Amazon to Control Delivery by Drone?

People are talking about and news organizations are covering Amazon’s announced plans to deliver goods by drone in the not-too-distant future.  However, fewer are talking about or covering Amazon’s effort to be the only company that can autonomously deliver goods by drone.  On March 25, 2014, Amazon filed a United States patent application directed to aspects of a drone delivery system.  Pursuant to current patent law, the application was published on October 1, 2015, roughly 18 months after the application was filed.  While the application is still pending and not yet an issued patent, it provides an interesting look at the scope of protection Amazon is seeking for its drone delivery system.

Under current proposed FAA regulations, drones cannot be flown outside of the line of sight of the operator.  A much greater range will be needed for an effective drone delivery network.  Amazon is proposing to send its drones as far as 15 miles from a regional fulfillment center.  The drones would take off vertically from a warehouse floor, fly at low altitude over a suburban landscape and then descend into the backyards of their destination points.  There they would lay the package on the lawn before lifting off to return to the warehouse for another run.  The success of such a system will depend upon receiving FAA approval.  FAA approval of such a system is likely to be contingent upon demonstrating that the system can be operated without causing a hazard.  In other words, the drones will need to be equipped  with “sense and avoid” technology that prevents them from crashing into things.

Amazon’s pending patent application, Pub. No. US 2015/0277440 A1, contains claims that are broadly directed to a propeller driven automated mobile vehicle having a laser based rangefinder configured to determine a distance to an object, to a distance determining system for an automated mobile vehicle having a distance determining element positioned to emit a laser signal that reflects off a reflective exterior surface of a motor, and to an automated mobile vehicle having a plurality of motors where the alignment axis of at least two of the motors are not parallel and each motor has a distance determining element.  These claims have not yet been examined by the Patent Office.  Upon examination, the scope of the claims will likely have to be narrowed to distinguish them from prior art.  However, it seems clear that Amazon is interested in pursuing broad protection for “drones” having a distance determining element, which is likely to be a necessary component of any “sense and avoid” technology.  Thus, the potential exists that Amazon will obtain patent protection broadly covering drone delivery systems.

The way the Amazon patent application is written, it seeks to avoid the need for human involvement to ensure that vehicles do not collide with other drones, manned aircraft, or other objects or structures on the ground.  It also discusses a system for automatically sensing and avoiding objects.  Thus, the “automated mobile vehicles” of the application and recited in the claims appear to be directed to autonomous drones.  However, at this stage it is not yet clear whether the claims in any patent that issues will be limited to autonomous drones, but might also cover remotely-piloted drones.  It remains to be seen whether the examination process will push Amazon into limiting the claims to autonomous operation.

The Amazon patent application also discusses the distance determining elements being used to detect the presence of objects and to then cause the automated mobile vehicle to alter its path to avoid the object.  Thus, the distance determining elements seem to be used not only for unloading positioning, but also for sense and avoid in flight.  While in a remotely piloted context, a sense and avoid system may not need to actually determine distances to other objects.  The remote pilot could rely on visual displays of the surrounding environment of the drone to avoid collisions.  However, in an autonomous operation, it is difficult to envision any sense and avoid system that would not need to know at least the distance from the drone to surrounding objects to function.  Amazon appears to be using this need to know such distances in the autonomous context to preempt the field.  In other words, a patent covering any autonomous drone that determines distance to surrounding objects might preclude any other drones from being able to have a functioning sense and avoid capability.

The broadest claims in the Amazon patent application just recite a “distance determining element.”  In a narrower claim, the application specifies “the distance determining element is at least one of an ultrasonic ranging module, a laser rangefinder, a radar distance measurement module, stadiametric based rangefinder, a parallax based rangefinder, a coincidence based rangefinder, a Lidar based rangefinder, Sonar based rangefinder, or a time-of-flight based rangefinder.”  Thus, at this stage, Amazon is trying to cover all of the named techniques, any combination of those techniques, as well as anything else that could broadly be considered a distance determining element.

As noted, the Amazon patent application is still just pending and has yet to be examined.  Amazon may have other patent applications pending that have not yet been published, and therefore are not yet open to review by the public.  FAA regulations are also still developing.  Thus, much remains to be determined even as it relates to Amazon itself.  Other entities may also be working on drone delivery systems and/or have pending patent applications that have not yet been published.  Domino’s Pizza is said to have tested delivering pizzas by drone.  Skype’s co-founders have set up Starship Technologies to develop a ground-based drone that would be able to deliver groceries to customer’s homes.  It will be very interesting to see how the intellectual property protection for drone delivery systems plays out.

Article By Thomas J. Daly of Lewis Roca Rothgerber LLP

©2015 All Rights Reserved. Lewis Roca Rothgerber LLP

HHS Issues Final Rule on HIPAA and Firearm Background Check Reporting

On January 6, as part of President Obama’s executive action to combat gun violence, HHS promulgated a final regulation modifying the HIPAA Privacy Rule to allow certain HIPAA covered entities to disclose limited information to the National Instant Criminal Background Check System (NICS).

Background:  The NICS, maintained by the Federal Bureau of Investigation (FBI), is the national database used to conduct background checks on persons who may be disqualified from receiving firearms based on federal or state law.  Federal law identifies several categories of potential disqualifiers, known as “prohibitors” including a federal mental health prohibitor.  By statute, the federal mental health prohibitor applies to individuals who have been committed to a mental institution or adjudicated as a mental defective.  The Department of Justice has promulgated regulations that defines these categories to include the following individuals:

  • individuals committed to a mental institution for reasons such as mental illness or drug use;

  • individuals found incompetent to stand trial or not guilty by reason of insanity, or

  • individuals who have been otherwise determined by a court, board, commission, or other lawful authority to be a danger to themselves or others or to lack the mental capacity to contract or manage their own affairs as a result of marked subnormal intelligence or mental illness, incompetency, condition, or disease.

However, there is currently no federal law that requires state agencies to report data to the NICS, including the identity of individuals who are subject to the mental health prohibitor.  HHS believes that HIPAA poses a potential barrier to such reporting. Under current law, HIPAA only permits covered entities (e.g., state mental health agencies) to disclose such information to the NICS in limited circumstances: when the entity is a “hybrid” entity under HIPAA (and the Privacy Rule does not apply to these functions) or when state law otherwise requires disclosure, and thus disclosure is permitted under HIPAA’s “required by law” category.

Final Rule:  HHS finalized its proposed rule without any substantive changes. Under the final rule, a new section 164.512(k)(7) of the HIPAA Privacy Rule expressly permits certain covered entities to disclose information relevant to the federal mental health prohibitor to the NICS.

The permitted disclosure applies only to those covered entities that function as repositories of information relevant to the federal mental health prohibitor on behalf of a State or are responsible for ordering the involuntary commitments or the adjudications that would make someone subject to the prohibitor.  Thus, most treating providers may not disclose protected health information about their own patients to the NICS, unless otherwise permitted by the HIPAA Privacy Rule.  HHS also clarifies that individuals who seek voluntary treatment are not subject to the prohibitor.

The rule limits disclosure only to the NICS or an entity designated by the State to report data to the NICS.  And only that information that is “needed for purposes of reporting to the NICS” may be disclosed, though HHS gives States the flexibility to determine which data elements are “needed” to create a NICS record (consistent with requirements of the FBI, which maintains the NICS).  At present, the required data elements for the NICS are: name; date of birth; sex; and codes identifying the relevant prohibitor, the submitting state agency, and the supporting record.  The NICS also allows disclosure of certain optional data elements (e.g., social security number and identifying characteristics).  HHS notes that applicable covered entities may disclose such optional data elements “to the extent necessary to exclude false matches.”

HHS declined many commenters’ suggestion to expand the rule to permit the disclosure of information about individuals who are subject to state-only mental health prohibitors. HHS fears that expanding the scope of the permitted disclosure would disrupt the careful balance between public safety and encouraging patients to seek mental health care.

Finally, in the preamble, HHS defended its statutory authority to make this change, despite the fact that Congress did not address HIPAA in recent legislation to strengthen the NICS.  HHS explained that the “HIPAA statute confers broad authority on the Department to specify the permitted uses and disclosures of PHI by HIPAA covered entities.”

Article By Dena Feldman of Covington & Burling LLP

© 2015 Covington & Burling LLP

Supreme Court Poised to Strike Down Union Agency Fees for Public Employees?

The U.S. Supreme Court, in argument on Jan. 11, from all accounts appears poised to strike down its prior decision in Abood v. Detroit Board of Education and conclude that mandatory agency fees paid by public employees to unions that represent them are unconstitutional.Classroom Supreme Court teachers decision

​In Friedrichs v. California Teachers Association, the petitioners contend that mandatory fair share dues to cover the cost of collective bargaining and other representational activities violate the free-speech rights of nonunion workers.  Chief Justice John Roberts summarized the issue similarly: “The problem that’s before us is whether or not individuals can be compelled to support political views that they disagree with.”

The case, which poses a significant threat to the funding of public employee unions in the 20 states that allow so-called fair share fees, has generated substantial interest and coverage. The SCOTUS Blog is an excellent stepping off point to review coverage of the case.

Court watchers are suggesting that Friedrichs will overturn Abood not only because of the tone of the questioning during argument but in large part because of the Court’s 2014 decision in Harris v. Quinn in which the Court’s 5-4 majority wrote of Abood and its “questionable foundations.”

Article By Gerald F. Lutkus of Barnes & Thornburg LLP
© 2015 BARNES & THORNBURG LLP

Covered Contractors Take Note of Changes in 2016

Pay transparency final rule is in effect

Executive Order 13665 (EO 13665), the Final Rule promoting pay transparency protection, took effect on January 11, 2016. The executive order covers employees and job applicants of companies with over $10,000 in federal contracts/subcontracts entered into or modified on or after January 11, 2016.

If covered by the law, employers must:

  • Disseminate the Pay Transparency Statement, as prescribed and made available by the OFCCP on its website, by either electronic posting OR by posting a copy of the provision in conspicuous places available to employees and applicants for employment; and

  • Incorporate the Pay Transparency Statement into existing employee manuals or handbooks; and

  • Update your equal employment opportunity clause in covered federal contracts/subcontracts and purchase orders to include a prohibition from discharging, or in any manner discriminating against any employee or applicant for employment because the employee or applicant inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. If you are currently only incorporating the nondiscrimination obligation by reference to 41 CFR 60-1.4, you may continue to do so.

It is important to note that the pay transparency nondiscrimination provision is required to be posted in addition to the required “EEO is the Law” posting. Once the “EEO is the Law” poster is updated to reflect the new pay transparency nondiscrimination provision, it will be made available on the OFCCP’s and EEOC’s website. In the meantime, however, you can place the supplement to the “EEO is the Law” poster alongside the “EEO is the Law” poster. You can find the supplement on the OFCCP’s website.

Minimum wage increases for covered contractors

Effective as of January 1, 2016, the minimum wage for certain employees of covered federal contractors will increase by five cents to $10.15 per hour, and the minimum cash wage for tipped employees working on or in connection with covered federal contracts will increase to $5.85 per hour.

Covered contracts include those contracts resulting from solicitation issues on or after January 1, 2015, and contracts awarded outside of the solicitation process on or after January 1, 2015. Significantly, not all federal contractors are subject to this new requirement. As a practical matter, most “supply” contractors, or those providing goods (and not services) to the federal government should not be covered by this new Executive Order.

Article By Margaret R. Kurlinski & Deborah  Rehorst of Godfrey & Kahn S.C.

Copyright © 2015 Godfrey & Kahn S.C.

Over 4.5 Million Are Waiting for Green Cards—Over 100,000 of them are Employment-Based

The Department of State (DOS) recently published its annual report of immigrant visa applicants (2015 Annual Immigrant Visa Report), which tallies up the number of total applicants—including spouses and children—who are waiting for their respective priority date to become current, allowing for them to obtain their green card. The annual report, which totals the number of applicants up to Nov. 1, 2015, does not take into account those applicants who have adjustment of status applications pending with the U.S. Citizenship and Immigration Services (USCIS) as of Nov. 1.

Overall, 2015 saw a three precent increase of total applicants compared against last year, increasing from a total of 4,422,660 for 2014 to 4,556,021 for 2015. This total includes both family-based green cards and employment-based green cards. Employment-based green card applicants only accounted for roughly 100,000 of the 4.5 million. When compared against 2014, the percentage of employment-based applicants waiting to apply for their green cards increased from 90,910 to 100,747—an increase of 10.8 percent.

While a 10.8 percent increase seems like a marginal increase, examining specific categories individually reveals that certain categories—namely Employment First, Second, and Fifth—have grown in popularity with employers and investors. Employment First encompasses green card applications for aliens of extraordinary ability, outstanding researchers, and multi-national managers or executives. From 2014 to 2015, the Employment First category saw an increase of 27.1 percent on the waiting list, from 2,733 to 3,474. Employment Second is reserved for Aliens of Exceptional Ability, which is measured by positions that require a U.S. Master’s degree (or higher), or a Bachelor’s degree and five years of progressive experience.  In 2015, there was an increase of 36.5 percent for Employment Second, with 11,440 on the waiting list as opposed to 8,380 in 2014. Finally, Employment Fifth is reserved for investors and entrepreneurs who invest substantial capital into the U.S. economy, among other requirements. Employment Fifth saw the greatest increase from 2014 to 2015—175.2 percent. The specific wait list numbers, broken down by category, are below:

Employment-based Preferences for Visas​

Number of Applicants on Waiting List in Employment-based Preference Categories​

At first glance, the 140,000 of expected employment-based green card approvals this year seems like it would clear the existing backlog of green card applications of 100,747 left from 2015, but this is not the case because there is a seven percent per-country limit, which visa issuances to any single country, including China and India, cannot exceed. What this looks like for applicants from countries such as China and India is that the wait for green cards will only increase, absent legislative or executive action.

Reviewing the 2015 Annual Immigrant Visa Report by country reveals that India and China remain the world’s largest applicants across each Employment Category, a trend that will likely continue into 2016. For Employment First, China represents more than 25 percent of all applicants, with India coming in a distant second at 9.6 percent.

Employment First Preference Category by Country​

For Employment Second, India accounts for a two-thirds of all applicants at 66.8 percent; China, on the other hand, accounts for only 7.8 percent, falling just behind South Korea at 8.4 percent.

Employment Second Preference Category by Country​

For Employment Fifth, China leads the applicant-pool with 89.6 percent of all applications.  The next two countries—Hong Kong S.A.R., and Vietnam, only account for 1.4 percent each.

Employment Fifth Preference Category by Country​

For 2016, approximately 140,000 employment-based green cards are projected to be approved, meaning that the wait will continue for most of the 100,747 who are already waiting for their priority date to become current so that they can obtain their green cards. As the U.S. economy continues to rebound, it is safe to assume that only more applicants, especially from India and China, will continue to apply for employment-based green cards in the higher preference categories—Employment First, Second, and Fifth—where the wait is shorter as compared to Employment Third and Fourth, reserved for skilled workers, and special immigrants, respectively.

Article By Cole F. Heyer of Greenberg Traurig, LLP

©2015 Greenberg Traurig, LLP. All rights reserved.

2015 FDA Wrap-Up and 2016 Regulatory Priorities

Happy New Year! This article will revisit and update the status of significant regulatory issues in 2015 and assess 2016 FDA priorities in the food area.

2015 Overview

  • Office of Dietary Supplement Programs

    On December 21, 2015, the FDA announced the creation of the Office of Dietary Supplement Programs (ODSP).1 The program was formerly a division under the Office of Nutrition Labeling and Dietary Supplements, now known as the Office of Nutrition and Food Labeling. The Department of Justice brought a significant number of civil and criminal cases against the makers of dietary supplements in 2015. The creation of ODSP supports the mission of monitoring the safety of dietary supplements and taking action against entities that present a risk of harm to the consumer.

  • “Natural” Label Claims

    In 2015, the FDA received three Citizen Petitions asking that the agency define the term “natural” for use in food labeling. The term “natural” has been the subject of many food labeling lawsuits. In direct response to requests from the public, the FDA has extended the comment period on the use of the term “natural” in food labeling to May 10, 2016.2 The Morgan Lewis FDA team is currently working on an analysis of the comments submitted to date. Please contact the FDA team if you are interested in submitting a comment.

  • Food Safety and Modernization Act (FSMA) Regulations

    As discussed in our November 16 post, in late 2015, the FDA published three final rules under FSMA: the Standards for Growing, Harvesting, Packing, and Holding of Produce for Human Consumption (Produce Safety rule),3 the Foreign Supplier Verification Programs for Importers of Food for Humans and Animals (FSVP rule),4 and the Accreditation of Third-Party Certification Bodies to Conduct Food Safety Audits and to Issue Certifications (Accredited Third-Party Certification rule).5 These rules implement sections of FSMA geared toward protecting the US food supply. As discussed below, the FDA plans to take further action to implement sections of FSMA in 2016.

  • Menu Labeling Requirements

    As discussed in our post July 13, 2015, FDA released its final rule on menu labeling in restaurants on December 1, 2014, and later extended the date for compliance from December 1, 2015 to December 1, 2016. The rule will require restaurants and similar retail food establishments that (1) sell “restaurant-type food,” (2) are part of a chain of 20 or more locations, (3) do business under the same name or slight variations of each other, and (4) offer for sale substantially the same menu items as the other business locations, to disclose calorie information on menus and menu boards.

  • New York Sodium Warning

    AThe New York City Department of Health and Mental Hygiene Board of Health (Board of Health) Sodium Warning Label Rule went into effect on December 1, 2015. The Rule requires food service establishments in New York City with 15 or more locations nationwide to provide a warning for menu items that contain 2,300 mg or more of sodium. New York City is the first city in the United States to require chain restaurants to include sodium warnings on menus or menu boards. Chains with 15 or more locations have 90 days to comply with the new rule before they face a $200 fine. The rule elicited responses from the National Salt Institute and the National Restaurant Association. The National Restaurant Association filed suit against the Board of Health, claiming that it did not have the authority to require such a warning. We will monitor this lawsuit and provide updates in 2016.

2016 FDA Regulatory Publication Agenda

On December 15, 2015, the FDA released its Semiannual Regulatory Agenda.6 The Agenda outlines the following outstanding proposed and final rules for 2016 with respect to food:

  • Food Labeling; Gluten-Free Labeling of Fermented, Hydrolyzed, or Distilled Foods:7

    This proposed rule was published in late 2015. It would establish requirements concerning compliance for using a ‘‘gluten-free’’ labeling claim for those foods for which there is no scientifically valid analytical method available that can reliably detect and accurately quantify the presence of 20 parts per million gluten in the food. FDA has acknowledged that it is difficult to scientifically detect gluten in fermented and hydrolyzed foods.8 Accordingly, the rule would require manufacturers to make and keep records to show that (1) the food meets the definition for “gluten-free” in 21 C.F.R. 101.91(a)(3), including that the food had less than 20 ppm gluten, before fermentation or hydrolysis; (2) the manufacturer adequately evaluated the processing for any potential for gluten cross-contact; and (3) where a potential for gluten cross-contact has been identified, the manufacturer has implemented measures to prevent the introduction of gluten into the food during the manufacturing process. FDA is accepting comments until February 16, 2016.

  • Food Labeling: Revision of the Nutrition and Supplement Facts Labels:9

    Under the Food, Drug and Cosmetic Act (FD&C Act), this final rule would amend the labeling regulations for conventional foods and dietary supplements to provide updated nutrition information on the label to assist consumers in maintaining healthy dietary practices. The rule would modernize the nutrition information found on the Nutrition Facts label, as well as the format and appearance of the label. The FDA reopened the comment period for this final rule in October 2015, and anticipates issuing a final rule in March 2016.10

  • Food Labeling: Serving Sizes of Foods That Can Reasonably Be Consumed At One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily Consumed (RACCS):11

    Under the Nutrition Labeling and Education Act of 1990 and the FD&C Act, this final rule would modify labeling regulations for foods to provide updated RACCs for certain food categories to assist consumers in maintaining healthy dietary practices. The rule would also amend the definition of single-serving containers; the label serving size for breath mints; and provide for dual-column labeling, which would provide nutrition information per serving and per container or unit, as appropriate. The FDA anticipates releasing the final rule in March 2016.12

  • Focused Mitigation Strategies to Protect Food Against Intentional Adulteration:13

    Under FSMA, the final rule would require domestic and foreign food facilities that are required to register with the FDA to address hazards that may be intentionally introduced by acts of terrorism. Food facilities would be required to identify and implement focused mitigation strategies to significantly minimize or prevent significant vulnerabilities identified at actionable process steps in a food operation. The FDA anticipates releasing the final rule in June 2016.14

  • Sanitary Transportation of Human and Animal Food:15

    Under the 2005 Sanitary Food Transportation Act and FSMA, this final rule would establish requirements for parties and receivers engaged in the transportation of food, including food for animals, to use sanitary transportation practices to ensure that food is not transported under conditions that may render the food adulterated. The FDA anticipates publication of the final rule in April 2016.

Article By Robert G. Hibbert & Heather A. Dorsey of Morgan, Lewis & Bockius LLP

Copyright © 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

1 U.S. Food & Drug Admin., FDA Creates the Office of Dietary Supplement Programs and Announces New Nutrition Office Leadership (Dec. 21, 2015) http://www.fda.gov/Food/NewsEvents/ConstituentUpdates/ucm478303.htm.
2 80 Fed. Reg. 80178 (Dec. 28, 2015) https://www.gpo.gov/fdsys/pkg/FR-2015-12-28/pdf/2015-32471.pdf; 80 Fed. Reg. 69905 (Nov. 12, 2015) https://www.gpo.gov/fdsys/pkg/FR-2015-11-12/pdf/2015-28779.pdf.
3 80 Fed. Reg. 74354 (Nov. 27, 2015) https://www.gpo.gov/fdsys/pkg/FR-2015-11-27/pdf/2015-28159.pdf.
4 80 Fed. Reg. 74226 (Nov. 27, 2015) https://www.gpo.gov/fdsys/pkg/FR-2015-11-27/pdf/2015-28158.pdf.
5 80 Fed. Reg. 74570 (Nov. 27, 2015) https://www.gpo.gov/fdsys/pkg/FR-2015-11-27/pdf/2015-28160.pdf.
6 80 Fed. Reg. 77960 (Dec. 15, 2015).
7 Id. at 77963; 80 Fed. Reg. 71990 (Nov. 18, 2015) https://www.gpo.gov/fdsys/pkg/FR-2015-11-18/pdf/2015-29292.pdf.
8 78 Fed. Reg. 47154.
9 80 Fed. Reg. 77764, 77965 (Dec. 15, 2015).
10 Id. at 77764.
11 80 Fed. Reg. 77765, 77965 (Dec. 15, 2015).
12 Id. at 77765.
13 Id. at 77768.
14 Id.
15 Id. at 77771.

Drones: Insurance Coverage Issues

With new regulations for unmanned aerial vehicles (UAVs, or drones) and a seemingly never-ending expansion of use cases and attendant sources of liability, drone operators and those concerned about damage caused by drones need to carefully consider the role of insurance. As in other contexts, insurance—if carefully tailored and negotiated—can be an effective risk-transfer tool.

Insurance that potentially covers loss related to drones is in flux, but generally falls into three categories:

1. Specialty Aircraft Insurance: While specialty products related aircraft, including for unmanned aircrafts, have been on the market for a number of years, use of those products historically has been limited to individuals, companies and enterprises whose core business relates to aircrafts. This type of insurance is not always tailored to drones with cameras, which raise additional potential liability (e.g., invasion of privacy).

2. Commercial General Liability (CGL) Insurance: Most other insureds rely on a commercial general liability (CGL) policy to provide protection. But earlier this year, the Insurance Services Office (ISO), which proposes and makes changes to the standard CGL form used by most insurers, revised the provisions that might apply to drone-related liability. Some of these revisions purport to exclude coverage for liability related to drones that, for example, might arise from subcontractors’ or independent contractors’ operations for which the insured might be vicariously liable. Other changes to the CGL policy form require detailed attention to specific drones and projects or to whether violations of privacy might occur. The ISO changes warrant careful consideration, both when considering the purchase of insurance, as well as during contract negotiations where risk transfer is a significant issue.

3. Homeowners’ Insurance: Finally, for non-commercial insureds hoping to rely on their homeowners’ insurance policies, many insurers are seeking to include exclusions for drone-related liability in their new policies. Spend the time to learn whether or not your policy provides adequate coverage.

Purchasing insurance for drone-related liability is only the first step. Claims related to damage caused by drones are on the rise and will only continue to rise in the future. When faced with insurance claims, expect insurers to examine closely whether the insured complied with all applicable regulations, industry standards with respect to training, policies or procedures outlined in the application for insurance, and others.

In short, insurance can be an effective risk-transfer tool for commercial drone operators or those concerned about drone-related liability. The recent changes in policy terms and a rapidly-changing marketplace for insurance require diligence and specialized knowledge of how the offered insurance policy fits the insured’s potential liability.

Article By Eric G. Barber & Steven L. Ritt of Michael Best & Friedrich LLP

© MICHAEL BEST & FRIEDRICH LLP

Gun Control: HIPAA Final Rule Targets Background Checks and Mental Health Reporting

President Obama has announced plans to tighten gun control regulations, including applying the background check requirement to dealers at gun shows and on websites.  Federal law already requires that those “engaged in the business” of selling guns must have a Federal Firearms License (FFL) and conduct background checks at the time of every purchase.  Some sellers assert they are not gun dealers but collectors or hobbyists who do not sell regularly and, therefore, are not “engaged in the business” of selling firearms and not required to have a FFL and conduct background checks.  The Obama administration has clarified that people who claim to be hobbyists may be engaged in the business if, for example, they operate an online gun store, frequently sell guns in their original packaging, or pass out business cards.  The Bureau of Alcohol, Tobacco and Firearms (“ATF”) issued Guidance to help individuals understand when a FFL is required.

Consistent with this initiative, the Office for Civil Rights (“OCR”) released a Final Rule modifying the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule to permit certain covered entities to disclose identifying information on persons subject to a “Federal mental health prohibitor “ to the National Instant Criminal Background Check System (“NICS”).

Intersection of NICS and HIPAA

As background, the NICS is a national system mandated by the Brady Handgun Violence Prevention Act of 1993.  Maintained by the FBI since November 1998, NICS is used by Federal Firearms Licensees to instantly determine whether an individual seeking to buy firearms is eligible to do so.  Federal law provides that it is unlawful for certain categories of persons to ship, transport, possess, or receive a firearm.  These categories are referred to as “prohibitors.” Among them  are the following mental health prohibitors, which provide that it is unlawful for the following individuals to possess a firearm:

  • individuals who have been involuntarily committed to a mental institution, for reasons such as mental illness or drug use;

  • individuals found incompetent to stand trial or not guilty by reason of insanity; or

  • those otherwise determined by a court, board, commission or other lawful authority to be a danger to themselves or unable to manage their own affairs as a result of marked subnormal intelligence, or mental illness, incompetency, condition or disease.

Many of the records qualifying an individual for a Federal mental health prohibitor are maintained by the criminal justice system, which does not generally include HIPAA covered entities.  However, some qualifying information may be housed within HIPAA covered entities that are either (i) involved in involuntary commitments or mental health adjudications; or (ii) have been designated by states to serve as repositories to collect applicable mental health data and report it to the NICS.

In balancing individuals’ privacy with public safety, the Final Rule modifies HIPAA to permit the disclosure of select demographic information to the NICS by covered entities that either (i) function as repositories of information relevant to the Federal mental health prohibitor on behalf of the state; or (ii) are responsible for ordering the involuntary commitments or other adjudications.  The Final Rule limits disclosure to demographic and other information needed for purposes of reporting to the NICS, and disclosure of diagnostic or clinical information is not permitted.

Potential Impact on Mental Health Legislation

This Final Rule is one aspect of a multi-faceted approach the Obama administration is taking on gun control.  An open question remains as to whether Congress will act with respect to gun control and mental health, and if so, how?  Certain Republicans are already looking for ways to halt President Obama’s actions, while, others in Congress do not believe that the actions go far enough and seek additional gun control measures.

At a minimum, the President’s decision to take action related to gun controls is certain to have an impact on mental health legislation.  Congressional Republicans have been discussing improving the nation’s mental health system since 2013.  Many see this focus on mental health as an effort to redirect the conversation away from gun control.  As such, the President’s recent actions propose adding $500 million to increase access to mental health care.

The combination of Republicans seeking to dismantle the recent executive actions, while redirecting the conversation to mental health may place Senate Democrats in a tough position.  The President’s action increases the likelihood that gun control measures may be attached to mental health legislation.  The issue is whether Senate Democrats are willing to filibuster mental health legislation in order to keep the focus on gun control and prevent the unraveling of some of the President’s executive actions.

Article By Lauren M. Moldawer, M. Daria Niewenhous & Rodney L. Whitlock of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

©1994-2015 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

2016 Legal Marketing Challenges Opportunities – Jim Matsoukas [PODCAST]

Legal marketing can be a challenge, but it also comes with numerous opportunities. Jim Matsoukas from Pierce Atwood, LLC talks about a variety of marketing tactics in this podcast. Learn about what works, what doesn’t work, and how to use these tactics for your firm.

John McDougall:     Hi, I’m John McDougall and welcome to the Legal Marketing Review Show on National Law Review. Today my guest is Jim Matsoukas, CMO and Director of Business Development at the Law Office of Pierce Atwood. Welcome, Jim.

Jim Matsoukas:     How are you doing, John?

Legal Marketing Challenges for 2016

John:     Really good. So what are some of your biggest legal marketing challenges for 2016?

Jim:     That’s a good question. I think one definite challenge is actually a challenge and an opportunity. [We need to] be smarter about how we go about marketing ourselves digitally and making our website more friendly and more efficient and convenient for people that come to take a look at it. I think that’s very important. That’s something that we have to keep working on. The technology keeps developing and the competition keeps increasing. People keep using digital methods to shop more often, so we need to keep on top of that. That’s definitely one. I think this might be related to that, but SEO optimization is always top of the mind. What we’re finding is that our traffic is increasing in terms of people finding us through organic search. We have to be more sophisticated and more strategic about the language we use on the site and the language that we use in our ads and in our alerts, articles, and publications and how that matches up with people looking for legal services. I think that’s important.

John:     Those are two good ones. On the first one, I don’t know if you’ve heard this stat and I’m trying to think of where I’ve heard it, but Chief Marketing Officers are now spending more than Chief Technology Officers. Marketing has become more technical.

Jim:     I couldn’t agree more with that. I sort of consider myself a CMO/CIO, because you have to be these days. Obviously I don’t deal with the intricacies of the technology as much as a CIO does, but I have to know a hell of a lot about it, because I have to understand how the technology works in order to take advantage of it in the best possible way. So, I keep up with that constantly. I think you have to continue to read and go to panels that are technically oriented and so on.

Legal Marketing Opportunities for 2016

John:     Yeah, it changes like the wind. What are some of your biggest legal marketing opportunities for 2016?

Jim:     Like I said before, the challenge and the opportunity are similar there. Like in digital and website and SEO optimization – those are all key opportunities, but they’re very challenging. It’s two sides of the same coin. Other things that I consider opportunities are to focus more on what we do best and what we do well. Continue to provide proportional support across the firm. What makes a firm different from a corporation is that corporations are more hierarchical and are more able to market and select things and sacrifice other things for strategic reasons. That makes sense for them as a business. We do the same thing, but when you’re a firm, you have to make sure that everybody within your firm, regardless of whether they’re a leading service or supporting service or a niche service, they all have a role to play. So when you’re the CMO of a firm, you have to make sure that you’re balanced and a little bit adventurous in the right way and everybody’s getting that level of investment that they should and they deserve. That’s a continuing challenge, but it’s an opportunity. If you do it well, if you don’t squander resources and you sell what the firm is best at and everybody understands the role they play in sales activity, which is really healthy. That’s something we focus on a lot. Another opportunity is we’re growing quite a bit in Boston, New Hampshire, Rhode Island, and DC. We want to keep that momentum going. A real opportunity for is us that we’re finding [people] are finding us more and more attractive because they see us as a high quality firm that has a relatively low overhead, so we can get people that are lead practitioners who want to lower their rates a bit for their clients, but still socialize and be part of a firm that has a very high level of performance. So far, that’s been a real success for us and we want to try to keep that going, while at the same time making sure that there’s a cultural fit with the people we bring on. We’re a team oriented firm, so everybody shares information and credit. That’s important. I guess the last thing I was saying would be I constantly advise people and train people who focus on clients before leads and look backwards. A lot of times the natural reaction in marketing is to develop more leads and raise more awareness. That’s all very important and we do that continuously, but you have to balance that with knowing where your current contacts are and what your current clients need, and branch out from that. We always know where our bread and butter [comes from] and how developing our leads relates to what we’re currently doing well with and who we’re working for.

John:     So being more strategic about the whole process, where it’s easy to just hop on the latest tactic.

Jim:     Exactly. You have to balance a lot of different variables when you’re managing the place. So we want to bring the latest techniques in and we want to do it in a way that fits within our current structure and our current approach to the market.

SEO vs. Social Media vs. Paid Search

John:     What about tactically? What holds the most promise – SEO, social media, or paid search? I know mentioned SEO quite a bit, but what do you think in 2016, given what you just said and aligning to your positioning and growth plans, what tactically do you think matches well with that?

Jim:     As far as digital marketing tactics go, I think SEO is definitely number one for us. We have to be more and more intelligent about how to do that. We’re working hard on that. Then, we’re trying to integrate all of the different digital initiatives that we have, whether they be the way we invite people to events, the way we communicate with our contacts regarding new legal developments, publications and articles, and all participation. What we’re trying to do is bring all of that together so that everything we do has a rationale and supports our search engine optimization strategy. In everything we do, we’re trying to make sure that it fits into how people find us and then build on the way in which people are currently finding us. That also opens up other paths for them to come in. So, that’s what holds the most promise for us. I think SEO is definitely the focus. We don’t do as much paid search, because we don’t think that given what we do, it really helps us a whole lot. We did do a lot of social media, in terms of keeping the word out there and spreading information about the firm, and we’re continuously pushing that out. So I don’t mean to say we ignore social media, but SEO has a more direct connection to our sales process.

John:    I was just going to ask if you had to only budget for SEO, or social media, which would you do and why? But I think you can probably knock that one off pretty quick given what you just said.

Jim:     Definitely, it would be SEO. Before the advent of a lot of digital marketing, let’s go back to 20-25 years ago, if you think about people being out and about and constantly going to events and socializing, networking, and circulating, you have to do that when you’re selling knowledge and you’re selling professional services. To me, social media is the current version of that, where you have to be out there and constantly interact in putting information up and sharing with others. And then interacting with people within this social media realm. A lot of that is very similar to in-person networking, it’s just another layer that you have to do today. That’s more of like a routine investment that you have to constantly make. But if I had to budget and choose, I would definitely put more money towards SEO than social media.

John:     Right, and just to further elaborate on where you’re headed with that, it sounds like the thought leadership piece and doing SEO, not in just the old way where it’s just kind of cramming keywords in. You have to put the keywords there, but within reason and Google is looking for topics and in-depth content. But it has to now really be based on thought leadership, right?

Jim:     I couldn’t agree more. One of the key challenges we have though is when you’re dealing with law, inserting the keywords becomes a real challenge because the way in which the law is expressed is very technical. When you’re translating legal knowledge into every day conversation, which is usually what you do on the web and in advertisements, you have to be very careful what language you use. You can lead people down the wrong path very quickly if you say things the wrong way. So we have to be real careful about that. I think it’s a bigger challenge for not only a law firm, but for anybody that is selling a complex service. The way you phrase things sometimes is in conflict with the way they should be phrased to be successful in the search engines.

Legal Compliance Issues

John:     That’s a nice lead actually into the next question. Are compliance issues for content marketing getting in the way of your legal marketing, or are they manageable?

Jim:     You know, the answer to that is they always get in the way. In terms of compliance issues, they’re pretty strict in the legal marketplace, and if you’re dealing with individual consumers, they’re very strict. If we’re marketing things like that our trust & estates practice or if we’re marketing services to individuals or maybe residential real estate or something like that, we have to be very, very careful. You can’t deceive someone who is not sophisticated about the law and you can’t go after them in a way that persuades them of something they shouldn’t be doing. For our more important market, which is the commercial market and in-house counseling and corporate officers and things of that nature, regulation is still strict, but the regulations are really designed to protect the person who is unsophisticated. That market is more sophisticated, so we can be a little more liberal. We still adhere to what we need to adhere to. When you’re talking to someone who knows a product very well that you’re trying to sell, there’s less of a chance that you’re going to deceive or mislead them, or possibly persuade them to do something they wouldn’t otherwise do. So we’re very careful. The bottom line is, they get in the way, but it’s manageable. It’s a skill that you develop over a number of years in this industry. You begin to understand how to phrase things so that the regulators are okay, the bar associations are okay, but you’re still getting your job done. It’s a constant tug o’ war.

John:     That is what you do as an attorney. It’s definitely tough for attorneys and banks and financial services and certain things, but at the same time, the good news is that you’re attorneys, so you have a leg up in that sense. But it’s still challenging.

Jim:     It’s something you always have to pay attention to, and you can’t be too free and loose about it.

PPC Marketing

John:     We talked a bit about paid search, but do you think it’s a good alternative to or in addition to content marketing, or were you basically saying you haven’t had great energy towards PPC?

Jim:     We haven’t had great luck with it. We’ve tried it a couple of times, and what we find is that our market is not as likely to pay attention to paid search or not as likely to use it to find legal services. A lot of times, when you look at the sponsored listings in search engines versus the organic listings, our market tends to go to the organic. When we tried paid search, it had some effect and some success, but we find that the market we’re going after is less likely to come to us through that path. The reason for that is a lot of the phrases that people are paying for are very, very expensive in the legal realm, or at least the more popular ones. So, what we might do in the future is we might look for specific niches, language-wise and practice-wise, that we can use in paid search that are not as popular but that we happen to be particularly strong in. Then we’ll do some tests and see what might work there. That’s been a challenge for us.

John:     Yeah, I think it’s a challenge with all of legal. We’ve managed quite a bit of legal [marketing.] Millions and millions of dollars of paid search, like mesothelioma, lawyers, auto accident attorneys. These clicks are the most expensive. It was interesting. Hubspot came out with the top most expensive paid search clicks in an infographic recently. Even mesothelioma got beat out by auto accident attorneys in specific cities.  So it’s fascinating, you know, $670 per click.

Jim:     I think those personal injury type practices are more likely to use that. I think for a good reason. They’re economic model is different. They spend a lot of money in bringing leads in, and then filtering them and hoping that they hit the right lead and make a lot of money on a contingent basis with a good case. Whereas our business model is very different. We’re not in the personal injury market, so what we do is a lot of corporate defense and working with people to strategize with them about how they can move their businesses forward and still be legally compliant and taking advantage of different things that the legal system might offer. When you do that, we don’t spend a lot of money up front and get it back on contingency, we’re much more of a retainer billed and hourly billed type of thing. This makes spending a lot of money on paid search a little more difficult.

John:     Back to our earlier thought on how thought leadership is important. Your potential customer, if they think you’re just buying ads, they’re not as likely to be impressed either. So that’s part of the reason organic is just so critical for your market. They want to hire services and legal providers that are at the top of the real results with authentic content. Not that paid search is bad, we love paid search for the right things and even non-personal injury work. We’ve certainly been doing that quite well. But the ultimate is having that organic presence.

Jim:     At least for our business. So there’s a perception of different tactics that you use in addition to the content. So if, like you said, if you used too much advertisement or too much paid search or too much push, sometimes a brand like ours gets tarnished a bit by overdoing it. So, we have to balance that very carefully. I guess the phrase would be “tasteful” marketing, because some of types of clients that we have are more likely to be impressed by our ability to pick our spots and have some restraint with what we do and not to be too over-the-top. That’s for our brand.

Legal Marketing & Blogging

John:     That makes a lot of sense. What about challenges and opportunities from blogging? What do you think the issues are there?

Jim:     You know John, I think blogging is great. I’ve pushed that as much as I can here. The biggest challenge we have with blogging is content generation. To make a blog work, you have to have a certain level of frequency with posting. It’s very difficult sometimes for attorneys that have high billable hours that are always working, and then they have other things that they’re doing with their non-billable time like other marketing opportunities and other professional opportunities. It becomes difficult for them to be a consistent blogger. Sometimes, they can get around that by having [other people] writing for them and having them review it. But what I’ve found is that only gets you so far because it’s the attorney’s knowledge that is driving the blog and it’s their ability to know what to say about what topic that really drives the interest of the blog. So there’s just so much you can help them with that. They really have to generate a lot of that on their own. So that’s the main challenge for it, but as far as a tool, it’s one of the best tools, especially for establishing your authority and your thought leadership and making sure that you have content out there all the time that is being clicked on or looked at. It opens up conversations. I think it’s a wonderful too.

John:     Yeah, you just have to keep working on creative ideas, like podcasting and video, and doing things with the attorneys that might get content out of their voice without always having them write. You know, balance I’m sure.

Jim:     It’s just making it as easy for them as possible and getting them to commit to some type of routine. Which is difficult, because their lives go up and down. You have peaks and troughs. When the peaks come, things tend to fall off the map and then the trough comes and they’re back. It’s hard to keep it going sometimes.

John:     I think the good news though is that you have quite a few attorneys, so even if they got on a once a quarter schedule, but it was enough attorneys so you at least have a blog post a week, then the challenge is partially back on the marketing team to then go promote the content. And the attorneys too should share the links to the content they create, so it’s not just post it and hope that Google does everything. It should really be a matter of sharing that content. That’s where it’s a little easier for your marketing staff to actually go share that content and these days, it’s important to have a lot of content, but a big mistake we see people making and we certainly made it for a while, was putting 90% of effort into the blogging and 10% into the promotion. It really needs to be somewhat split, if not more towards the promotion than the creation.

Jim:     That’s a good point. I agree with you, and we have to work harder at that.

LinkedIn & LinkedIn Pulse in 2016

John:     Some of that, the attorney doesn’t have to do. That sort of leads into LinkedIn, where you can certainly use LinkedIn to help attorneys share their content, whether it’s LinkedIn Pulse or doing a status update with a post that they created. Whether it’s once a month or even once a quarter for that attorney. LinkedIn can help. What do you see opportunities are for doing more with LinkedIn, or not, in 2016?

Jim:     We’ll definitely do more. In fact, LinkedIn has lowered the threshold to get the information out there than having the blog discipline. We’ve gotten to a point now where the attorneys are pretty savvy, at least the ones we’ve talked to and explained it to and that’s quite a few, and they post what they do on LinkedIn routinely. If they have a new alert that goes out, or a new article, or a panels discussion, or an engagement that they’re allowed to talk about, those things are posted on LinkedIn relatively routinely. We’re getting much more sophisticated in terms of searching for particular groups and affiliations and getting people to use their list of contacts in a very strategic way. The right people are getting the right information. I see us doing more investment in LinkedIn in 2016.

John:     That’s great, and I really appreciate your tips today Jim. How can people get in touch with you?

Jim:     They’re welcome to either go on the website at pierceatwood.com, they can see my bio on the website and all the attorney bios. They’re also welcome to call if they want to call, it’s (617) 488-8206 and I’ll be happy to talk to them. Then look at information that’s going out from the firm. Hopefully there’s enough out there that people might find out about us.

John:     Absolutely. Well, thanks again Jim for speaking to us today.

Jim:      Thanks for the opportunity, John.

John:     Check out legalmarketingreview.com as well as the National Law Review at natlawreview.com for more information and interviews on legal marketing. I’m John McDougall, thanks for listening.

Article By John McDougall of McDougall Interactive

© Copyright 2015 McDougall Interactive

Auto Industry Record Breaking Sales Close Out 2015

The automotive industry ended 2015 with a bang, breaking the record with nearly 17.5 million sales of cars and light trucks. This tops the previous record of 17.35 million cars in 2000. In all, American consumers spent $570 billion on new cars. This is a significant comeback from the low of 10.4 million cars consumers purchased in 2009.

business people connecting

Trucks, SUVs, and crossover vehicles had the strongest overall sales in 2015, with an increase in 13% over 2014. The Ford F-150 remained the top selling vehicle in the US. The industry also saw a significant increase in leasing, totaling 29% of new retail sales. Merely 10 years ago, leases accounted for only 16.6% of new retail sales.

As we previously noted on the blog, low fuel prices and easier access to credit, among other factors, drove sales over the past year. Gas prices should remain low in the near term, and although interest rates are slowly increasing, analysts expect a continued upward trend with 2016 predicted to be another record year in the auto industry.

Article By Lauren M. Loew of Foley & Lardner LLP

© 2015 Foley & Lardner LLP