USPTO Director Reclaims Authority to Institute IPRs

The new Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, John Squires, has reclaimed authority to institute IPRs. Here is his letter regarding the subject:

An Open Letter From America’s Innovation Agency

Bringing the USPTO Back to the Future: Return of Institution Authority under 35 U.S.C. §§ 314 and 324 to the Director

Dear Colleagues, Inventors, and Americans,

Under the America Invents Act (AIA), Congress entrusted the United States Patent and Trademark Office with several mandates to ensure the timely and fair adjudication of patent validity challenges through post-grant review (PGR) or inter partes review (IPR) mechanisms and priority contests via derivation proceedings. As to IPRs specifically, under 35 U.S.C. § 314(a), Congress made plain that: The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition … shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition. This statutory language expressly vests the authority to institute IPRs and PGRs in the USPTO Director. While 35 U.S.C. § 3(b)(3)(B) permits delegation of that authority, such delegation is non-exclusive. Statutorily, the Director retains full and concurrent authority over whether an IPR or PGR shall proceed. Since the AIA’s enactment, initial operational choices led to the delegation of institution decisions to the Patent Trial and Appeal Board, where panels then adjudicated the merits once instituted. Although this delegation was initially practical, experience has raised structural, perceptual, and procedural concerns inconsistent with the AIA’s design, clear language, and intent affecting, among other things, the public’s rightful expectation of impartiality. Given the statutory charge, my aim as Director is to address these concerns. Under oath in my confirmation hearing before the Senate Judiciary Committee and thereafter in my submitted Questions for the Record responses, I expressed discomfort that data seemed to be “skewed” in favor of certain provisions (namely IPRs over PGRs and a very high invalidation rate). To me, this raised questions about both the administration of IPR proceedings and their institution in particular. I vowed to administer the AIA as the statute provides and as Congress intended.

Today, in keeping with my vow and having now taken the Oath of Office as USPTO Director, I have ordered changes pursuant to my memo to the Board (attached). Below, I describe the reasons for my action today. Over the past several years, the delegated-institution model has given rise to the following difficulties: 1. Perception of Self-Incentivization – While the Board has done an admirable job, performance metrics and workload structures have created the appearance that institution decisions affect docket size, credit, and resource allocation—inviting concern that the Board may be “filling its own docket.” – This may be unfounded, but nevertheless such a perception undermines public confidence in the integrity of our Office’s adjudicatory functions with respect to IPRs. 2. Bifurcated Procedures for Discretionary Considerations – The evolution of the bifurcated processes, which were smart and necessary, was never intended to be permanent. Under those processes, a preliminary review precedes Board referral. However, this appears to have inadvertently produced extraordinarily high institution rates (at one point exceeding 95 percent) for referred cases. 3. Statutory Adherence and Administrative Clarity – Congress expressly charges the Director—not the Board as delegees —to make institution determinations. Returning this function to the Director re aligns our Office’s procedures with the clear language and intent of the statute and returns accountability for such decisions to the Director just as the framework of the AIA provides. In sum, reclaiming the Director’s statutory role is intended to: • Eliminate the appearance of self-interest by separating the power to institute from the body that conducts the trial; • Remove a perceived referral-signal bias by centralizing the decision point; • Enhance transparency and public trust through a single line of authority; and • Re-align the duties and responsibilities of the Director, as a Presidentially appointed and Senate-confirmed officer, to be accountable for this threshold determination and properly effectuate the clear language of the AIA and thus Congress’s intent.

This action aligns the USPTO’s administration of IPRs with both the letter and the spirit of 35 U.S.C. § 314 and strengthens the integrity of the Office’s adjudicatory processes. In closing, the mission of America’s Innovation Agency is to lead the world in intellectual property protection. We can do so and serve the public interest only by maintaining a patent system that is fair, predictable, and respected. Returning institution authority to the Director bolsters our mission because it restores the statutory framework mandated by Congress in the America Invents Act.

UK intervention on SEPs including rate setting swims against the tide

The UK Intellectual Property Office’s 2025 consultation on standard essential patents proposes measures to improve licensing transparency and efficiency. These include searchable SEP databases, essentiality checking services, and mechanisms for aggregate rate setting to facilitate top-down approach FRAND licensing rate apportionments. While these initiatives aim to support UK innovation – particularly for SMEs – they risk undermining a licensing system that has successfully evolved through decades of commercial practice and judicial developments.

The UK’s Prime Minister and Chancellor have recently pledged to promote economic growth by slashing red tape and taking out regulators. The IPO’s proposals fly in the face of that.

In my response submission to the IPO’s consultation, I focus on interventions that could do more harm than good: essentiality checking and essentiality rate estimating, aggregate royalty setting and top-down rate apportionment. My concerns are similar to those previously raised in response to the EU SEP consultation in 2023 and 2024.

Checking essentiality – along with infringement and validity – are important and are economically achieved on handfuls of patents to reliably establish that licensing is required. Comparable licences are then the generally preferred method of determining FRAND rates. Where these do not yet exist or are unavailable, parties are best placed to determine rates through discussion and negotiation.

Estimating essentiality rates of entire patent portfolios and for all patents reading on a standard is a far more demanding and costly endeavour, even when only random samples of patents are checked. Results are inaccurate and unreliable.

Setting aggregate royalties and then apportioning them based on counts of declared essential or checked essential patents is also very problematic.

My consultation submission can be downloaded here.

U.S. NIST Report on DeepSeek

The U.S. National Institute of Standards and Technology has recently released a 69 page report concerning DeepSeek and the risks associated with utilizing it.  The Press Release states:

WASHINGTON — The Center for AI Standards and Innovation (CAISI) at the Department of Commerce’s National Institute of Standards and Technology (NIST) evaluated AI models from the People’s Republic of China (PRC) developer DeepSeek and found they lag behind U.S. models in performance, cost, security and adoption.

“Thanks to President Trump’s AI Action Plan, the Department of Commerce and NIST’s Center for AI Standards and Innovation have released a groundbreaking evaluation of American vs. adversary AI,” said Secretary of Commerce Howard Lutnick. “The report is clear that American AI dominates, with DeepSeek trailing far behind. This weakness isn’t just technical. It shows why relying on foreign AI is dangerous and shortsighted. By setting the standards, driving innovation, and keeping America secure, the Department of Commerce will ensure continued U.S. leadership in AI.”

The CAISI evaluation also notes that the DeepSeek models’ shortcomings related to security and censorship of model responses may pose a risk to application developers, consumers and U.S. national security. Despite these risks, DeepSeek is a leading developer and has contributed to a rapid increase in the global use of models from the PRC.

CAISI’s experts evaluated three DeepSeek models (R1, R1-0528 and V3.1) and four U.S. models (OpenAI’s GPT-5, GPT-5-mini and gpt-oss and Anthropic’s Opus 4) across 19 benchmarks spanning a range of domains. These evaluations include state-of-the-art public benchmarks as well as private benchmarks built by CAISI in partnership with academic institutions and other federal agencies.

The evaluation from CAISI responds to President Donald Trump’s America’s AI Action Plan, which directs CAISI to conduct research and publish evaluations of frontier models from the PRC. CAISI is also tasked with assessing: the capabilities of U.S. and adversary AI systems; the adoption of foreign AI systems; the state of international AI competition; and potential security vulnerabilities and malign foreign influence arising from the use of adversaries’ AI systems.

CAISI serves as industry’s primary point of contact within the U.S. government to facilitate testing, collaborative research, and best practice development related to commercial AI systems, and is a key element in NIST’s efforts to secure and advance American leadership in AI.

Key Findings

DeepSeek performance lags behind the best U.S. reference models.
The best U.S. model outperforms the best DeepSeek model (DeepSeek V3.1) across almost every benchmark. The gap is largest for software engineering and cyber tasks, where the best U.S. model evaluated solves over 20% more tasks than the best DeepSeek model.

DeepSeek models cost more to use than comparable U.S. models.
One U.S. reference model costs 35% less on average than the best DeepSeek model to perform at a similar level across all 13 performance benchmarks tested.

DeepSeek models are far more susceptible to agent hijacking attacks than frontier U.S. models.
Agents based on DeepSeek’s most secure model (R1-0528) were, on average, 12 times more likely than evaluated U.S. frontier models to follow malicious instructions designed to derail them from user tasks. Hijacked agents sent phishing emails, downloaded and ran malware, and exfiltrated user login credentials, all in a simulated environment.

DeepSeek models are far more susceptible to jailbreaking attacks than U.S. models.
DeepSeek’s most secure model (R1-0528) responded to 94% of overtly malicious requests when a common jailbreaking technique was used, compared with 8% of requests for U.S. reference models.

DeepSeek models advance Chinese Communist Party (CCP) narratives.
DeepSeek models echoed four times as many inaccurate and misleading CCP narratives as U.S. reference models did.

Adoption of PRC models has greatly increased since DeepSeek R1 was released.
The release of DeepSeek R1 has driven adoption of PRC models across the AI ecosystem. Downloads of DeepSeek models on model-sharing platforms have increased nearly 1,000% since January 2025.

A Good Idea to Cut Public Funding for R&D? Doesn't Look Like It.

David Rotman has authored an excellent article titled, “How to Measure the Returns on R&D Spending: Forget the Glorious Successes of Past Breakthroughs—the Real Justification for Research Investment is What We Get for Our Money. Here’s What Economists Say” in the MIT Technology Review.  The article does a nice job explaining recent research concerning public funding of R&D and the return on investment to the public.  The article notes that many questions are not answered.  The article is available, here. 

Medicaid to Receive Most Favored Nation Pricing on Pfizer Drugs

The White House has announced that President Trump has made a deal with Pfizer for state Medicaid to receive most favored nation pricing on Pfizer pharmaceuticals.  This is welcome news; however, I do wonder if the rest of the world’s pharmaceutical prices will rise.  The White House has released a fact sheet that states:

ADVANCING MOST-FAVORED-NATION PRICING: Today, President Donald J. Trump announced the first agreement with a major pharmaceutical company, Pfizer, to bring American drug prices in line with the lowest paid by other developed nations (known as the most-favored-nation, or MFN, price).

• The agreement will provide every State Medicaid program in the country access to MFN drug prices on Pfizer products, resulting in many millions of dollars in savings and continuing President Trump’s historic efforts to strengthen the program for the most vulnerable.
• The agreement ensures foreign nations can no longer use price controls to freeride on American innovation by guaranteeing MFN prices on all new innovative medicines Pfizer brings to market. 
• The agreement requires Pfizer to repatriate increased foreign revenue on existing products that Pfizer realizes as a result of the President’s strong America First U.S. trade policies for the benefit of American patients. 
• The agreement requires Pfizer to offer medicines at a deep discount off the list price when selling directly to American patients.

 
DELIVERING REDUCED COSTS: Today’s actions will result in tangible cost savings to American patients and the healthcare system as a whole. Taken together, more than 100 million patients are impacted by the diseases Pfizer’s medicines treat, and many of those will benefit from the President’s successful negotiation of lower prices for Americans. Examples include:

• Eucrisa, a topical ointment for atopic dermatitis, will be made available at an 80% discount to patients purchasing directly.
• Xeljanz, a widely used oral medication for rheumatoid arthritis, psoriatic arthritis, and ulcerative colitis, will be available at a 40% discount to patients purchasing directly.
•  Zavzpret, a commonly utilized treatment for migraines, will be sold directly to patients at a 50% discount.

 
ENDING GLOBAL FREELOADING ON AMERICAN PHARMACEUTICAL INNOVATION:  President Trump is taking decisive action to rebalance a system that allows pharmaceutical manufacturers to offer low prices to other wealthy nations while charging Americans significantly higher prices.  

• According to recent data, the prices Americans pay for brand-name drugs are more than three times the price other Organization for Economic Cooperation and Development nations pay, even after accounting for discounts manufacturers provide in the U.S. 
• The United States has less than five percent of the world’s population, yet roughly 75% of global pharmaceutical profits come from American taxpayers.
• Drug manufacturers benefit from generous research subsidies and enormous healthcare spending by the U.S. Government. Instead of passing that benefit through to American consumers, drug manufacturers then discount their products abroad to gain access to foreign markets and subsidize those discounts through high prices charged in America. Americans are subsidizing drug-manufacturer profits and foreign health systems, both in development and once the drugs are sold. 

 
DELIVERING ON PROMISES TO PUT AMERICAN PATIENTS FIRST: President Trump is delivering on promises for American patients that the political establishment did not believe were possible.

• On May 12, 2025, President Trump signed an Executive Order titled: “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients” directing the Administration to take numerous actions to bring American drug prices in line with those paid by similar nations.
• On July 31, 2025, President Trump sent letters to leading pharmaceutical manufacturers outlining the steps they must take to bring down the prices of prescription drugs in the United States to match the lowest price offered in other developed nations 
• President Trump has been relentless in his effort to address the unfair and outrageous prices Americans pay for prescription drugs:

o   President Trump: “In case after case, our citizens pay massively higher prices than other nations pay for the same exact pill, from the same factory, effectively subsidizing socialism aboard [abroad] with skyrocketing prices at home. So we would spend tremendous amounts of money in order to provide inexpensive drugs to another country. And when I say the price is different, you can see some examples where the price is beyond anything — four times, five times different.”

AI Patent Claims are 101 Patent Eligible Subject Matter

In the matter of ex parte Desjardins et al., the Appeals Review Panel vacates the Patent Trial and Appeals Board decision that claims concerning machine learning are not patent eligible subject matter.  The Appeals Review Panel included Under Secretary of Intellectual Property John Squires who is also Director of the United States Patent and Trademark Office.  The Appeals Review Panel criticized the PTAB for not adequately considering the teachings of the Federal Circuit’s Microsoft v. Enfish decision and stated:

Under a charitable view, the overbroad reasoning of the original panel below is perhaps understandable given the confusing nature of existing § 101 jurisprudence, but troubling, because this case highlights what is at stake. Categorically excluding AI innovations from patent protection in the United States jeopardizes America's leadership in this critical emerging technology. Yet, under the panel's reasoning, many AI innovations are potentially unpatentable-even if they are adequately described and nonobvious-because the panel essentially equated any machine learning with an unpatentable "algorithm" and the remaining additional elements as "generic computer components," without adequate explanation. Dec. 24. Examiners and panels should not evaluate claims at such a high level of generality.

The reasoning of the Appeals Review Panel is based upon the USPTO approach to patent eligible subject matter analysis. 

Anthropic Settles Copyright Suit

Wired Magazine reports that the class action copyright suit involving Anthropic in the Northern District of California (Bartz v. Anthropic) has been settled (for the most part) for around $1.5 billion US.  The article is available, here.  

The practical implications of the settlement on positioning in other copyright suits involving generative artificial intelligence remain to be seen.  In June, Judge Alsup issued an order stating, in part:

. . . This order grants summary judgment for Anthropic that the training use was a fair use. And, it grants that the print-to-digital format change was a fair use for a different reason. But it denies summary judgment for Anthropic that the pirated library copies must be treated as training copies.

We will have a trial on the pirated copies used to create Anthropic's central library and the resulting damages, actual or statutory (including for willfulness). That Anthropic later bought a copy of a book it earlier stole off the internet will not absolve it of liability for the theft but it may affect the extent of statutory damages. Nothing is foreclosed as to any other copies flowing from library copies for uses other than for training LLMs.

Decluttering the US Trademark Register from Fraudulent Filings

The United States Trademark Office has terminated over 52,000 trademark pending registrations and registrations based on widespread fraud by a foreign-filing entity.  Notably, the sanctions order states the following administrative sanctions:

(1) Permanently preclude Respondents from submitting trademark-related documents on behalf of Respondents or others; (2) Strike or otherwise give no weight to all trademark-related documents submitted by Respondents; (3) Deactivate any USPTO accounts in which contact information related to Respondents appears, and take action to prevent Respondents from creating or activating further accounts; (4) Block future financial transactions from credit cards used to pay filing fees associated with the improper submissions and/or associated with Respondents; (5) Terminate all pending proceedings identified by Serial Numbers in Exhibit A because they contain submissions filed by Respondents. . .; (6) For trademark proceedings later found to involve Respondents or containing submissions filed by Respondents, continue to strike documents, remove information, deactivate accounts, block financial transactions, and terminate proceedings.

The Press Release states:

On August 6, 2025, the U.S. Patent and Trademark Office (USPTO) issued sanctions against a foreign filing firm and terminated over 52,000 applications and registrations connected to the firm. The firm submitted documents on behalf of others without the proper authority or qualifications. To conceal this, they: Sought out the cooperation of U.S.-licensed attorneys and then misused their credentials and faked their electronic signatures; Repeatedly signed documents using other people’s names; Submitted fake specimens of use; and Misused USPTO.gov accounts. By removing these records from the trademark register, the USPTO is helping ensure the register accurately reflects trademarks that are actually being used in commerce.

Report Shows Growth in Investment in Intangible Assets

An article titled, Investment in Intangible Assets Surges, led by Funding for Software and Databases Amid AI Boom, which discusses a report by WIPO and Italy’s Luiss Business School, states, “that in the last year alone, intangible investment across 27 high-and middle-income economies grew by about 3 percent in real terms, reaching USD 7.6 trillion in 2024, up from USD 7.4 trillion in 2023.”  The article additionally states that, “investment in intangible assets has . . . increase[ed] at a compound annual rate of about 4 percent between 2008 and 2024, far outpacing tangible investment growth of just 1 percent.”  The article can be found, here. 

Free LES Webinar on IP Valuation in M&A Deal Making

The Silicon Valley Chapter of LES is hosting a free webinar titled, IP Valuation in Special Situations: Closing the Intangible Value Gap in M&A Deal Making on Tuesday, June 24 at 9:00 am to 10:30 pm Pacific Time.  The notice concerning the webinar states:

“Efrat [Kasznik] will present four unique strategies for integrating IP assets in M&A deal pricing without disrupting deal workflows, while addressing the needs of both sellers and buyers. Topics to be covered include: Current trends in M&A deals How are companies valued in M&A deals? Why is there an intangible valuation gap in M&A deals? Seller and buyer M&A deal pricing considerations Strategies for bridging the intangible valuation gap Personal Insights from an M&A deal where the valuation gap was addressed using IP Make connections to help discover and drive deals. Engage 75+ registered participants —innovators, investors, IP management experts from startups and established SV organizations, and many more.  Online via Zoom” The Registration Link is, here.

FBI Reports Hacker Group After US Law Firms (Again)

The U.S. Federal Bureau of Investigation (FBI) Cyber Division (Internet Crime Complaint Center) has issued a warning that certain malicious cyber actors are targeting law firms.  Law firms are a ripe target for valuable information concerning clients, including intellectual property.  The warning states, in part:

The cyber threat actor Silent Ransom Group (SRG), also known as Luna Moth, Chatty Spider, and UNC3753, is targeting law firms using information technology (IT) themed social engineering calls, and callback phishing emails, to gain remote access to systems or devices and steal sensitive data to extort the victims. While SRG has historically victimized companies in many sectors, starting Spring 2023, the group has consistently targeted US-based law firms, likely due to the highly sensitive nature of legal industry data. . . .

As of March 2025, SRG was observed changing their tactics to calling individuals and posing as an employee from their company’s IT department. SRG will then direct the employee to join a remote access session, either through an email sent to them, or navigating to a web page. Once the employee grants access to their device, they are told that work needs to be done overnight. Once in the victim’s device, a typical SRG attack involves minimal privilege escalation and quickly pivots to data exfiltration conducted through “WinSCP” (Windows Secure Copy) or a hidden or renamed version of “Rclone.” If the compromised device does not have administrative privileges, WinSCP portable is used to exfiltrate victim data. Although this tactic has only been observed recently, it has been highly effective and resulted in multiple compromises. Similar to their phishing emails posing as a company with a subscription, once SRG exfiltrates data, they extort the victim by sending them a ransom email threatening to sell or post the data online. SRG will also call employees at a victim company to pressure them into engaging in ransom negotiations. SRG has developed a publicly available site to post victim data, however, they are inconsistent in their use of the site, and do not always follow through on posting victim data.

Governmental Best Practices Report on AI Data Security

U.S., UK, Australian and New Zealand government cybersecurity related agencies have recently released a joint report titled, “AI Data Security Best Practices for Securing Data Used to Train & Operate AI Systems.”  The report provides advice for addressing potential threats to AI data security.  Notably, for the U.S., the report provides minimum security standards that may be applicable in subsequent litigation and important in drafting contracts concerning AI use and adoption.  The report states:

Data security is of paramount importance when developing and operating AI systems. As organizations in various sectors rely more and more on AI-driven outcomes, data security becomes crucial for maintaining accuracy, reliability, and integrity. The guidance provided in this CSI outlines a robust approach to securing AI data and addressing the risks associated with the data supply chain, malicious data, and data drift. Data security is an ever-evolving field, and continuous vigilance and adaptation are key to staying ahead of emerging threats and vulnerabilities. The best practices presented here encourage the highest standards of data security in AI while helping ensure the accuracy and integrity of AI-driven outcomes. By adopting these best practices and risk mitigation strategies, organizations can fortify their AI systems against potential threats and safeguard sensitive, proprietary, and mission critical data used in the development and operation of their AI systems.

U.S. Department of Homeland Security Revokes Harvard's Ability to Enroll Foreign Students

The U.S. Department of Homeland Security press release states:

Harvard University Loses Student and Exchange Visitor Program Certification for Pro-Terrorist Conduct

Harvard is being held accountable for collaboration with the CCP, fostering violence, antisemitism, and pro-terrorist conduct from students on its campus.

WASHINGTON – Today, Homeland Security Secretary Kristi Noem ordered DHS to terminate the Harvard University’s Student and Exchange Visitor Program (SEVP) certification.

This means Harvard can no longer enroll foreign students and existing foreign students must transfer or lose their legal status.

Harvard’s leadership has created an unsafe campus environment by permitting anti-American, pro-terrorist agitators to harass and physically assault individuals, including many Jewish students, and otherwise obstruct its once-venerable learning environment. Many of these agitators are foreign students. Harvard’s leadership further facilitated, and engaged in coordinated activity with the CCP, including hosting and training members of a CCP paramilitary group complicit in the Uyghur genocide.

“This administration is holding Harvard accountable for fostering violence, antisemitism, and coordinating with the Chinese Communist Party on its campus,” said Secretary Noem. “It is a privilege, not a right, for universities to enroll foreign students and benefit from their higher tuition payments to help pad their multibillion-dollar endowments. Harvard had plenty of opportunity to do the right thing. It refused. They have lost their Student and Exchange Visitor Program certification as a result of their failure to adhere to the law. Let this serve as a warning to all universities and academic institutions across the country.”

On April 16, 2025, Secretary Noem demanded Harvard provide information about the criminality and misconduct of foreign students on its campus. Secretary Noem warned refusal to comply with this lawful order would result in SEVP termination.

This action comes after DHS terminated $2.7 million in DHS grants for Harvard last month.

Harvard University brazenly refused to provide the required information requested and ignored a follow up request from the Department’s Office of General Council. Secretary Noem is following through on her promise to protect students and prohibit terrorist sympathizers from receiving benefits from the U.S. government.

Facts about Harvard’s toxic campus climate:

• A joint-government task force found that Harvard has failed to confront pervasive race discrimination and anti-Semitic harassment plaguing its campus.
• Jewish students on campus were subject to pervasive insults, physical assault, and intimidation, with no meaningful response from Harvard’s leadership.
• A protester charged for his role in the assault of a Jewish student on campus was chosen by the Harvard Divinity School to be the Class Marshal for commencement.
• Harvard’s own 2025 internal study on anti-Semitism revealed that almost 60% of Jewish students reported experiencing “discrimination, stereotyping, or negative bias on campus due to [their] views on current events.”
• In one instance, a Jewish student speaker at a conference had planned to tell the story of his Holocaust survivor grandfather finding refuge in Israel. Organizers told the student the story was not “tasteful” and laughed at him when he expressed his confusion. They said the story would have justified oppression.
• Meanwhile, Pro-Hamas student groups that promoted antisemitism after the October 7 attacks remained recognized and funded.

Instead of protecting its students, Harvard has let crime rates skyrocket, enacted racist DEI practices, and accepted boatloads of cash from foreign governments and donors.

• Crime rates at Harvard increased by 55% from 2022 to 2023.

o   From 2022 to 2023 aggravated assaults increased 295% and robberies increased 560%

• Harvard has adopted race-conscious hiring policies, potentially in violation of civil rights law.
• Harvard Received $151 Million From Foreign Governments Since January 2020 — making up more than 13 percent of the total $1.1 billion received from foreign donors over the same period.
• Harvard hosted and trained members of the Xinjiang Production and Construction Corps (XPCC), a CCP paramilitary group complicit in the Uyghur genocide, even after its 2020 designation on the U.S. Treasury’s Specially Designated Nationals List, with engagements continuing as recently as 2024.
• Harvard researchers collaborated with China-based academics on projects funded by an Iranian government agent and partnered with Chinese universities tied to military advancements, including aerospace and optics research, using U.S. Department of Defense funds.
• Harvard partnered with individuals linked to China’s defense-industrial base, including conducting robotics research with military applications.

U.S. Budget: Artificial Intelligence and University Endowments

The U.S. budget reconciliation bill is moving through the U.S. Congress.  One part getting attention concerns artificial intelligence.  First, subsections (a) and (b) provide for funding to upgrade the federal information technology system with artificial intelligence.  Importantly, the funding should provide better cybersecurity protection for federal information technology systems.  Second, subsection (c) seems to provide a ban on enforcement of state or local regulation of artificial intelligence.  A draft of the proposed section is below.

PART 2—ARTIFICIAL INTELLIGENCE AND INFORMATION TECHNOLOGY MODERNIZATION

Section 43201. Artificial intelligence and information technology modernization initiative.

Subsection (a) would appropriate $500,000,000 to the Department of Commerce for fiscal year 2025, to remain available through September 30, 2035, for the purpose of modernizing and securing federal information technology systems through the deployment of commercial artificial intelligence, automation technologies, and the replacement of antiquated business systems.

Subsection (b) states that the Secretary of Commerce shall use these funds to support the replacement and modernization of legacy business systems with state-of-the-art commercial artificial intelligence systems and automated decision systems, the adoption of artificial intelligence models that increase operational efficiency and service delivery, and improve the cybersecurity posture of Federal information technology systems through modernized architecture, automated threat detection, and integrated artificial intelligence solutions.

Subsection (c) states that no state or political subdivision may enforce any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period beginning on the date of the enactment of this Act.

Subsection (d) provides definitions for key terms used in the Act, including “artificial intelligence”, “artificial intelligence model”, “artificial intelligence system”, and “automated decision system”.

The House Ways and Means Committee has a list of other parts of the proposed budget bill of interest, including taxation of university endowments:

• Holds woke, elite universities that operate more like major corporations and other tax-exempt entities accountable, ensuring they can no longer abuse generous benefits provided through the tax code.
• Increases the university endowment tax and subjects the largest endowments to the corporate tax rate.
• Increases tax on massive non-profits that resemble hedge funds and pay their employees huge salaries.

The National Conference of State Legislatures states: “[This a]dds to the current 1.4% excise tax on net investment income from private universities endowments that are greater than $500,000 per student. The new tax rate is based on a tiered, student-adjusted system. Universities with per-student endowments above $2,000,000 are taxed at a 21% rate, between $1,250,000 and $1,999,999 at 14%, and between $750,000 and $1,249,999 at 7%.” 

Reducing Anticompetitive U.S. Regulations Process Continues

The U.S. Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust are continuing their work to address anticompetitive regulations across the U.S. government.  The FTC press release states:

Today, the Federal Trade Commission and the Department of Justice Antitrust Division issued a joint letter directing the heads of agencies across the federal government to create a list of anticompetitive regulations that reduce competition, entrepreneurship, and innovation.

FTC Chairman Andrew N. Ferguson and Assistant Attorney General Abigail Slater of the DOJ’s Antitrust Division issued the letter, which advances President Trump’s Executive Order on Reducing Anticompetitive Regulatory Barriers.

The Executive Order directs all agency heads to provide a list identifying anticompetitive regulations within their agency’s rulemaking authority to the FTC and DOJ. Along with each regulation identified, the agency must include a recommendation for deletion; a recommendation for specific modifications; or a justification for the potential anticompetitive effects.

The joint letter follows a recent Request for Information launched by the FTC inviting members of the public to comment on how federal regulations can harm competition in the American economy.

Following public feedback and the lists of anticompetitive regulations from agency heads, the FTC and DOJ will provide the Director of the Office of Management and Budget a consolidated list of regulations that should be rescinded or modified, along with recommended modifications.

Steve Blank Sounds Warning for U.S. Academic Research Decline

The very talented Steve Blank has laid out a case for why U.S. academic research is in serious trouble based on recent U.S. policy changes.  As he states, once you lose your advantage it's unlikely to be regained.  My guess is that there's a certain point at which the lead is lost and is too difficult to regain.  A March 2025 Nature article reports on a poll which indicates that of 1,600 scientists surveyed around 75% are contemplating moving with Canada or Europe as top destinations. I wonder what unintended consequences--particularly those that are beneficial for the United States--may exist in distributing U.S. researchers around the world. Could they be lured back in three years and seven months?  And, what could be some unintended negative consequences?  Do we really want to lose our best researchers during a military build-up around the world?  Gee whiz, it seems like almost everything is a national security issue and all technology is dual use.  Steve Blank's blog post is available, here.  

U.S. Department of Justice Creates Anticompetitive Regulation Task Force

On March 27, 2025, the U.S. Department of Justice launched the Anticompetitive Regulations Task Force.  The Task Force is soliciting public input concerning regulations that may hinder competition.  I wonder if IP-related laws will be examined.  The Press Release states:

Today, the Justice Department launches an Anticompetitive Regulations Task Force to advocate for the elimination of anticompetitive state and federal laws and regulations that undermine free market competition and harm consumers, workers, and businesses. The Antitrust Division has a long history of advocacy against laws and regulations that create unnecessary barriers to competition.  The Task Force will surge resources to these efforts and invite public comments to support the Administration’s mission to unwind laws and regulations that hinder business dynamism and make markets less competitive.    

“Realizing President Trump’s economic Golden Age will require unwinding burdensome regulations that stifle free market competition. This Antitrust Division will stand against harmful barriers to competition whether imposed by public regulators or private monopolists,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division. “We look forward to working with the public and with other federal agencies to identify and eliminate anticompetitive laws and regulations.”

On Jan. 31, President Trump signed Executive Order 14192 declaring “the policy of the executive branch” to be that federal agencies should “alleviate unnecessary regulatory burdens placed on the American people.” Consistent with this policy, on Feb. 19, President Trump signed Executive Order 14219 directing agencies to “initiate a process to review all regulations” and identify regulations that, among other things, “impose undue burdens on small businesses and impede private enterprise and entrepreneurship.” Consistent with longstanding practice, the Antitrust Division will support federal agencies’ deregulatory initiatives by sharing its market expertise on regulations that pose the greatest barriers to economic growth.

Regulatory capture is a well-studied phenomenon in which agencies become “captured” by special interests and big businesses, rather than serving the interests of the American people. But when regulations serve the few and impose undue burdens on small businesses, private enterprise, and entrepreneurs, they also harm competition and ultimately hurt American consumers, workers, and businesses. For example, regulations can increase compliance costs, preventing businesses from competing on a level playing field with powerful corporations. Regulations can also discourage or even intentionally prohibit small businesses and new products from entering markets and lowering prices for American families. In contrast, eliminating unnecessary anticompetitive regulations makes it easier for businesses to compete. More competition empowers the American people — not government regulators — to drive economic progress and innovation. When every American has a fair opportunity to enjoy the benefits of competitive free markets, every American has an opportunity to realize the American dream.

By identifying and working with state and federal agencies to revise or eliminate these laws and regulations, the Anticompetitive Regulations Task Force will contribute to making the American dream a reality. As a first step, the Antitrust Division will initiate a public inquiry to identify unnecessary laws and regulations that raise the highest barriers to competition. In particular, the Division will seek information from the public about laws and regulations that make it more difficult for businesses to compete effectively, especially in markets that have the greatest impact on American households, including:

• Housing: Americans spend more than one-third of their monthly income on housing, and the cost of owning or renting a home continues to rise. Laws and regulations in housing markets can contribute to these problems by making it more difficult for companies to build and ordinary Americans to rent or buy.
• Transportation: Laws and regulations in areas like airlines, rail, and ocean shipping can grant antitrust immunities, outright monopolies, or safe harbors for conduct that undermines competition. As a result, Americans pay more for travel, fuel, and a variety of other products.
• Food and Agriculture: By the end of the Biden-Harris Administration, grocery prices were 27% higher than at the end of the first Trump Administration. Eliminating unnecessary anticompetitive regulations will help farmers, growers, and ranchers increase the amount of food they produce and unlock lower prices for American consumers.
• Healthcare: Laws and regulations in healthcare markets too often discourage doctors and hospitals from providing low-cost, high-quality healthcare and instead encourage overbilling and consolidation. These kinds of unnecessary anticompetitive regulations put affordable healthcare out of reach for millions of American families.
• Energy: Reliable and affordable energy is essential to modern American life — whether in homes, businesses, manufacturing plants, schools, hospitals, sporting events, or data centers. Laws and regulations can undermine reliability and affordability by protecting incumbent electricity providers from competition or disruptive innovation.

The public will have 60 days to submit comments at www.Regulations.gov (Docket No. ATR-2025-0001), no later than May 26. Once submitted, comments will be posted to Regulations.gov. All market participants are invited to provide comments in response to this inquiry, including consumers, consumer advocates, small businesses, employers, trade groups, industry analysts, and other entities that are impacted by anticompetitive state or federal laws and regulations.

In addition to reviewing responses from the public, the Task Force will bring together attorneys, economists, and other staff from across the Division, together with interagency partners, to identify state and federal laws and regulations that unnecessarily harm competition. The Antitrust Division will then take appropriate action, including helping agencies revise or eliminate these regulations.

The Task Force will also consider other ways to advocate for the removal of anticompetitive laws and regulations. The Division routinely files amicus briefs and statements of interests in private litigation, and it will continue to do so to promote competition and oppose anticompetitive laws and regulations. The Division also provides comments on proposed legislation in the states on the request of state legislators. These efforts will continue with an eye toward protecting competition and interstate commerce in light of dormant Commerce Clause principles.

The Justice Department has a long history of serving as the Executive Branch’s chief competition advocate by working with agencies to identify and eliminate unnecessary regulations. In 2018, the Justice Department released a report on how regulations can harm competition. Following this report, the Justice Department submitted dozens of comments to federal agencies supporting efforts to eliminate unnecessary regulations and increase competition. For example, the Justice Department, in consultation with the Federal Trade Commission, submitted a comment opposing  regulations that would have protected incumbent electricity transmission companies from much-needed competition in energy markets across the country. The Justice Department filed comments aimed at making it easier for individuals and small businesses to navigate the federal government bureaucracy. The Justice Department also provided technical assistance and trainings to federal agencies to help them analyze how new and existing regulations might affect competition, or whether competition may be a better alternative to regulation altogether.

The Anticompetitive Regulations Task Force will continue these efforts, supporting ongoing efforts across the Trump Administration to unleash competition by eliminating unnecessary, burdensome, and wasteful government regulations. For more information on the Task Force, including contact information, see Anticompetitive Regulations Task Force page on the Division’s website.

Bad Timing: Starving the University Technology Transfer System

A group of over 1000 scientists who are elected members of the National Academy of Sciences, Engineering and Medicine has released a letter expressing concern with the Trump Administration’s handling of research funding.  The letter states, in part:

If our country’s research enterprise is dismantled, we will lose our scientific edge. Other countries will lead the development of novel disease treatments, clean energy sources, and the new technologies of the future. Their populations will be healthier, and their economies will surpass us in business, defense, intelligence gathering, and monitoring our planet’s health. The damage to our nation’s scientific enterprise could take decades to reverse. 

The AUTM, the Association of University Technology Managers, noted that the Great Recession would have been much worse if it had not been for university technology transfer.  Harming the engine that’s been creating innovation and new business may not be such a good thing right now.  Besides pushing us into a recession, I do wonder what the political fallout will be of the increased removal of research funding from universities.  Not only do universities spin-off companies to varying degrees of success but there are universities located in many, many congressional districts--and those universities are major regional employers.  The full letter is available, here.  The Scientific American discusses the full letter, here. 

US Copyright Office Report on Copyrightability of AI Output

The U.S. Copyright Office has released a report titled, “Copyright and Artificial Intelligence: Part 2 Copyrightability.”  The report is in response to comments by interested parties concerning the copyrightability of AI generated outputs.  The report has a helpful summary of the approach of other countries.  The full report is available, here.  The report makes several conclusions and recommendations:

• Questions of copyrightability and AI can be resolved pursuant to existing law, without the need for legislative change.

• The use of AI tools to assist rather than stand in for human creativity does not affect the availability of copyright protection for the output.

• Copyright protects the original expression in a work created by a human author, even if the work also includes AI-generated material.

• Copyright does not extend to purely AI-generated material, or material where there is insufficient human control over the expressive elements.

• Whether human contributions to AI-generated outputs are sufficient to constitute authorship must be analyzed on a case-by-case basis.

• Based on the functioning of current generally available technology, prompts do not alone provide sufficient control.

• Human authors are entitled to copyright in their works of authorship that are perceptible in AI-generated outputs, as well as the creative selection, coordination, or arrangement of material in the outputs, or creative modifications of the outputs.

• The case has not been made for additional copyright or sui generis protection for AI generated content.

Addressing Insider Threats: CIA Analyst Divulges Confidential Information

One of the most difficult cybersecurity issues concerns predicting insider threats -- identifying the person or persons in your organization who are likely to divulge personal data or intellectual property.  The U.S. Department of Justice issued this press release recently: 

A former CIA analyst pleaded guilty today to retaining and transmitting Top Secret National Defense Information to people who were not entitled to receive it, information which was publicly posted on a social media platform in October 2024.

According to court documents, Asif William Rahman, 34, of Vienna, was an employee of the CIA since 2016 and had a Top-Secret security clearance with access to Sensitive Compartmented Information (SCI).

. . .

According to court documents, on Oct. 17, 2024, Rahman accessed and printed two Top Secret documents containing National Defense Information regarding a U.S. foreign ally and its planned actions against a foreign adversary. Rahman removed the documents, photographed them, and transmitted them to individuals he knew were not entitled to receive them. By Oct. 18, 2024, the documents appeared publicly on multiple social media platforms, complete with the classification markings.

After Oct. 17, 2024, Rahman deleted and edited journal entries and written work product on his personal electronic devices to conceal his personal opinions on U.S. policy and drafted entries to construct a false narrative regarding his activity. Rahman also destroyed multiple electronic devices, including a personal mobile device and an internet router he used to transmit classified information and photographs of classified documents, and discarded the destroyed devices in public trash receptacles in an effort to thwart potential investigations into him and his unlawful conduct.

Beginning in the spring of 2024 and continuing through November 2024, Rahman repeatedly accessed and printed classified National Defense Information, including documents classified up to the Top Secret level, to take them to his residence. There, Rahman reproduced the documents and, while doing so, altered them in an effort to conceal their source and his activity. Rahman then communicated Top Secret information that he learned in the course of his employment to multiple individuals he knew were not entitled to receive it.

Rahman was indicted by a grand jury on Nov. 7, 2024, and was arrested by the FBI as he arrived to work on Nov. 12, 2024. He has remained in custody since his arrest.

Rahman pleaded guilty to two counts of willful retention and transmission of classified information related to the national defense. He is scheduled to be sentenced on May 15, 2025. He faces a maximum penalty of 10 years in prison for both counts in the plea agreement. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.