and manufacturers of products found to contain elevated levels of lead and recommended that the manufacturers voluntarily recall these products because prolonged exposure to them may be unsafe. The products were identified during an FDA-initiated sampling and testing effort to assess cinnamon sold across numerous retail stores. No illnesses or adverse events have been reported to date related to the ground cinnamon products listed in this news release, but the FDA is concerned that, because of the elevated lead levels in these products, continued and prolonged use of the products may be unsafe.
- Since the issuance of the letter, recipient companies El Chilar and Raja Foods, as well as Stonewall Kitchen and Colonna, have issued voluntary recalls for some of their cinnamon products.
- FDA continues to work with the Center for Disease Control and Prevention (CDC), as well as state and local partners, to investigate elevated lead and chromium levels in individuals with reported exposure to apple cinnamon fruit puree pouches.
Author: National Law Forum
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The Antitrust Investigator Will See You Now: What Healthcare And Pharma Should Expect In A World Of Enhanced Antitrust Scrutiny
Highlights
- Healthcare entities should expect heightened government scrutiny of mergers, acquisitions, and business behaviors that could be construed as restricting competition in healthcare and pharma
- The FTC, DOJ, and HHS have advanced a “whole-of-government approach,” including data sharing, cooperative enforcement, and enhanced antitrust training
- Businesses should take note of practices that are likely to trigger investigatory and enforcement actions
According to media reports, the Department of Justice (DOJ) has opened an antitrust investigation into UnitedHealth Group, which is the owner of the United States’ largest health insurer, UnitedHealthcare. The focus of the inquiry appears to be the relationship between the UnitedHealthcare insurance plan and one of its health services divisions, Optum, and the potential impact on rivals and consumers.
While tech giants have grabbed most of the headlines when it comes to enhanced antitrust scrutiny, this new matter is the DOJ’s second antitrust investigation into UnitedHealth Group in recent years, giving teeth to the administration’s claim that it has an aggressive antitrust policy in the healthcare sector.
In another example of increased antitrust scrutiny, the Federal Trade Commission (FTC) recently announced a new initiative in partnership with the DOJ and Department of Health and Human Services (HHS) to address what they consider to be the effects of anticompetitive behavior in the healthcare and pharmaceutical spaces. According to the government, these new efforts are aimed at lowering consumer costs and will include “partnering on new initiatives which include a joint Request for Information to seek input on how private-equity and other corporations’ control of health care is impacting Americans.”
Although interagency cooperation is the focus of the recent push to ramp up antitrust investigations and enforcement, each agency will still spearheaded their own regulatory activity.
Federal Trade Commission
FTC Chair Lina Khan has made it clear that her agency will devote more resources to enforcement in the healthcare industry, and emphasized that “safeguarding fair competition and rooting out unlawful business practices in health care markets is a top priority for the FTC.” In furtherance of these priorities, the commission has recently taken the following actions:
- Orange Book Policy: The FTC challenged more than 100 patents held by pharmaceutical companies that they claim are inaccurately or improperly listed in the FDA’s Orange Book. The commission also released a policy statement explaining its renewed focus on Orange Book infractions.
- Proposed Non-compete Rule: The FTC presented a new rule that would place a ban on non-compete clauses in employee contracts.
U.S. Department of Justice
Jonathan Kanter, Assistant Attorney General of the DOJ’s Antitrust Division, highlighted the division’s emphasis on the healthcare space when he said, “we are committed to weeding out anticompetitive practices and market consolidation that hinder Americans’ access to quality care at affordable rates, or deprive health care workers of fair wages and opportunity.” The following are just a few examples of how the DOJ has implemented this renewed focus:
- Criminal Penalties: Recently, the DOJ’s Antitrust Division successfully secured a deferred prosecution agreement against Teva Pharmaceuticals, obtaining the largest monetary penalty ever (over $200 million) against a purely domestic producer that was allegedly operating an antitrust cartel.
- Blocked Mergers: The Antitrust Division filed a suit to stop Aon plc’s $30 billion proposal to acquire Willis Towers Watson, two of the three largest brokers of health insurance and retirement benefits consulting. The companies later ceased their pursuit of the merger.
U.S. Department of Health and Human Services
HHS Secretary Xavier Becerra made his agency’s priorities clear when he recently stated that “the Biden-Harris Administration remains laser-focused on increasing access to high-quality, affordable health care for all Americans, like by making hearing aids available for sale over the counter and lowering prescription drug costs through the Inflation Reduction Act.” The department’s initiatives have included:
- Ownership Transparency: For the first time, HHS, via the Centers for Medicare & Medicaid Services, made ownership data available on federal qualified health centers and rural health clinics on data.cms.gov. HHS hopes the release of this data will help catalyze enforcement actions by identifying common ownership.
- Medicare Advantage Marketing: HHS also announced new efforts to crack down on what it considers “predatory marketing” that seeks to steer patients towards Medicare Advantage plans that “may not best meet their needs.”
Takeaways
In light of the government’s renewed focus on increased competition, expanded enforcement actions, access to quality care, more affordable services and products, and transparency of ownership in the healthcare and pharmaceutical industries, legal and compliance departments should consider being proactive about conducting thorough reviews of current practices. This is particularly true for mergers and acquisitions, competitive strategies, and pricing decisions, which are the business activities most likely to conflict with these recently energized regulatory bodies. Even healthcare providers with stellar compliance programs should expect to receive more frequent and targeted requests for information from enforcement authorities about their business partners, payors, and marketing practices.
Concussions and Their Impact: Recognizing the Signs and Seeking Help
A concussion is a mild form of traumatic brain injury and is usually caused by blunt force to the head. In some cases, it can result from a back-and-forth jerking of the head, resulting in the brain matter being dashed against the skull wall. It’s a pretty common injury in children, individuals engaged in contact sports, and Michigan car accidents.
Most concussions are not life-threatening. However, some cases can develop complications that could significantly impact a victim’s life. So, the first step in getting timely treatment is understanding its symptoms and what you ought to do after suffering an injury.
Signs and Symptoms of a Concussion
Symptoms and signs of a concussion fall into three categories: physical, cognitive, and psychological or emotional.
PHYSICAL SYMPTOMS
Where a significant blow to the head causes a concussion, the victim could pass out for a few seconds. However, this is not always the case, so you cannot use passing out as the litmus test for concussions. Often, patients exhibit symptoms like headaches, nausea and vomiting, blurred vision, dizziness, loss of balance, slurred speech, fatigue, ringing ears, tingling in the hands, loss of taste or smell, etc.
COGNITIVE SYMPTOMS
With a concussion being a brain injury, it is unsurprising that it may cause problems with brain function. In some patients, a concussion will cause problems with concentration, confusion, forgetfulness, feeling slowed down in your thinking, and trouble finding words.
EMOTIONAL SYMPTOMS
A concussion can, in some patients, cause emotional problems, resulting in a deviation from a person’s normal behavior. For example, patients may become easily irritable, report feeling foggy or “out of it,” experience immense sadness, and have anxiety.
When to See a Doctor
In most cases, symptoms of a concussion will start to show immediately after an accident, in which case seeing a doctor makes absolute sense. However, concussions are among the few types of injuries that tend to have delayed onset. In some cases, it can take up to 72 hours or even more for the first signs of a concussion to show.
If you are in an accident where you have suffered a blow to the head or are violently shaken, it is always a good idea to see a doctor. You may not have to call 911 if your symptoms are not as severe, but it is best to see a doctor on the same day or within 72 hours of an accident at most.
Timely medical interventions help in several ways. It helps stop the deterioration of an injury, shortens recovery time, and provides the documentation necessary for filing a personal injury claim if you intend to seek compensation.
What to Do To Recover Damages
Once your health is taken care of, focus on evidence gathering, starting with scene documentation in pictures and video. If there were any witnesses to the incident, talk to them, record their statements, and get their contacts so you can easily trace them if you need help with your case. If it is a car accident, you will need to get the other driver’s insurance and vehicle registration details.
Besides evidence, you need to prepare for the legal battle. It doesn’t always have to go all the way to court, but you will still need to work with a personal injury lawyer to get the best chances at recovering fair compensation.
Personal injury lawyers bring knowledge, investigation and evidence-gathering skills, negotiation skills, and respect, which altogether help you in mitigating mistakes and increasing your chances of getting a fair outcome.
Nevada Reaffirms Inquiry Notice Standards for Medical Malpractice Statutes of Limitations
Igtiben v. Eighth Jud. Dist. Ct., 140 Nev. Adv. Op. 9 (App. Feb. 22, 2024), concerned a prisoner who was transported to a hospital for medical treatment and died in the hospital after treatment began. At the time, the applicable statute of limitations contained in NRS 41A.097(2) was “1 year after the plaintiff discovers or through the use of reasonable diligence should have discovered the injury….” This also is known as inquiry notice.
Applied here, the prisoner’s mother obtained his complete hospital medical chart six weeks after the death. Approximately fourteen months after the death, a forensic pathologist the family hired concluded professional negligence contributed to the death. The family filed their lawsuit eight months after receiving the forensic pathologist’s report. The hospital and physician moved to dismiss, arguing the family’s one-year statute of limitations had expired. The district court denied the motion, concluding a genuine issue of material fact was present because the family filed suit within eight months of the pathologist’s report.
Nevada’s Court of Appeals reversed and directed the district court to dismiss the complaint. In Nevada, inquiry notice for potential medical malpractice begins when the plaintiff or the plaintiff’s representative receives “all relevant medical records.” Applied here, the only relevant medical records were the hospital records. Thus, the family had the information necessary to investigate the care and treatment and trigger inquiry notice just six weeks after the death. The date that the forensic pathologist provided his report was irrelevant.
Igtiben might provide greater certainty to providers and patients as they evaluate potential professional negligence claims. However, it underscores the importance of careful responses to requests for medical records because if other “relevant” records existed but were not provided, inquiry notice might not be triggered.
U.S. Corporate Transparency Act: CTA is Declared Unconstitutional in U.S. District Court Case
The Corporate Transparency Act has been declared unconstitutional. On March 1, 2024, U.S. District Court Judge Liles C. Burke issued a 53-page opinion[1] granting summary judgment for the National Small Business Association and held that the Corporate Transparency Act “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.”
As a result, Judge Burke found the CTA to be unconstitutional because it exceeds the Constitution’s limits on Congress’ power, without even reaching a decision on whether it violates the First, Fourth, and Fifth Amendments. The Court then permanently enjoined the government from enforcing the CTA against the named plaintiffs and ordered a further hearing on the award of costs of litigation.
While it is likely that this litigation will continue to play out in the federal court system, the initial victory has gone to small business and importantly that means that compliance with this now unconstitutional regulatory regime can be set aside for the current time being.
[1] Nat’l Small Bus. United v. Yellen, No. 5:22-cv-01448-LCB (N.D. Ala. 2022)
In Alabama, Pre-Embryos are “Extrauterine Children” Under the State’s Wrongful Death Statute
Background
On February 16, 2024, the Alabama Supreme Court issued an opinion in the consolidated cases LePage et al., v. The Center for Reproductive Medicine et al. and Burdick-Aysenne et al., v. The Center for Reproductive Medicine et al., SC-2022-0579, in which the Court reversed a trial court’s dismissal of the plaintiffs’ civil wrongful-death claims and allowed the plaintiffs to move forward with a cause of action under the Alabama Wrongful Death of a Minor Act (the “Act”).[1] In so holding, the Alabama Supreme Court found that fertilized pre-embryos stored outside of the human body are “extrauterine children” and thus are included in the definition of “minor children” for purposes of the Act.
Originally passed in 1872, when in-vitro fertilization (“IVF”) would have been considered science fiction, the Act allows the parents or legal representatives of a “minor child” to sue defendants in civil court for monetary damages for “any wrongful act, omission, or negligence” that caused the minor child’s death.[2] However, the Act does not define “child” or “minor child”. Instead, the Court relied on prior cases that interpreted the term “minor child” to include an “unborn child . . . regardless of the child’s viability or stage of development”.[3] The Court then extended that meaning to include pre-embryos, reasoning that “extrauterine children” must be children based on the Court’s interpretation of the dictionary definition of the meaning of the word “child”. As a result, the Court has created a pathway for plaintiffs to sue IVF providers under civil law for the wrongful death of a minor child for having terminated pre-embryos in Alabama. This type of decision has been a goal for those in the fetal personhood movement.[4]
Scope of the Alabama Supreme Court Decision
This decision is rightfully garnering attention from the IVF provider community and the wider public because it may be the first time a court has conferred even limited “personhood” rights to a pre-embryo that has never entered a human body. Historically, pre-embryos have been treated as property and have been the subject of disputes in the family law context across the country.[5] While some state abortion bans prohibit termination from the point of fertilization, such bans tend to govern only the activity that occurs within a uterus or at least within the human body.[6] Instead, re-classifying pre-embryos as human children in all contexts could make IVF treatment using pre-embryos impossible. For example, common practices such as cryogenic freezing of pre-embryos for long-term storage or disposal of stored pre-embryos for medical research purposes could be considered child endangerment or even homicide.
However, the Alabama Supreme Court’s decision is limited to the interpretation of what constitutes a “minor child” under the Act. The majority did not interpret the meaning of what constitutes a human being or a child under any other Alabama law. Thus, for the moment, the immediate impact of this decision is on the application of a particular statute – the Alabama Wrongful Death of a Minor Act – in a particular context – the alleged negligent termination of pre-embryos by a rogue patient in a fertility clinic.
Further, the Court did not resolve the defendant clinics’ claims that the plaintiffs waived the possibility of raising wrongful death claims by signing contracts with the defendant clinics that contained provisions governing the destruction of pre-embryos that had remained frozen for longer than five years, donation of pre-embryos to medical research, or discarding “abnormal embryos” created through IVF. Instead, the Court acknowledged the need for further briefing on whether the plaintiffs had indeed contractually waived wrongful death claims or were otherwise equitably estopped from bringing them against the defendant clinics.
In the near term, the defendant clinics could ask the Alabama Supreme Court to reconsider its decision, or the defendant clinics could petition the United States Supreme Court for certiorari. In the long term, the defendant clinics and other IVF providers could petition the Alabama legislature for an amendment to the Act that would define “minor child” in a manner that would exclude pre-embryos created and stored outside of the human body.
Impact on IVF in Alabama
Though the Alabama Supreme Court confined its holding to Alabama’s Wrongful Death of a Minor Statute, the limited nature of the ruling is causing confusion and uncertainty around what is and what is not allowed under Alabama law. For example, some fertility providers in the state have announced that they will pause IVF treatments to evaluate the impact of the Court’s decision.[7]
The majority justices were careful not to extend this interpretation of the meaning of a “child” to the state’s criminal code or other portions of Alabama law. Some future action would be required to apply this ruling beyond Alabama’s wrongful death statute, such as future litigation. Alabama’s criminal homicide and assault laws, at least, apply only to “unborn children in utero”.[8] Nevertheless, IVF clinics and providers in Alabama may not wish to serve as test cases for a possible expansion of the Alabama Supreme Court’s logic in the present case to laws such as Alabama’s child abuse and neglect laws, where the term “child” is similarly underdefined.[9] Alabama already has used Alabama’s child abuse and neglect laws to prosecute pregnant women for alleged harms to “unborn” children under a theory of child endangerment.[10] Moreover, aggravated child abuse – which includes abuse on more than one occasion or abuse that causes “serious physical injury” – is a felony in Alabama.[11]
At present, the most significant difference between allowing a plaintiff in Alabama to sue an IVF provider for the destruction of pre-embryos as property based on a theory of negligence versus allowing a plaintiff to sue for the wrongful death of a human child is the availability of punitive damages – plaintiffs cannot recover punitive damages from a claim of negligence in Alabama.[12] Moreover, there are no caps on punitive damages in wrongful death cases in Alabama[13] and thus, awards for damages can be exponentially higher in a wrongful death case.
At the very least, IVF providers in Alabama who wish to continue to offer the full range of IVF services in Alabama should evaluate whether they have in place appropriate controls to ensure pre-embryos are safely and securely stored and should also review insurance policies to ensure adequate coverage, given the possibility of expanding liability. Cautious providers in Alabama may choose to limit services, such as limiting the number of retrievals, so that no more than one pre-embryo is created at a time or eliminate storage options for multiple pre-embryos such as cryogenic freezing or only freezing eggs with the possibility of crossing state lines when it is time for the creation of the embryo. Unfortunately for patients in need of assisted reproductive therapies, the chilling effect of the Alabama Supreme Court’s decision in this case may mean some providers in Alabama may stop providing IVF services altogether. It will be interesting to see how other states respond in light of this new decision from the Alabama Supreme Court.
ENDNOTES
[1] Ala. Code § 6-5-391 (“When the death of a minor child is caused by the wrongful act, omission, or negligence of any person, persons, or corporation, or the servants or agents of either, the father, or the mother as specified in Section 6-5-390, or, if the father and mother are both dead or if they decline to commence the action, or fail to do so, within six months from the death of the minor, the personal representative of the minor may commence an action.”).
[2] Id.
[3] Citing Mack v. Carmack, 79 So. 3d 597 (Ala. 2011).
[4] See, e.g., Bloomberg Law, Alabama Embryo Ruling Gives Boost to Fetal Personhood Movement (Feb. 21, 2024)
[5] See, e.g., Davis v. Davis, 842 S.W.2d 588, 594 (Tenn. 1992), on reh’g in part, No. 34, 1992 WL 341632 (Tenn. Nov. 23, 1992) (“One of the fundamental issues the inquiry poses is whether the preembryos in this case should be considered “persons” or “property” in the contemplation of the law. The Court of Appeals held, correctly, that they cannot be considered “persons” under Tennessee law[.]”
[6] See, e.g., Idaho Code § 18-604(1) (““Abortion” means the use of any means to intentionally terminate the clinically diagnosable pregnancy of a woman with knowledge that the termination by those means will, with reasonable likelihood, cause the death of the unborn child”) and Idaho Code § 18-604(11) (““Pregnant” and “pregnancy.” Each term shall mean the reproductive condition of having a developing fetus in the body and commences with fertilization.”).
[7] Associated Press, Alabama hospital puts pause on IVF in wake of ruling saying frozen embryos are children (Feb. 21, 2024).
[8] Ala. Code § 13A-6-1 (emphasis added).
[9] See Ala. Code § 26-14-1 (defining “child” as “[a] person under the age of 18 years.”)
[10] Hicks v. State, 153 So. 3d 53, 58 (Ala. 2014). Note also that the Alabama Supreme Court in the present case cited to Hicks – which held that the term “child” included an “unborn” child – in support of extending the definition of “unborn child” to include an “extrauterine child”.
[11] Ala. Code § 26-15-3.1.
[12] Lafarge N. Am., Inc. v. Nord, 86 So. 3d 326, 335 (Ala. 2011) (“Punitive damages cannot be awarded on a negligence claim[.]”)
[13] Ala. Code § 6-11-21(j); see also Springhill Hosps., Inc. v. Patricia Bilbrey W., No. SC-2022-0719 (Ala. Aug. 4, 2023).
©2024 Epstein Becker & Green, P.C. All rights reserved.
by: Erin Sutton , Lynn Shapiro Snyder , Amy K. Dow , Susan Gross Sholinsky of Epstein Becker & Green, P.C.
For more news on the Alabama Supreme Court’s IVF Decision, visit the NLR Litigation / Trial Practice section.
Dartmouth Basketball Players Vote to Be First College Athletes Represented by a Union
On March 5, 2024, players on the Dartmouth College men’s basketball team voted to unionize, making the group the first college sports team to do so in the United States. Dartmouth College has already filed an appeal with the National Labor Relations Board (NLRB), setting up a legal challenge that will have significant implications for the status of college athletes and the future of college sports in the United States.
Quick Hits
- The Dartmouth men’s basketball team voted to unionize in what would be the first union to represent college athletes.
- Dartmouth has filed an appeal with the NLRB that could determine whether college athletes are employees within the meaning of the NLRA.
- The union vote could have significant implications for the future of college sports in the United States.
In a representation election overseen by the NLRB, the Dartmouth men’s basketball players reportedly voted 13-2 to be represented by the Service Employees International Union Local 560. The Trustees of Dartmouth College immediately filed a request for a review of the regional director’s decision and direction of election that had allowed the unprecedented election to proceed despite serious implications for college sports.
The election comes after an NLRB regional director in Boston, Massachusetts, ruled on February 5, 2024, that the men’s basketball players at Dartmouth—who compete in the National Collegiate Athletic Association (NCAA) Division I, the highest level of college athletics—are “employees” within the meaning of the National Labor Relations Act (NLRA) and have the right to a union election.
Dartmouth argued in its request for review that the players cannot be considered employees under the NLRA because they are amateur students who are provided with financial aid and academic resources, not compensation, and do not provide any service to the school.
Dartmouth, which is a private institution in New Hampshire and part of the all-private Ivy League collegiate athletic conference, called the regional director’s decision an “unprecedented, unwarranted, and unsupported departure” from applicable legal standards that creates a “new definition of ‘employee’” and “promises to have significant negative labor and public policy implications.”
College Athletes’ Employment Status
NLRB Region 1 Director Laura Sacks found that the Dartmouth men’s basketball players were employees in large part because the school “exercises significant control” over their participation on the team, including determining when players practice and play, review film, engage with alumni, and take part in other team-related activities. During travel, the school controls when and where the players travel, eat, and sleep, the regional director found.
Further, the regional director found that despite questions about the revenue generated, the players generate publicity for the school, and do so to receive various economic benefits, including equipment and apparel, tickets to games, lodging, meals, and other specialized academic and career development support.
The Dartmouth appeal tees up for the NLRB the issue of whether college athletes at private schools are employees after the NLRB punted on a similar issue in a 2015 case involving college football players at Northwestern University that left open the issue of whether college athletes at private universities may be considered employees under the NLRA.
In the Northwestern case, the full Board later declined to assert jurisdiction over the case, finding it “would not serve to promote stability in labor relations,” largely because the majority of schools that compete in college football at the highest level are public institutions not subject to the NLRA.
The regional director in Dartmouth reached her conclusion despite the significant differences in the economics of college basketball and football that distinguished the Dartmouth case from the Northwestern case, where the players received athletic scholarships in a sport—football—that generated more revenue. Further, unlike the highest level of college football, which is comprised mostly of public universities, Dartmouth is a member of a collegiate athletic conference made up entirely of private universities that do not provide athletic scholarships.
Looking Ahead
If the Board agrees that the Dartmouth basketball players are employees and allows the union election to stand, it could have a ripple effect, with college athletes at private universities across the country seeking to organize.
Yet the Dartmouth basketball players’ unionization vote is only the latest in a string of legal developments related to whether college athletes may be considered employees or parties entitled to receive compensation under various legal standards, including under the NLRA and Fair Labor Standards Act (FLSA). On February 23, 2023, the U.S. District Court for the Eastern District of Tennessee issued a preliminary injunction blocking the NCAA from enforcing new rules on athletes’ compensation derived from name, image, and likeness (NIL) rights—specifically, rules restricting the ability of so-called school “boosters” to negotiate with NCAA athletes during the recruiting and transfer processes.
Federal Court Strikes Down the Corporate Transparency Act as Unconstitutional
On March 1, 2024, the federal judge presiding over the lone case testing the validity of the Corporate Transparency Act (CTA) struck down the CTA as unconstitutional. As we have explained, through the CTA, Congress imposed mandatory reporting obligations on certain companies operating in the United States, in an effort to enhance corporate transparency and combat financial crime. Specifically, the CTA, which took effect on January 1, 2024, requires a wide range of companies to provide personal information about their beneficial owners and company applicants to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). More than 32.5 million existing entities are expected to be subject to the CTA, and approximately 5 million new entities are expected to join that number each year. By mid-February, approximately a half million reports had been filed under the CTA according to FinCEN.
The CTA’s enforceability is now in doubt. In National Small Business United d/b/a National Small Business Association v. Yellen, the Honorable Liles C. Burke of the United States District Court for the Northern District of Alabama held that the CTA exceeded Congress’s authority to regulate interstate commerce, and that the CTA was not necessary to the proper exercise of Congress’ power to regulate foreign affairs or its taxing power. The Court issued a declaratory judgment—stating that the CTA is unconstitutional—and enjoined the federal government from enforcing the CTA’s reporting requirements against the plaintiffs in that litigation. A nationwide injunction, which would have raised its own enforceability concerns, was not included in the Court’s ruling.
The Court focused on three aspects of the CTA. First, the Court highlighted that the CTA imposes requirements on corporate formation, which is traditionally left to state governments as matters of internal state law. Second, the Court observed that the CTA applies to corporate entities even if the entity conducts purely intrastate commercial activities or no commercial activities at all. Third, the Court concluded that the CTA’s disclosure requirements could not be justified as a data-collection tool for tax officials as that would raise the specter of “unfettered legislative power.”
What the Decision Means for Entities Subject to the CTA
The Court’s decision creates uncertainty on entities’ ongoing obligations under the CTA. Although the Court purported to limit its injunction to the parties in the litigation before it, the lead plaintiff in the suit is the National Small Business Association (NSBA). In its opinion, the Court held that the NSBA had associational standing to sue on behalf of its members. Based on precedent, this means the Court’s injunction likely benefits all of the NSBA’s over 65,000 members. If so, the government is prevented from enforcing the CTA’s reporting requirements against any entity that is a member of the NSBA.
Regardless of membership in the NSBA, however, the Court’s declaratory judgment that the CTA is unconstitutional also raises serious doubts about the government’s ability to enforce the CTA’s reporting requirements. This could amount to a de facto moratorium on CTA enforcement, depending on the government’s view of the decision.
What Happens Next
The government will likely appeal this decision, but the Court’s injunction and declaration will remain in effect unless a stay is granted. To receive a stay, the government will first likely need to file a motion in the district court, which will consider (1) how likely it is that the government will succeed on appeal; (2) whether the government will be irreparably harmed without a stay; (3) whether a stay will injure other parties interested in the litigation; and (4) whether a stay would benefit the public interest. If the district court denies a stay, the government will be able to seek a stay from the Atlanta-based United States Court of Appeals for the Eleventh Circuit.
The government has 60 days to appeal, though it will likely file its appeal sooner given the grant of an injunction and decision’s far-reaching consequences. The grant or denial of stay should be resolved in the coming weeks, but the timing of any final decision from the Court of Appeals is uncertain. In 2023, the median time for the Eleventh Circuit to resolve a case was over 9 months. However, the key deadline by which tens of millions of companies otherwise must file their initial report under the CTA is January 1, 2025.
Navigating Hemp THC Beverages
Nonalcoholic beverages infused with delta-9 tetrahydrocannabinol (THC) derived from hemp (aka intoxicating hemp beverages) are becoming increasingly popular for consumers looking for an alternative to alcohol.
With major alcohol retailers like Total Wine entering the cannabis space, alcohol beverage producers may be looking for opportunities to leverage their existing experience in manufacturing, marketing and distributing alcohol beverages towards the emerging intoxicating hemp beverage market. While intoxicating hemp beverages are arguably legal pursuant to the Agriculture Improvement Act of 2018 (2018 Farm Bill), risks remain under federal and state food and drug laws. Accordingly, beverage producers looking to enter this emerging market should become familiar with the ambiguities involved.
Federal Treatment of Intoxicating Hemp Beverages
The 2018 Farm Bill removed hemp, defined as cannabis (Cannabis sativa L.) and derivatives of cannabis with extremely low concentrations of delta-9 THC (specifically, no more than 0.3 percent THC on a dry weight basis), from the definition of “marijuana” in the Controlled Substances Act. The federal government defines hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Accordingly, products that meet the definition of “hemp” may be marketed and sold in the United States and are no longer classified under federal law as illegal drugs.
How Is Hemp Regulated?
Under the 2018 Farm Bill, the US Department of Agriculture (USDA) has been assigned to regulate hemp production.
However, any hemp-derived foods, including beverages, are subject to regulation by the US Food & Drug Administration (FDA) under the Food, Drug, and Cosmetics Act (FDCA). While the FDA has largely avoided enforcement actions against such products, focusing most of its efforts on products making unsubstantiated medical and therapeutic claims, it has clearly concluded that it is a prohibited act under federal law to introduce any food in the market to which THC or cannabidiol (CBD) has been added. Therefore, the risk of federal enforcement remains until the agency changes its stance towards THC as a beverage additive.
State Regulation
While the federal government has been inactive in this space, the legal status of intoxicating hemp beverage products varies significantly by state. On the one hand, several states, including Minnesota, have expressly legalized the inclusion of hemp-derived cannabinoids in beverage products, with clear regulations regarding testing, labeling, advertising and more. On the other hand, some states have legalized hemp beverage products but lack a robust regulatory framework – leading to a mostly unregulated, laissez-faire market.
Further, many states fall into a grey area when it comes to the legality of such products. Some of these states have legalized hemp along the lines of the 2018 Farm Bill but have not officially opined on whether it can be added to beverage products, while others do not mention hemp products at all. A subset of states has expressly legalized hemp in beverages, as long as it complies with federal guidance, which currently does not affirmatively allow hemp to be used as a beverage additive.
One of the most extreme measures taken by state officials to ban hemp from beverage products is currently underway in South Carolina. The state’s Department of Health and Environmental Control (DHEC) recently issued a letter to the hemp industry warning that certain hemp products are not approved to be added to beverage products, including delta-9 THC.
In its letter, the DHEC also ruled that labels and packaging may not contain references to “THC,” “CBD” or “delta-9” products, or isolates, as this implies the product is no longer a food item but is a drug and is unlawful.
This new guidance is far from outlawing cannabinoids in beverages, but it affects a growing industry that has already been promoting intoxicating hemp beverages in the state. Indeed, some beverage manufacturers in South Carolina have been forced to halt production, citing confusion over the new labeling and packaging requirements. This demonstrates how the legal landscape around intoxicating hemp beverages can change rapidly.
Finally, it is important to note that even states that expressly allow and regulate THC-infused beverage products fall into a grey area when we consider the current state of federal regulations. Until Congress acts or the FDA changes its stance towards THC as a beverage additive, we will continue seeing a patchwork of different approaches.
New USPTO Obviousness Guidelines Seek to Refine Examiner Evaluations Likely Making Path to Patent Grant More Difficult and Potentially Opening Door to More Patent Challenges
On February 27, the United States Patent and Trademark Office (USPTO) released new guidance aimed at enhancing the methodology used to assess the obviousness of patent applications. The updated USPTO guidance emphasizes the need for a clear articulation of a reasoned analysis, grounded in relevant facts, in determining whether a claimed invention meets the criteria of being obvious. The USPTO asserts that this initiative is in line with the directives of the U.S. Supreme Court’s landmark decision in KSR Int’l Co. v. Teleflex Inc., advocating for a flexible approach toward obviousness evaluations.
The USPTO suggests that this newly issued guidance will act as a practical manual for USPTO examiners, applicable to all utility patent applications under review or contestation. It allegedly aims to ensure a standardized application of the law of obviousness across various cases.
A brief synopsis provided from the USPTO’s updated guidance and garnered since the KSR decision of the Federal Circuit include:
- In KSR, the Supreme Court instructed the Federal Circuit that persons having ordinary skill in the art also may glean suggestions from the prior art that go beyond the primary purpose for which that prior art was produced. “Thus, the Supreme Court taught that a proper understanding of the prior art extends to all that the art reasonably suggests and is not limited to its articulated teachings regarding how to solve the particular technological problem with which the art was primarily concerned.”
- Since KSR, the Federal Circuit has confirmed that “the flexible approach to obviousness encompasses not only how to understand the scope of prior art, but also how to provide a reasoned explanation to support a conclusion that claims would have been obvious.”
- However, a flexible approach to obviousness does not negate the need for articulated reasoning and evidentiary support, the USPTO said.
- Obviousness decision-makers must examine all the evidence before them.
- The USPTO states that, “there is no one-size-fits-all approach to crafting an obviousness rejection.”
Kathi Vidal, Director of the USPTO, expressed the agency’s commitment to issuing reliable patent rights while ensuring clarity and consistency across the board. “Our initiative aims at bolstering transparency and uniformity within our processes and across the innovation landscape,” Vidal remarked.
The implications of this USPTO guidance extend to design patents as well, with the USPTO keenly awaiting the Federal Circuit’s verdict in LKQ Corp. v. GM Global Technology Operations LLC.
Additionally, the USPTO makes notes that it is gearing up to explore the influence of artificial intelligence on the landscape of prior art and the competence of someone skilled in the art, particularly how these factors interplay with patentability assessments including obviousness determinations. The USPTO plans to invite public commentary on these topics soon.
The updated USPTO guidelines initially appear to increase the burden on the patent applicant or the patentee to show that a claimed invention is not obvious by allowing the obviousness decision-makers (e.g., USPTO examiners and judges of the Patent Trial and Appellate Board (PTAB)) more flexibility in rejecting claims and to go outside of the boundaries of patent documents used to reject claims as long as reasoning is articulated and evidentiary support is provided. To counter an obviousness rejection made by an obviousness decision-maker, patent applicants or patentees should review obviousness rejections for a clearly articulated obviousness reasoning, including evidentiary support (e.g., not purely the examiner or judge’s argument) that is sound (e.g., actually supports the examiners or judges’ positions). Patent applicants and patentees also may need to rely on more expert declarations or affidavits to help overcome obviousness rejections.
For more news on Patent Law Guidance, visit the NLR Intellectual Property Law section.