Insights

On November 12, 2025, the Tax Court issued a reviewed opinion in Patel v. Commissioner holding in favor of the IRS that the taxpayers’ transaction lacked economic substance, and therefore the taxpayers were liable for penalties under the codified economic substance doctrine at the increased penalty rate, as well as accuracy-related penalties. The Court previously held in a separate opinion that the taxpayers’ purported captive transactions did not constitute insurance because they failed to distribute risk, and in the alternative, that the micro-captives did not act as an insurer commonly would. 

The Federal Trade Commission (FTC) and National Advertising Division (NAD) of BBB National Programs laid out their enforcement priorities during the 2025 ANA Masters of Advertising Law Conference, at which Crowell & Moring attorneys spoke on and attended various panels.

In recent months the executive branch has indicated a willingness to assert control over intellectual property funded by federal research dollars in novel ways. This could potentially include leveraging its march-in rights under the Bayh-Dole Act.

This news bulletin is provided by the International Trade Group of Crowell & Moring. If you have questions or need assistance on trade law matters, please contact Anand Sithian or Simeon Yerokun or any member of the International Trade Group.

On October 29, 2025, the attorneys general of Florida, Texas, Iowa, Nebraska, and Montana (the “State AGs”) jointly issued letters to three sustainability groups asserting that their plastics recycling initiatives may violate state and federal antitrust and consumer protection laws.

As a founder, your days are packed — building product, managing people, and trying to grow fast enough to stay alive. It’s easy for the end of the fiscal year to sneak up on you. But year-end board meetings are one of your best opportunities to show investors that your company is operating effectively and that you’re a thoughtful, disciplined leader.

On October 3, 2025, the Sixth Circuit reaffirmed that the attorney-client privilege and the work-product doctrine protections apply to materials created during attorney-led internal investigations. In re FirstEnergy Corp., No. 24-3654 (6th Cir. Oct. 3, 2025).

On August 15, 2025, the Treasury Department and IRS released updated guidance concerning Beginning of Construction requirements to qualify for clean energy tax credits. This new guidance is critical for developers to consider as they rush to qualify for the tax credits before they expire entirely. The much-anticipated guidance followed the July 7, 2025 Executive Order 14315, Ending Market Distorting Subsidies for Unreliable, Foreign-Controlled Energy Sources (“July 7, 2025 Executive Order”), which signaled that the Trump Administration was planning to strictly enforce the termination of production and investment tax credits for solar and wind facilities that are set to expire under the One Big Beautiful Bill Act (OBBB Act), covered in more detail here. The new guidance comes at a time when many in the industry are struggling to keep up with the myriad ways that the new administration is working to roll back wind and solar tax credits, leaving developers to piece through the recent guidance to determine how best to structure and invest in clean energy projects given the volatile position of the current administration vis-a-vis wind and solar energy.

On October 1, 2025, the IRS Independent Office of Appeals launched a two-year pilot program to make Post Appeals Mediation (PAM) more attractive and accessible to taxpayers. See IRS Announcement 2025-10. The new PAM pilot program offers taxpayers the opportunity to be assigned to a new Appeals team, which is otherwise unconnected to the underlying case, who will represent the original Appeals team in the mediation session. The assignment of the new Appeals team does not begin a new appeals process but rather is intended to help facilitate an expedited and impartial look at the underlying case with the goal of further exploring all potential paths to resolution prior to litigation.

On September 9, 2025, the Ninth Circuit Court of Appeals affirmed a district court’s denial of a preliminary injunction as to certain provisions of California’s Protecting Our Kids from Social Media Addiction Act. This interlocutory ruling is significant for two reasons. First, it demonstrates why and how state laws can withstand and avoid First Amendment challenges. Second, it showcases the potential difficulties in establishing associational standing on behalf of member technology and digital commerce companies.

On October 1, 2025, the Eighth Circuit decided 3M Co. v. Commissioner in the taxpayer’s favor, based on its application of Loper Bright. The question presented in the case was whether the IRS had the authority to reallocate royalty income to a U.S. parent company that its foreign subsidiary was prohibited from paying under foreign law. The court held that the best interpretation of the governing statute did not permit the IRS’s reallocation.

The Really Simple Licensing Collective (“RSL Collective”), a nonprofit dedicated to creating collective licensing solutions for content creators and publishers, has announced Really Simple Licensing (“RSL”), a new standard designed to stop crawlers from scraping websites for content without permission or compensation. If adopted, RSL could have major implications for both online platforms and the AI technologies that source content for training data from them.

On September 30, 2025, the Food and Drug Administration (FDA) issued a Request for Public Comment (“Request”) inviting stakeholders to share practical experience and recommendations for measuring and evaluating the real-world performance of AI-enabled medical devices, including those powered by GenAI. According to FDA, the Request is not intended to communicate new guidance or regulatory expectations but aims to advance the conversation on how best to assure the safety, effectiveness, and reliability of AI-driven technologies in clinical practice.

On September 29, 2025, the U.S. Department of Commerce Bureau of Industry and Security (BIS) announced a sweeping Interim Final Rule (IFR), (the “Affiliates Rule”) expanding which entities qualify as Entity List or Military End-User entities, thereby subjecting those entities to elevated export control restrictions under the Export Administration Regulations (EAR). U.S. export restrictions applicable to entities on the Entity List, Military End-User (MEU) List, and Specially Designated Nationals and Blocked Persons (SDN List) now apply to foreign affiliates that are, in the aggregate, owned 50% or more by one or more of the aforementioned entities. An entity that becomes subject to these restrictions because of its ownership structure will be subject to the most restrictive controls that attach to any of its parent entities, regardless of ownership stakes.

On September 18, EPA announced that it will prioritize Toxic Substances Control Act (“TSCA”) review for “new chemicals related to data centers and artificial intelligence (“AI”) projects,” in an effort to “streamline permitting and regulations to accelerate American data center development.”

On September 24, 2025, the California Air Resources Board (“CARB”) issued a preliminary list of reporting/covered entities under California’s climate disclosure laws SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act) (the “Climate Disclosure Laws”) (both as modified by SB 219).

Responding to the D.C. Circuit’s deadline to inform the court how it wishes to proceed in litigation challenging the agency’s listing of two types of per- and polyfluoroalkyl substances (PFAS) as hazardous substances under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Environmental Protection Agency (EPA) stood behind its rule. In a September 17, 2025 filing, EPA told the court that the Trump administration had completed its review and would ultimately keep the Biden-era CERCLA final rule in place. The agency also requested that the court remove—i.e. pause—the abeyance placed on the proceedings, so that the lawsuit could move forward and be adjudicated.

The Department of Education (DOE) announced on September 10, 2025, that it will end discretionary funding to several Minority-Serving Institution (MSI) grant programs that, it stated, “discriminate by conferring government benefits exclusively to institutions that meet racial or ethnic quotas.”[1] The agency stated that it would “us[e] its statutory authority to reprogram discretionary funds to programs that do not present such concerns.”[2] This announcement follows a July 2025 decision by the Department of Justice to no longer defend the constitutionality of a provision of the Higher Education Act of 1965 (HEA) that authorizes grant funding to Hispanic-Serving institutions, after determining that such programs “violate the equal-protection component of the Fifth Amendment’s Due Process Clause.”[3]

U.S. Government and private sector sources continue to report efforts by Democratic People’s Republic of Korea (DPRK) nationals to infiltrate companies around the world by posing as information technology (IT) professionals, in order to get hired by U.S. and other businesses and gain access to sensitive company systems. Crowdstrike, a U.S. cybersecurity company, has reported a 220% increase in the number of companies infiltrated by North Korean threat actors over the last 12 months. In particular, a DPRK-affiliated group known as “Famous Chollima” has leveraged artificial intelligence and deepfake technology to generate synthetic identities, as well as resumes and CVs, draft communications, and conduct job interviews. Enforcement actions brought by the U.S. Department of Justice identify victims in the cryptocurrency sector, including decentralized finance (“DeFi”) projects. In addition, media reports indicate that North Korean hackers are purportedly offering fake job offers targeting employees in the cryptocurrency sector, with the goal of stealing crypto.