In late August, the California legislature passed two bills that would limit the creation or use of “digital replicas,” making California the latest state to seek new protections for performers, artists, and other employees in response to the rise of AI-generated content.  These state efforts come as Congress considers the NO FAKES Act (S. 4875), introduced by Senator Chris Coons (D-DE) on July 31, which would establish a federal “digital replication right” over individual’s own digital replicas and impose liability on persons who knowingly create, display, or distribute digital replicas without consent from the right holder.

This is part of an ongoing series of Covington blogs on the implementation of Executive Order No. 14110 on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” (the “AI EO”), issued by President Biden on October 30, 2023.  The first blog summarized the AI EO’s key provisions and related OMB guidance, and subsequent blogs described the actions taken by various government agencies to implement the AI EO from November 2023 through July 2024.  This blog describes key actions taken to implement the AI EO during August 2024.  It also describes key actions taken by NIST and the California legislature related to the goals and concepts set out by the AI EO.  We will discuss developments during August 2024 to implement President Biden’s 2021 Executive Order on Cybersecurity in a separate post. 

The California Invasion of Privacy Act (CIPA) provides a private right of action only to those who have “been injured by a violation of” CIPA.  A California Superior Court decision, Rodriguez v. Fountain9, Inc., 2024 WL 3886811, at *4 (Cal. Super. July 9, 2024), confirmed that a plaintiff cannot satisfy this statutory standing requirement unless the plaintiff alleges “a concrete injury-in-fact.”

On August 29, 2024, the Federal Communications Commission (the “Commission”) adopted rules (the “Order”) enabling licensed initial drone operations in the 5 GHz spectrum band, allowing for reliable and protected wireless communications necessary for controlling “uncrewed aircraft systems” (“UAS”). The Order is an initial step in the Commission’s phased approach to developing licenses and service rules for UAS operations.

In a press release accompanying the Order, Chairwoman Jessica Rosenworcel said “We are already starting to live in the future we’ve long imagined: uncrewed aircraft systems are fighting wildfires, supporting news gathering, delivering packages, and supporting national security…The FCC is working hard to meet the spectrum needs of remote-piloted aircraft activity. We will continue to work with our public and private partners to support the best outcomes for public safety, wireless services, consumers, and our economy.”

On 18 July 2024, Ursula von der Leyen, the current President of the European Commission (“Commission”), was reconfirmed by the European Parliament for a second term. Ahead of her reconfirmation, President von der Leyen delivered a speech before the European Parliament, accompanied by a 30-page program (the “Guidelines”) that lays down the next five-year policy agenda she proposes for the Commission. This blog outlines the key points to look out for in the “mission letters” she is expected to issue to her Commissioners-designate later this week.

A European “Christmas Tree”

The Guidelines were designed to secure a majority in the European Parliament ahead of the crucial 18 July vote. They affirm that the “priorities set out draw on […] consultations and on the common ideas discussed with the democratic forces in the European Parliament” (a reference to the cordon sanitaire – the agreed common exclusion of far-right parties from political discussions).

However, whilst the Commission has the monopoly on the right of initiative in EU law-making, the European Council (the strategic body that comprises the EU heads of state and government) defines the general political direction and priorities of the European Union. Hence, the European Council is the ultimate agenda-setter. At their 27 June 2024 meeting, the European Council agreed on a draft 2024-2029 Strategic Agenda (“Strategic Agenda”). This sets in stone the European Council’s policy priorities and invites the Commission to put these “into action during the next institutional cycle”. Thus, the Strategic Agenda acted as the basis upon which Von der Leyen prepared her Guidelines.

Other workstreams also influenced the drafting of the Guidelines. Enrico Letta’s report on the future of the EU Single Market advocated for the Commission to propose the establishment of the European Savings and Investments Union. Mario Draghi’s report on competitiveness (published on September 9, 2024) also fed into the Guidelines. Finally, the Guidelines seek to establish a sense of continuity, allowing von der Leyen’s second mandate to build on her first, notably with regards to the Green Deal: “we have achieved a lot together in the last five years, […] we must and will stay the course on all of our goals, including those set out in the European Green Deal”.

On September 4, DoD published a proposed rule updating the other transaction (OT) regulations set forth in 32 CFR part 3.  These updates are intended to implement various changes to the prototype OT statute (42 U.S.C § 4022) previously enacted by Congress.  Among other things, those changes included:

  • An expansion of the “appropriate circumstances” under which a prototype OT may be issued, to include situations involving participation by nonprofit research institutions, participation by small businesses, or opportunities “to expand the defense supply base”; and
  • Authority for DoD to issue follow-on “production” OTs on a sole source basis, provided that competitive procedures were used for award of the initial prototype OT.

Although these changes were already applicable to DoD as a matter of statute, the proposed rule would ensure that the CFR is aligned with the statute and that the regulations provide accurate guidance. More details are below.

This is part of a series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and the subsequent blogs described the actions taken by various government agencies to implement the Cyber EO from June 2021through July 2024.  This blog describes key actions taken to implement the Cyber EO, as well as the U.S. National Cybersecurity Strategy, during August 2024.  We discuss developments during August 2024 to implement President Biden’s Executive Order on Artificial Intelligence in a separate post. 

On 3 September 2024, the European Court of Justice (“ECJ”) published its highly-anticipated judgment in Illumina/Grail v Commission (Joined Cases C‑611/22 P and C‑625/22 P) (“ECJ Judgment”), regarding the scope of application of Article 22 of the EU Merger Regulation (“EUMR”).

The ECJ set aside the EU General Court (“GC”) judgment (Case T‑227/21) and ruled that the European Commission (“Commission”) does not have jurisdiction over transactions referred to it by the national competition authorities of EU Member States (“NCAs”) if the transactions do not meet the national thresholds of the referring EU Member States.

Key takeaways

  • Based on a historical, contextual, and teleological interpretation of Article 22 EUMR and the EUMR itself, NCAs cannot ask the Commission to examine transactions which do not meet their national thresholds.
  • Article 22 EUMR provides for a corrective function regarding the allocation of competences between the Commission and NCAs, and is to limit the possibility of multiple parallel notifications, providing legal certainty and facilitating the one-stop shop principle.
  • An amendment of the EUMR thresholds and/or referral rules to capture below-threshold transactions would likely entail a burdensome legislative process and complex negotiations with EU Member States.
  • The Commission can still rely on (i) new thresholds which have by now been introduced in some EU Member States to catch transactions outside the scope of their traditional turnover-based thresholds, and (ii) the possibility for NCAs to review these transactions by means of Article 102 TFEU, which prohibits abuses of a dominant position.

In Ohio Carpenters’ Pension Fund v. Deutsche Bank AG, no. 22-cv-10462-ER (S.D.N.Y. Aug. 26, 2024), the U.S. District Court for the Southern District of New York dismissed an antitrust class action alleging a conspiracy between Deutsche Bank and Rabobank to manipulate prices of European government bonds.  Plaintiffs, certain U.S.-based pension funds, alleged that the defendants manipulated the prices they offered to investors to buy or sell EGBs in order to widen the resulting “bid-ask spread” between those prices and increase their profits.