Insights

In the last few months, both Washington State and Pennsylvania enacted significant legislation addressing the malicious use of deepfakes—artificial intelligence-generated or manipulated media. These new laws reflect a growing national and state-level trend to regulate AI-generated content, especially when used to harm individuals or mislead the public.

In an effort to update and modernize the FDA’s regulation of sunscreen, Representative John Joyce (R-Ohio) and a group of bipartisan members of Congress introduced in June the Supporting Accessible, Flexible, and Effective Sunscreen (SAFE) Standards Act.  If enacted, the bill would establish a more flexible regulatory scheme at the FDA, decrease the cost in the approval process and expand the array of sunscreen available for purchase.

The Southern District of New York issued a recent opinion in Lehrman et al v. Lovo, Inc., 1-24-cv-03770 (SDNY Jul. 10, 2025) (J. Paul Oetken) regarding copyright infringement issues involving artificial intelligence models, focusing this time on voice cloning. Two voice-over actors, Paul Lehrman and Linnea Sage, filed a lawsuit against Lovo, Inc., a company specializing in AI-driven text-to-speech services. The Plaintiffs alleged that Lovo used artificial intelligence to clone their voices without authorization, raising complex legal questions regarding intellectual property and privacy rights in the age of AI.

On July 14, 2025, the FTC announced its enforcement action against telemedicine company NextMed over charges it used misleading prices, fake reviews and deceptive weight-loss claims to sell GLP-1 weight-loss drugs. The FTC has now settled its charges that NextMed used deceptive practices to lure consumers into buying their weight-loss membership programs that had hidden terms and conditions. With the rise of both authentic and counterfeit GLP-1s throughout the nation and the proliferation of the availability of GLP-1s from telemedicine/telehealth companies, online pharmacies and medspas, this announcement is a sign that the federal government will actively monitor these entities to ensure consumers are getting genuine, authentic GLP-1s, that consumers are making informed decisions about weight-loss drugs, and that consumers are not being deceived and duped in the frenzy over GLP-1s.

On July 8, 2025, the Eighth Circuit vacated the Federal Trade Commission’s (“FTC”) Negative Option Rule, also known as the Click-to-Cancel Rule, on procedural grounds. The Click-to-Cancel Rule, which provided a streamlined path for consumers to cancel subscription services in a few clicks of a mouse, was scheduled to take effect on July 14, 2025, but the Court found that the FTC had failed to follow mandatory procedural requirements.

Twenty years ago, the Supreme Court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 919 (2005). In the Grokster case, the Supreme Court found that peer-to-peer file sharing companies could be liable for copyright infringement for their users’ deployment of file sharing software. There, the Court found that liability was warranted because the file sharing companies knew that its users were infringing, and the companies materially contributed to that infringement.

Section 230 of the Communications Decency Act of 1996 has been credited with “creating” the internet by immunizing websites and platforms from lawsuits arising from the content posted by third-party users. Specifically, an internet company is not liable for publishing or posting content drafted by another person under conventional common law tort theories such as defamation or slander, however loathsome, violent or otherwise hateful that content is.  At the same time, Section 230 also immunizes a website or platform that engages in good-faith moderation of content it deems to violate its terms of use/conditions or community standards. 

Last week, artificial intelligence companies won two significant copyright infringement lawsuits brought by copyright holders, marking an important milestone in the development of the law around AI. These decisions – Bartz v. Anthropic and Kadrey v. Meta (decided on June 23 and 25, 2025, respectively), along with a February 2025 decision in Thomson Reuters v. ROSS Intelligence – suggest that AI companies have plausible defenses to the intellectual property claims that have dogged them since generative AI technologies became widely available several years ago. Whether AI companies can, in all cases, successfully assert that their use of copyrighted content is “fair” will depend on their circumstances and further development of the law by the courts and Congress.

Crowell attorneys have closely monitored developments related to the California Invasion of Privacy Act (“CIPA”). In particular, we have watched plaintiffs attempt to extend this wiretapping law to encompass website chatbot communications that are managed by third parties.

The Federal Trade Commission (FTC) issued a proposed order prohibiting Workado, LLC, from advertising the accuracy of its artificial intelligence (AI) detection products unless it possesses competent and reliable evidence demonstrating that the model performs as depicted.

On April 21, 2025, the FTC filed an enforcement action against Uber alleging that Uber enrolled consumers in Uber One without proper consent, created substantial barriers to cancellation, and misrepresented the financial benefits of the subscription. The claims include violations of the FTC Act—which prohibits unfair and deceptive acts in commerce—and the Restore Online Shoppers’ Confidence Act (“ROSCA”)—which prohibits charging consumers for goods and services sold on the internet through a negative option (i.e., failing to cancel a subscription, unless the seller clearly discloses all material terms of the transaction before obtaining the consumer’s information and obtains the consumer’s expressed informed consent for the charges and provides simple mechanisms for the consumer to stop the recurring charges).

On April 14, 2025, ClassPass, a web-based company offering subscription services to third-party fitness classes, petitioned for rehearing en banc of the Ninth Circuit’s Chabolla v. ClassPass decision, which held that ClassPass’ users were not bound by the terms of ClassPass’ “sign-in wrap” agreement. The ruling has significant consequences for online companies using sign-in wrap agreements and for online contract formation and enforcement more generally. A sign-in wrap is a type of online agreement in which the agreement is hyperlinked on the website, but the user is not required to access, review, confirm an understanding, or otherwise affirmatively “assent” to be bound. If the Ninth Circuit does not grant ClassPass’ request and issue a new ruling in Chabolla, this case may signal the death knell for sign-in wraps, resulting in significant disruption, friction, and ultimately lower conversion for online companies who will be forced to redesign their sign-up flows to be click-wrap agreements (online agreements that require the user to affirmatively accept a company’s terms of use by clicking an assent box or button). Short of that, this decision increases business risk given that there are now conflicting opinions both within the Ninth Circuit and between the various Circuits.

Will the Supreme Court review the Ninth Circuit’s unique Server Test for online copyright infringement? After the Ninth Circuit recently affirmed the Server Test, a photographer and copyright owner has requested certiorari. Petitioner-Plaintiff, Elliot McGucken, is a landscape photographer. Respondent-Defendant, Valnet, Inc., is the owner of a travel website located at “www.thetravel.com.” McGucken sued Valnet for copyright infringement when Valnet embedded on its site a number of links to McGucken’s Instagram posts. The district court, bound by the Ninth Circuit’s en banc decision in Perfect 10, granted Defendant’s motion to dismiss, finding that the Server Test foreclosed McGucken’s direct infringement claim as a matter of law, because Valnet linked to the images and did not store them on its own servers. The Ninth Circuit affirmed in a panel decision. McGucken now requests the Supreme Court to review the validity of the Server Test, which is unique to the Ninth Circuit.

On April 3, 2025, the United States Department of Justice’ Antitrust Division hosted a forum on “Big-Tech Censorship” in which key Trump Administration Officials announced their desire to reform, or entirely overhaul, Section 230 of the Communications Decency Act. In March 2025, we wrote about the Federal Trade Commission’s (FTC) inquiry into “tech censorship” and its associated request for public comments from those who “may have been harmed by technology platforms that limited their ability to share ideas or affiliations freely and openly.” That RFI remains open, and its deadline is May 21, 2025.

On March 18, President Trump fired the Federal Trade Commission’s two Democratic Commissioners, Alvaro Bedoya and Rebecca Kelly Slaughter. The move represents the latest effort by the Trump administration to exert greater control over executive-branch agencies, including bi-partisan independent agencies like the FTC.

On February 20, 2025, the Federal Trade Commission launched an “inquiry” into “tech censorship” by calling for public comments from those who “may have been harmed by technology platforms that limited their ability to share ideas or affiliations freely and openly.” The deadline for comments is May 21, 2025.

On February 18, President Trump issued an Executive Order titled “Ensuring Accountability for All Agencies” that directs independent agencies (as well as Cabinet Departments and their sub-agencies) to route all “proposed and final significant regulatory” and budgetary actions through the White House and the Office of Management and Budget. If implemented to its full extent, this action will significantly strengthen the authority of the White House by weakening the political autonomy of these independent agencies. As an assertion of the President’s inherent powers under Article II of the U.S. Constitution, it also stands to weaken congressional influence over these independent agencies, both through the appropriations and confirmation processes.

The U.S. Copyright Office has released Part 2 of its Report on the legal and policy issues related to copyright and artificial intelligence (AI). This part of the Report, issued on January 29, 2025, focuses on the copyrightability of outputs created using generative AI. Overall, the Copyright Office concludes that existing law is sufficient to resolve questions of AI usage in copyrighted works, and sufficient human contributions to AI-generated outputs that would constitute authorship will be analyzed on a case-by-case basis. The Office declined to support a separate copyright registration analysis for AI works, but provided new examples of how using AI as a tool could support sufficient authorship for copyrightability.

Artificial intelligence is now a mainstay in our daily lives. It’s in our phones and computers. It helps us draft emails and learn math. It recommends purchases and guides our online searches. It’s everywhere—and every sign suggests that it’s here to stay.

The Federal Trade Commission (“FTC”) recently approved a final consent order against Sitejabber, an artificial intelligence-enabled consumer review platform, for deceiving consumers by misrepresenting that the ratings and reviews it published came from customers who actually experienced the reviewed product or service. In reality, the reviews were collected before reviewers received the products or services, artificially inflating average star ratings and review counts.