On December 9, 2025, the California Air Resources Board (CARB) released a rulemaking package for its proposed “initial regulation” to implement California’s landmark climate disclosure laws: Senate Bill (SB) 253, requiring annual reporting of Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions, and SB 261, requiring the disclosure of climate-related financial risks. CARB also announced an in-person and virtual public hearing on the proposed rule to be held during the board’s regularly scheduled meeting on February 26, 2026.
CARB’s public announcement and release of the proposed rule on December 9 occurred in tandem with CARB’s submittal of the rulemaking package to the state Department of Administrative Law (OAL). According to CARB, OAL is not anticipated to publish the official notice of the rulemaking until December 26, 2025, at which point the 45-day formal public comment period would begin. However, CARB stated that “[g]iven the holiday season and the strong interest in this program, staff is providing extra time for public review of materials prior to the start of the 45-day formal comment period.” The proposed rulemaking materials released by CARB include the notice of public hearing, a staff report detailing the justification for the rule, and proposed regulatory text.
The primary purpose of the proposed initial regulation is to establish the framework by which fees will be assessed for implementation of SB 253 and SB 261, which are required by statute to be funded through fees assessed on the businesses required to make disclosures under each law. For purposes of the fee regulation, the proposed rule defines a number of key terms for determining applicability of SB 253 and SB 261, including “revenue” and “doing business in California.” The proposed initial rule also identifies the following exemptions to the disclosure requirements of SB 253 and 261:
- Federal, state, and local government entities, and companies that are majority-owned by government entities (>50.00%);
- Nonprofit or charitable organizations that are tax-exempt under the Internal Revenue Code;
- Entities whose only business in California is the presence of teleworking employees; and
- A business entity whose only business within California consists of wholesale electricity transactions.
In addition to codifying some of CARB’s initial staff recommendations related to applicability of the disclosure laws, the proposed initial rule also establishes a deadline of August 10, 2026, for submittal of the first disclosure of Scope 1 and Scope 2 GHG emissions required under SB 253.
CARB’s rulemaking is proceeding in parallel with ongoing judicial challenges to both climate disclosure laws. A few weeks prior to the release of the proposed rulemaking package, on November 18, 2025, the Ninth Circuit Court of Appeals granted the Chamber of Commerce’s motion for an injunction pending appeal as to the enforcement of SB 261, which requires affected entities to post their first climate-related financial risk disclosures to their websites by January 1, 2026. In response, CARB issued an Enforcement Advisory on December 1, 2025, stating that CARB will not enforce against covered entities for failing to post on the company’s webpage by the January 1, 2026, statutory deadline and will provide further information — including an alternate date for reporting, if appropriate — after the appeal is resolved.
This article was originally published on December 15, 2025 on Law360 and is republished here with permission.
For years, arbitration users have sent a consistent message: They want faster, more predictable, and more cost-effective processes without sacrificing quality and fairness.
The American Arbitration Association–International Centre for Dispute Resolution’s announcement and rollout of an artificial intelligence arbitrator for two-party, documents-only construction disputes this September marks a meaningful response to that market demand.[1]
While the tool is intentionally very narrow at this stage, its launch is significant because it provides a technology-driven, arbitrator-supervised workflow that aims to deliver speed and cost savings in a limited and well-defined segment of smaller construction cases.
The AI arbitrator, however, is less a radical departure than a pragmatic iteration: It attempts to make arbitration work the way users wish it would in a narrow band of disputes. If early results bear out its promise, the implications for U.S. and international arbitration in 2026 and beyond could be felt well beyond its initial application to documents-only construction cases.
Framing the Shift: A Response to Market Demands
The market signals have been consistent for more than a decade across arbitration sectors and jurisdictions. Users prefer arbitration for complex and cross-border disputes, but they also report that inefficiency — driven by adversarial tactics, over-lawyering and insufficiently proactive case management by arbitrators — risks eroding much of its value.[2]
The 2025 Queen Mary University of London International Arbitration Survey brought the issue into focus.[3] Respondents prioritized tools that shorten timelines and lower costs and are receptive to technical innovation, including AI, when it is explainable, disclosed and supervised.
Institutions and seats have acted accordingly. In the past18-24 months, arbitral rules and legislation have been modernized specifically to address speed and cost — e.g., the Hong Kong International Arbitration Centre‘s 2024 rules,[4] the Singapore International Arbitration Centre‘s 2025 rules[5] and legislative refinements in key jurisdictions such as the 2025 U.K. Arbitration Act[6] — all aimed at earlier case management, stronger summary tools, clearer expedited tracks and more efficient routes to enforceable awards.
Against this backdrop, the AAA-ICDR’s AI arbitrator looks less like an experiment and more like the next step in a gradual progression: a deliberately scoped, opt-in feature designed to trim time and money from a class of disputes where records are relatively standardized, and hearings are rare. Put differently, the AI arbitrator is the most readily deployable AI solution for arbitration — designed to answer users’ repeated demands for time and cost savings for a narrow set of disputes that lend themselves to this tool.[7]
What the AI Arbitrator Is — and What it Isn’t
At bottom, the AI arbitrator is not a robot judge. It is a supervised workflow for a very specific subset of cases.
What it is:
- A narrow, opt-in product for two-party, documents-only construction disputes administered by the AAA-ICDR. Parties must affirmatively choose it; otherwise, the case proceeds under traditional procedures.[8]
- A system trained on a large body of AAA documents-only construction awards and was refined with expert-labeled examples. It uses structured prompts and conversational AI to produce a draft award responsive to the parties’ submissions.[9]
- A human-in-the-loop process where every case is overseen by a human arbitrator who reviews, edits, challenges, and ultimately signs and issues the final award. The human remains responsible for the decision and its reasoning.[10]
- A transparency-focused tool that seeks to afford users a greater understanding of how their confidential information will be used and protected. The AAA-ICDR has published FAQs, governance principles and explanatory materials addressing the tool’s scope, training data, ethics and privacy.[11] The platform’s value proposition is expressly tied to explainability and accountability.[12]
- A time- and cost-saver for a specific subset of construction arbitrations. The AAA-ICDR claims that the AI arbitrator tool will generate expected time savings starting around 20%-25% and cost reductions starting around 35% in appropriate documents-only construction disputes — results that, if sustained, would directly answer user priorities.[13]
What it isn’t:
- It is not an unsupervised or autonomous decision-maker. The AI produces a draft; a human arbitrator decides. There is no award without human judgment and signature.
- It is not a replacement for evidentiary hearings or complex case management. The initial deployment excludes multiparty cases, oral hearings and complex factual matrices. The tool is tailored to the repeatable patterns and record-based nature of documents-only construction disputes.
- It is not a black box. The program is framed around disclosure and governance: The institution has surfaced FAQs, ethics and privacy standards, and dedicated content about human oversight, with pathways for case-by-case clarification.
- It is not an all-purpose cure for arbitration’s challenges. The tool does not eliminate adversarial behavior, solve discovery excesses or rewrite parties’ incentives. It is a targeted intervention where the data and the procedure are conducive to reliable automation with human oversight and validation.
Why the Narrowness Matters
The narrowness of the AAA-ICDR’s AI arbitrator tool is what makes this initiative particularly apt for the subject matter disputes it is intended to manage. Documents-only construction disputes are typically low dollar and relatively standardized, and often involve well-developed contract frameworks that lend themselves to structured analysis.
Maybe more importantly, they are also the very disputes for which users most often demand speed, clarity and predictable cost. Indeed, within the construction sector itself, low-value, document intensive claims are commonplace, and the time and expense required to prosecute those claims in an arbitration can often be cost-prohibitive.
By focusing there, the AAA-ICDR can measure results, refine processes and build trust under conditions where human-in-the-loop oversight can be most effective and transparent. If the institution can consistently deliver faster timelines and cost savings in this area, and if users report comfort with quality and fairness, the market case for cautiously expanding the tool set becomes straightforward.[14]
What This Means for the Future — United States and Worldwide
In the U.S. and abroad, several near-term shifts are likely.
First, we expect the AI arbitrator tool to normalize AI-aware procedural discussions.
Parties and tribunals already address document formats, confidentiality protocols and discovery parameters at the first procedural conference; now they may contemplate adopting the use of AI to these procedural steps in the case. Counsel will ask institutions for their AI policies and governance, and parties may negotiate — or at least reserve — opt-in/opt-out choices where an AI-assisted path is available.
Sophisticated users, particularly in sectors with repeatable disputes, such as construction, supply chain and tech procurement, may even begin to run pilots and track metrics like cycle time, fee spend, award quality and postaward challenges. If those metrics meet expectations, there is a greater possibility for the expansion of similar AI arbitrator tools into other sectors and disputes.[15]
Second, clause drafting will evolve.[16] In transactions where documents-only arbitration is already common, parties are likely to experiment with AI-enabled clause variants that (1) specify eligibility criteria (e.g., two-party, below a stated amount); (2) preserve the right to opt-in or opt-out at filing; (3) incorporate disclosure baselines for AI use by counsel, experts and the tribunal; and (4) align fees and timetables to expedited tracks.
Because the AAA-ICDR’s approach is opt-in and human-supervised, arbitration agreement drafters may have the ability (and inclination) to test how best to adopt AI arbitrator tools without foreclosing traditional processes.
Third, early skepticism by local courts is likely inevitable but the involvement of human arbitrators and other safeguards implemented by institutions like the AAA-ICDR should give jurisdictions comfort that the process is consistent with prevailing award enforcement standards. Because a human arbitrator reviews, edits and issues the award, it seems more likely that award challenges are likely to focus on disclosure, due process in the conduct of proceedings, and whether the human decision-maker exercised independent judgment.
These are matters that the courts already assess when they hear allegations of evident partiality or procedural irregularity. The more transparent the process — and the clearer the record of human oversight — the more comfortable courts are likely to be with enforcement.
Fourth, arbitrator competencies will likely shift at the margins. As tribunals grow comfortable using AI responsibly for discrete tasks, e.g., issue-list generation, draft preparation and citation checks, institutional guidance and community norms will coalesce around disclosure and quality-control standards. That trend is already visible in emerging institutional guidelines and commentary. Arbitrators who can operate confidently within those guardrails — maintaining confidentiality, avoiding overreliance and documenting validation — may be best placed to address the demands an evolving practice.
Internationally, this step will add fuel to the ongoing competition among institutions and seats.
Major institutions have spent the past few years enhancing summary tools, tightening expedited tracks and modernizing case management. The AAA-ICDR’s move introduces a tangible benchmark for AI-enabled administration that others can watch, imitate or seek to improve.
The current trends among seats and institutions suggest that we may see (1) additional AI arbitrator pilots where records are standardized and hearing time is rare, (2) harmonization of AI disclosure protocols in institutional rules and practice notes, and (3) more granular data-sharing about speed, cost and user satisfaction. In that environment, the institutions that credibly quantify improvements may very well retain a competitive advantage among users.
Overall, arbitration user demands and expectations for efficiency and timeliness are likely to become sharper. For repeat players, AI-assisted arbitration will be evaluated like any process: run a controlled trial; measure cycle time and cost variance; assess quality (including the rate and outcome of any post-award challenges); and scale if performance meets expectations.
This practical, data-driven approach — rather than ideology for or against AI — is most likely to determine the pace and extent of adoption.
An Inflection Point?
In many ways, 2025 was the year AI shifted in arbitration from promise to pilot.
The AAA-ICDR’s AI arbitrator is not a silver bullet, and it is not meant to be. Its relevance lies in how directly it confronts what users have been telling the market for years: Make arbitration faster and more cost-effective in the kinds of cases that most need it, and do so with transparency and accountability. By choosing a narrow scope, keeping human decision-makers responsible and publishing governance materials, the AAA-ICDR has set a pragmatic template that others may scrutinize, adapt and scale.
The coming years will bring more data and more sophisticated generative artificial intelligence. If users report that the process is faster, cheaper and comparably fair — and courts are comfortable with the supervision and disclosure that surround it — expect measured expansion in the U.S. and carefully tailored pilots abroad.
If the results disappoint, the market will adjust. Either way, the signal from 2025 is unmistakable: The use of generative AI in arbitration is moving from conversation to implementation, and the user’s definition of value — speed, cost and trust — now sits at the center of that effort.
Albert Bates and Zach Torres-Fowler are partners at Troutman Pepper Locke LLP.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] AAA-ICDR, AAA-ICDR to Launch AI-Native Arbitrator, Transforming Dispute Resolution, dated September 17, 2025, available at https://www.adr.org/press-releases/aaa-icdr-to-launch-ai-native-arbitrator-transforming-dispute-resolution/.
[2] Queen Mary University of London & White & Case, 2025 International Arbitration Survey – The path forward: Realities and opportunities in arbitration (2025).
[3] Queen Mary University of London & White & Case, 2025 International Arbitration Survey – The path forward: Realities and opportunities in arbitration (2025).
[4] Hong Kong International Arbitration Centre, 2024 Administered Arbitration Rules in effect as of 1 June 2024.
[5] Singapore International Arbitration Centre, Arbitration Rules of the Singapore International Arbitration Centre, 7th Ed., in effect as of 1 January 2025.
[6] Arbitration Act 2025, 2025 c. 4 (UK).
[7] AAA-ICDR, AAA-ICDR AI Arbitrator Now Available for Documents-Only Construction Cases, dated Nov. 3, 2025 available at https://www.adr.org/press-releases/aaa-icdr-ai-arbitrator-now-available/; see also AAA-ICDR, AAA-ICDR InnovAAAtion hub, available at https://www.adr.org/innovaaation/.
[8] AAA-ICDR, AAA-ICDR AI Arbitrator Now Available for Documents-Only Construction Cases, dated Nov. 3, 2025 available at https://www.adr.org/press-releases/aaa-icdr-ai-arbitrator-now-available/; AAA-ICDR, AI Arbitrator: A New Path to Dispute Resolution FAQs (2025) available at https://www.adr.org/media/1vva0v2y/ai-arbitrator-one-sheet-20251029-1.pdf.
[9] AAA-ICDR, AAA-ICDR AI Arbitrator Now Available for Documents-Only Construction Cases, dated Nov. 3, 2025 available at https://www.adr.org/press-releases/aaa-icdr-ai-arbitrator-now-available/; AAA-ICDR, AI Arbitrator: A New Path to Dispute Resolution FAQs (2025) available at https://www.adr.org/media/1vva0v2y/ai-arbitrator-one-sheet-20251029-1.pdf.
[10] AAA-ICDR, How the AAA’s AI Arbitrator Keeps Humans in the Loop available at https://www.adr.org/news-and-insights/ai-arbitrator-faq/; AAA-ICDR, AI Arbitrator: A New Path to Dispute Resolution FAQs (2025) available at https://www.adr.org/media/1vva0v2y/ai-arbitrator-one-sheet-20251029-1.pdf.
[11] AAA-ICDR, AI Arbitrator: A New Path to Dispute Resolution FAQs (2025) available at https://www.adr.org/media/1vva0v2y/ai-arbitrator-one-sheet-20251029-1.pdf.
[12] AAA-ICDR, AAAi Standards for AI in ADR, available at https://www.adr.org/media/pgfe4xwg/aaai_standards_for_ai_in_adr.pdf.
[13] AAA-ICDR, AI Arbitrator: A New Path to Dispute Resolution FAQs (2025) available at https://www.adr.org/media/1vva0v2y/ai-arbitrator-one-sheet-20251029-1.pdf.
[14] AAA-ICDR, AI Arbitrator: A New Path to Dispute Resolution FAQs (2025) available at https://www.adr.org/media/1vva0v2y/ai-arbitrator-one-sheet-20251029-1.pdf.
[15] As noted above, AI Arbitrator was trained on a database of approximately 1400 AAA documents-only construction cases with awards and was refined with expert-labeled examples. This is a relatively unique database of cases that proceeded on documents only, i.e., without fact or expert witness testimony. One of the challenges to the expanded use of such a tool is identification of other caseloads with circumscribed datasets that can be used to properly develop and train the AI program.
[16] The AAA has also launched ClauseBuilder AI (Beta), a generative AI tool designed to simplify drafting arbitration and mediation clauses. AAA, ClauseBuilder AI & API Tools Streamline Arbitration Drafting (2024) available at https://www.adr.org/news-and-insights/introducing-clausebuilder-ai-beta-and-api-innovations-streamlining-arbitration-and-mediation-clause-drafting-with-generative-ai/.
Jay Dubow, Katie Hancin, and Dominique Hazel-Criss* co-authored an article for The Review of Securities & Commodities Regulation on how Delaware and Pennsylvania take different approaches to derivative litigation. While both states require stockholders to make a demand upon the corporation, Delaware allows demand to be excused if the stockholder can show that a majority of the board is incapable of making an impartial decision regarding the litigation. In contrast, Pennsylvania does not recognize the concept of demand futility and provides that a corporation can establish a Special Litigation Committee to determine whether pursuing litigation is in the best interests of the corporation. Understanding these differences is essential for effectively navigating derivative litigation in these jurisdictions.
Read the full article in The Review of Securities & Commodities Regulation here.
*Dominique Hazel-Criss, 2025 summer associate with Troutman Pepper Locke who is not admitted to practice law in any jurisdiction, also contributed to this article.
In GreenMarbles, LLC v. Clint Cushing, the Delaware Court of Chancery held that a contractual indemnification provision requiring a party “to indemnify and hold harmless” another party, absent an express mandate for advancement through use of the words “advance” or “defend,” indicates an intent to indemnify that party only. The inclusion of the phrase “payable as incurred” is insufficient to mandate advancement.[1]
Background:
In 2022, GreenMarbles, LLC (GreenMarbles) acquired all of Clint Cushing’s (Cushing) interests in four limited liability companies (LLCs). Each LLC acquisition was memorialized by separate purchase agreements. In 2024, Cushing alleged that GreenMarbles engaged in fraud, among other claims, in connection with the LLC acquisitions. Litigation ensued. In February 2025, GreenMarbles served Cushing a demand alleging Section 3 of the disputed agreement mandated indemnification and advancement (i.e., the obligation to pay indemnifiable losses as incurred). The language at issue read as follows:
- [Cushing] hereby agrees to indemnify and hold harmless the Company and any of its officers, members, managers, employees, agents or affiliates (collectively the “Indemnified Parties” and individually an “Indemnified Party”) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, against losses, liabilities and expenses of each Indemnified Party (including attorneys’ fees, judgments, fines, and amounts paid in settlement, payable as incurred) incurred by such person or entity in connection with such action, arbitration, suit or proceeding, by reason of or arising from (i) any misrepresentation or misstatement of fact or omission to represent or state facts made by [Cushing], including, without limitation, the information in this Agreement, or (ii) litigation or other proceeding brought by [Cushing] against one or more Indemnified Party in which the Indemnified Party is the prevailing party.
GreenMarbles argued that the inclusion of the phrase “payable as incurred” in the indemnification provision mandated advancement.
Analysis:
The court held the language at issue was insufficient to mandate advancement. The court explained advancement does not require magic words, but it does require contractual language expressly stating an intent to mandate advancement. Delaware courts have consistently held that the phrase “indemnify and hold harmless” is a term of art indicative exclusively of indemnification. In an indemnification provision, phrases such as “as incurred” or “as they are incurred” will signify advancement only if the provision clearly reflects a right to payment before a final determination. However, the inclusion of the word “defend” in an indemnification provision is enough to signal a right of advancement.
Takeaways:
This case reiterates the critical importance of precise contractual language, including in the context of indemnification provisions in M&A agreements. Delaware courts will not reform or reinterpret contractual provisions absent clear ambiguity. The common interpretation attributable to the language will control. The phrase, “indemnify and hold harmless” is a term of art indicative exclusively of indemnification. However, the inclusion of the word “defend” in an indemnification provision is sufficient to grant a right to advancement, while the words “payable as incurred” are not. Parties seeking both indemnification and advancement protections must clearly provide for both; courts will not supply what the contract omits.
[1] The inclusion of language reflecting a right to payment before a final determination will also trigger advancement rights; however, this language is not commonly found in contractual provisions.
This article was originally published on Law360 and is republished here with permission as it originally appeared on December 12, 2025.
On Aug. 1, Gov. JB Pritzker signed into law the Illinois Receivership Act, making Illinois the 16th state to adopt the Uniform Law Commission‘s Uniform Commercial Real Estate Receivership Act. The act becomes effective Jan.1.
The act will modernize Illinois law and bring much-needed clarity to an inconsistent and outdated patchwork of Illinois statutes and case law.
A critical component of the act is the express provision granting receivers the right to sell commercial real estate, with or without court approval, depending on whether the sale is in the debtor’s ordinary course of business. This key provision will be an invaluable resource for receivers, special servicers and commercial real estate lenders.
Current State of Illinois Law
Illinois receivership law is antiquated and scattered across different statutes. Illinois courts currently rely on common law and equitable principles as a supplement, which inherently means decisions are driven by the specific facts of the case rather than bright-line rules.
For example, Section 2-415 of the Illinois Code of Civil Procedure provides bond requirements for the appointment of receivers but does not expressly provide the powers or duties of a receiver, such as the power to sell or transfer assets.
The Illinois Mortgage Foreclosure Law, or IMFL, is more instructive, but still deficient in several respects.
Section 15-1704 of the IMFL applies to receivers for mortgaged real estate subject to a foreclosure action. While the IMFL provides some powers of a receiver, the list is nonexhaustive, and importantly, it does not expressly include the power to sell or transfer the mortgagor’s assets.
The language is also ambiguous and states the receiver “shall have all the usual powers of receivers in like cases.” Some duties are also mandatory, while others are permissive.
Under the IMFL, a foreclosing lender must demonstrate to a court that the circumstances warrant granting a receiver the authority to sell because a receiver’s sale is not currently addressed by statute.
Because granting a receiver the power to sell is rooted in the court’s equitable powers, the court’s granting of authority may also come with limitations or conditions, depending on the specific facts of the case.
Currently, secured parties may be hesitant to proceed with a receiver’s sale because of unpredictable outcomes and a lack of clear statutory authority. In most cases, the varied results could translate to additional costs and delays for the secured lender or prospective purchaser.
Additionally, title insurers may be hesitant to insure the transaction or may simply pass the cost of the increased risk on to the receiver — and ultimately lender — or prospective purchaser.
The Act
The act provides much-needed clarity on the issue of receivers’ sales of commercial real estate, among other new changes. It provides that a receiver may sell, lease or transfer receivership property outside the ordinary course of business with court approval, which is typically the case for secured creditors and special servicers.
Section 12, Subsection (b)(3), further authorizes the receiver to execute necessary documents and conveyances in the owner’s name.
Section 16 of the act provides further details on a receiver’s power to sell commercial real estate not in the ordinary course of business both by public and private sales.
Unless a purchase-and-sale agreement provides otherwise, the sale of commercial real estate under the act is free and clear of the lien of the person that sought appointment of the receiver (such as the foreclosing lender), any subordinate liens and any rights of redemption.
Also, unless a senior lienholder consents, the sale does not extinguish any senior lien on the real estate. Any lien that is extinguished in the disposition of the real estate will automatically attach to the proceeds of the sale with the same validity and priority as it had immediately before the transfer.
Looking Forward
The act provides clear statutory guidance for receivers’ sales that will likely streamline the process going forward. However, the act includes several other components that are essential to the new framework.
Some of those provisions are codifications of practices and procedures already utilized by Illinois receivers and attorneys.
Receivers’ sales will now have more certainty because they will be based on statute rather than equity. Moreover, several provisions create additional steps necessary to sell commercial real estate that were not previously required, such as a required notice of receivership, a formal claims process and a published notice of sale.
Also, because the act is not a mirror image of the Uniform Commercial Real Estate Receivership Act, the sales process will look slightly different in Illinois than in other UCRERA states.
Notice of Receivership
Section 12(c)(3) of the act requires receivers to record a formal notice of receivership.
The notice of receivership is comparable to a lis pendens or notice of foreclosure because it requires the receiver to promptly record with the county recorder’s office a document setting forth, among other things, the name of the receivership, the owner of the real estate, title of the case and a legal description of the property.
The recording of the notice of receivership puts all parties that acquire a subsequent interest in the real estate on constructive notice.
This is a new requirement that receivers are currently not required to do under the IMFL. Indeed, it was often not necessary since most receivers were appointed in commercial real estate foreclosures in which the foreclosing lenders already recorded notices of foreclosure.
This new requirement is a critical part of the new sales process. For one, the new notice requirement envisions circumstances where lenders may seek the appointment of a receiver without foreclosing their security interest in the real estate.
In those cases, the act shifts the responsibility from lenders to court-appointed receivers to put the world on notice of the pending receivership.
Most importantly, by ensuring subsequent interests in the real estate are deemed to have constructive notice, the new notice requirement helps facilitate the disposition of the real estate free and clear of subordinate liens.
The notice requirement provides assurances to title insurers, much like a lis pendens, because it provides legal authority that subsequent interests are inferior to the lien of the plaintiff.
This new process may help provide more options for title insurance for receivers’ sales. However, like any new legislation, there is uncertainty with how the act will be interpreted by courts.
Thus, while title insurers may welcome the added clarity to Illinois law, there may be initial hesitancy without any clear precedent.
In fact, many title insurers believe the act is an important step toward streamlining receivers’ sales, but the true benefits may not be fully realized until courts and practitioners can test the act’s reliability and create a record of successful transactions.
Notice of Appointment and the Claims Process
Section 20 of the act creates a formal notice of appointment and claims process. Prior to the act, a formal claims process was not uncommon, but it varied by court and case, and there was no statutory framework. Going forward, a receiver is tasked with sending out notice to all creditors of the owner upon appointment.
The owner is also required to provide the receiver with a list of creditors. The notice must provide creditors at least 60 days to file a notice of claim in accordance with the procedures established by the act and order of the court.
While any claim that is filed in accordance with the act and court’s order is prima facie evidence of the claim’s validity, the receiver and any other party with an interest in the receivership estate may file an objection to the claim.
The claims process creates a reliable framework for receivers, as fiduciaries, to ascertain and verify all claims related to the real estate.
Because the receiver is required to seek court approval prior to selling the real estate, the claims process ensures that creditors with valid claims are accounted for in any sale. It also supports the efforts to sell the real estate free and clear because a receiver can address certain claims before they mature or become liens against the property.
Indeed, the claims process actually encourages a sale because the act provides that any lien extinguished upon the sale or transfer of the real estate automatically attaches to the sale proceeds with the same validity and priority as it had before the transfer.
Additionally, the act provides that a claim filed outside the 60-day period, or more if the court order provides otherwise, is not entitled to a distribution from the receivership estate. This provision further supports efforts to sell real estate free and clear of claims because it provides clear guidelines on what claims are not entitled to distributions from the receivership estate.
It is also worth noting that the notice-and-claims process can be avoided altogether under the act if the court determines that the receivership estate will be insufficient to satisfy all perfected liens on the property.
Notice of Sale
The act further requires that notice by publication must be given to the owner and all persons having an interest, including unknown owners, nonrecord claimants and unknown necessary parties.
This is different than the notice of receivership required by Section 1 and is comparable to the public notice of sale required by a foreclosing lender or selling officer under the IMFL.
As Compared to Other Receivership Acts
Michigan is another state that adopted a variation of the Uniform Commercial Real Estate Receivership Act in the form of the Michigan Receivership Act. The considerations for receivers in Michigan are different than Illinois because Michigan allows for nonjudicial foreclosures.
Michigan is also a one-action state, and the Michigan Receivership Act importantly clarifies that seeking a receiver does not constitute an election of remedies that later precludes an action to enforce the debt.
Like the Illinois act, the Michigan Receivership Act allows for receivers’ sales, and the remedy is frequently utilized. The Michigan law was a welcome change for secured creditors in Michigan, and the act will likely be in Illinois as well.
Conclusion
Starting on Jan. 1, receivers’ sales of commercial real estate will look different in Illinois. The act brings welcome clarity to this area of law and contains several provisions that are either new or different than prior practice.
Practitioners should familiarize themselves with the new framework to take advantage of these new procedures. The true benefits of the act may take time to develop as courts, practitioners and title insurers put the act into practice, but the act is a positive development that will streamline the process of receivers’ sales of commercial real estate in Illinois.
On December 11, 2025, the House of Representatives passed a package of 22 bills that aim to lower regulatory requirements relating to several different aspects of the securities and capital markets in the United States — including public companies, private fundraising, venture capital funds, and retirement funds. The combined bill is styled as the Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025, or the INVEST Act of 2025. All Republicans in the House of Representatives voted for the bill, as did 87 Democratic House members. The INVEST Act contains several changes that, if passed into law, could strongly impact public and private capital formation. Troutman Pepper Locke’s Capital Markets attorneys are actively monitoring the progress of the legislation and assessing the potential impact. Most immediately notable for public companies and aspiring public companies are the following:
Change to EGC Rules. In a similar effort to revitalize the then-moribund IPO market, Congress passed the JOBS Act in 2012, which, among other things, created the concept of the “emerging growth company” for newly public companies. Emerging growth companies are exempt from many rules impacting larger public companies, most notably the requirement that a public company’s internal controls over financial reporting be subject to an attestation report by a registered public accounting firm. The INVEST Act would add additional benefits to qualifying as an emerging growth company.
- First, financial statements of acquired businesses would not be required for any period prior to the earliest audited period of the emerging growth company presented in connection with its IPO.
- Second, an emerging growth company would only be required to provide the previous two years of profit and loss statements when applying to list on a national securities exchange (e.g., the NYSE, the Nasdaq, or the TXSE), instead of the current three years.
Confidential Registration Statements and “Testing the Waters.“ The INVEST Act would also codify existing Securities and Exchange Commission (SEC) accommodations regarding the confidential filing of draft registration statements (DRS) with the SEC. The JOBS Act first permitted confidential filing of registration statements by companies undertaking IPOs that qualified as emerging growth companies. The SEC subsequently broadened this framework through regulatory accommodation, rather than formal rulemaking, to first permit confidential submissions during the first year following a company becoming a public reporting company and then, in March of this year, to permit confidential submissions by all companies in connection with their initial filing of a new registration statement. The INVEST Act would effectively codify into law these SEC accommodations — the Securities Act of 1933 would contain provisions providing that any company with respect to an IPO, an initial registration under Section 12(b) of the Exchange Act, or a follow-on offering may utilize the confidential, nonpublic review process. The DRS submissions would have to be made public (i) 10 days prior to effectiveness for IPOs, (ii) 10 days prior to listing on an exchange for an initial registration under Section 12(b) of the Exchange Act, and (iii) 48 hours before effectiveness for all other registration statements. Given the wide utilization of this process since its adoption, we expect companies will continue to find this to be an advantageous way of planning capital-raising without immediately notifying the markets of their intentions while they address any comments from the SEC, with added certainty.
The JOBS Act had previously permitted emerging growth companies to communicate with certain potential investors before or after filing a registration statement — a process known as “testing the waters.” The SEC subsequently expanded this through rulemaking to allow all issuers, not just emerging growth companies, to engage in testing-the-waters communications with certain investors on a pre-filing basis. The INVEST Act would effectively codify this into law by amending the Securities Act of 1933.
Change to WKSI Eligibility Requirements. Under existing law, larger companies that qualify as “well-known seasoned issuers” (or WKSIs) are granted added flexibility to raise capital on the public markets, based principally on the idea that such companies are large, well established, and known to the markets. Specifically, WKSIs can file shelf registration statements on Form S-3 that become automatically effective upon filing without any SEC review or waiting period. Additionally, WKSIs are permitted to register the sale of an unspecified amount of securities and do not need to identify selling stockholders in their base prospectuses, among other benefits. Under the INVEST Act, public companies with $400 million or more in public float would qualify as WKSIs, a reduction from the current $700 million public float requirement. The effect of this proposal would increase the number of companies that qualify as WKSIs, thereby easing the ability of these companies to tap the public markets for additional capital.
Multi-Class Voting Structures. Unlike most of the INVEST Act, which aims to ease regulation, the provisions addressing multi-class share structures would enhance disclosure for investors. The INVEST Act would require the SEC to write rules that mandate issuers with multi-class share structures disclose in proxy and consent solicitation statements the following information with respect to securities held by a director, officer or 5% beneficial holder: (i) the number of shares of all classes of voting securities held by such person, and (ii) the total voting power held by such person, in each case expressed as a percentage of the total number of outstanding securities of all classes or total voting power of all classes entitled to vote, respectively. This would give investors a clearer picture of the true power of insiders holding shares with special voting rights over the election of directors and other matters subject to a stockholder vote.
Accredited Investor Definition. Finally, the INVEST Act proposes to create a new category of accredited investor for those persons that do not meet the current financial requirements or other criteria. Under the proposal, individuals could qualify by passing an exam or certification established by the SEC and administered and offered by a registered national securities association — presumably the Financial Industry Regulatory Authority (FINRA). If widely utilized, this could broaden and expand the type and number of individuals that could purchase securities in exempt, private placements. This would allow both private and public companies raising capital in nonpublic offerings access to a greater pool of potential investors, and therefore, a theoretically easier path to raising larger amounts of capital in the private markets.
Pen registry claims involving the Meta Pixel are likely to increase after two recent decisions from the U.S. District Court for the Southern District of California allowed Section 638.51 (also known as “pen registry” or “trap and trace”) claims involving the Meta Pixel to proceed past the pleading stage.
Although California’s pen registry law has been effective as of January 1, 2016, the “modern” trend of pen registry claims began after an unpublished 2023 trial court decision from a Southern District of California court held California’s “pen registry” law was broad enough to include a software development kit (SDK). The plaintiff in that case alleged the defendant had hidden code in an SDK that collected multiple types of data from the user’s phone.
Following this 2023 decision, many complaints have accused other social media pixels of violating California’s pen registry law. Plaintiffs have filed complaints that allege not only SDKs, but also cookies, third-party tracking pixels and software, and “fingerprinting” software, are unlawful pen registers or trap and trace devices.
After two decisions in October and November, future lawsuits will likely focus on the Meta Pixel, which has already been a primary target in both Section 631(a) wiretapping claims, federal Electronic Communications Privacy Act (ECPA) wiretapping claims, and federal Video Privacy Protection Act (VPPA) claims. On October 1, the court held that “the information collected by Meta Pixel includes computer transmissions regarding Plaintiff’s location data and other personal sensitive information. Meta Pixel’s collecting such information is much like that of the process found as a pen register in Greenley. At this stage of the proceedings, Plaintiff has plausibly stated a claim under § 638.51.”
Then, on November 21, the court issued another decision, finding “the Meta Pixel software meets the statutory definition of a pen register or trap and trace device because it is ‘software that identifies consumers, gathers data, and correlates that data through unique fingerprinting.'” The court continued and held “a plaintiff may state a claim for violation of § 638.51 by alleging that a defendant used the Meta Pixel on their site and that the Meta Pixel tracked record or identifying information regarding their use of the site.”
As decisions such as these allow claims to proceed against additional cookies and pixels, it becomes even more important for websites to notify users of what cookies and similar tools are being used on the website and to make sure such notification meets the standards courts have set to qualify as “reasonably conspicuous.”
If you would like to discuss this or other concerns regarding privacy litigation relating to your website, please contact a Troutman Pepper Locke attorney for more information.
Executive Summary
Foreign investors entering the U.S. market face compressed timelines, intense competition, and exacting diligence. Intellectual property — patents, trademarks, trade secrets, and copyrights — is a core asset of a foreign investor’s business in the U.S. that increases valuation of the U.S. entity. Yet, many foreign investors prioritize setting up a U.S. entity or other structures, selecting the physical location of a U.S. office or manufacturing site, or applying for work visas or handling other immigration matters over IP protection. Advance planning for IP protection is crucial for building the most effective posture, and seeking IP protection is a process that takes substantial time. For instance, it usually takes the U.S. Patent and Trademark Office (USPTO) at least 11 months to examine and issue a trademark registration, and at least 26 months to examine and issue a patent. The process of protecting foreign investors’ IP rights in the U.S. should start as early as possible. The importance of starting this process early is explained in detail below, alongside a pragmatic framework to secure rights and preserve global options.
Why Early IP Protection Drives Value
Early intellectual property protection is a decisive driver of enterprise value. In the U.S. first‑inventor‑to‑file patent system, the race to the Patent Office matters, and public disclosures can narrow or even extinguish patent rights domestically and in many foreign jurisdictions. Securing brand priority through prompt trademark filings reduces the risk of costly rebrands, channel conflicts, and cybersquatting that can stall a U.S. launch. Copyright protection attaches automatically upon fixation, but timely registration unlocks statutory damages and attorneys’ fees. Further, registering trademarks and copyrights opens an avenue for receiving protection at the U.S. border. Trade secret protection is likewise process‑driven: enforceability hinges on demonstrable “reasonable measures” to maintain secrecy, so if controls such as NDAs, access restrictions, and need‑to‑know protocols are not in place before information is shared, protection may be lost.
Patent Readiness: File Early, Share Safely
Building on this foundation, patent readiness means filing early while sharing only what is necessary. At the outset, decide what belongs in a patent versus a trade secret. For instance, this could mean patenting user‑visible features, performance claims, and technology expected to be licensed, while keeping manufacturing recipes, tuning parameters, datasets, and methods that are not readily reverse‑engineered as trade secrets. If non‑U.S. markets matter, preserve global options by submitting a Patent Cooperation Treaty (PCT) application within 12 months of the earliest priority date. Crucially, any investor materials should be kept non‑enabling by emphasizing outcomes, performance, and business impact rather than replication steps, reserving technical detail for an NDA‑protected appendix.
Trademark Readiness: Clear, File, and Hold
In parallel with a patent program, trademark readiness focuses on clearing, filing, and holding the business’s brand assets. To begin with, candidate word marks and logos should be screened in the relevant classes, and essential domains and handles should be checked to avoid obvious conflicts and reduce infringement and rebranding risk. Before a business begins using a mark, it can file intent-to-use applications in the U.S. to secure a priority date, reserving brand territory for the listed goods/services and deterring squatters — giving the business room to finalize products and marketing while preserving the path to registration. As commercialization ramps up, the business can align internationally by using the Madrid Protocol, with the U.S. trademark application as the basis, to extend protection into priority foreign markets.
Copyrights: Leverage Automatic Protection Through Strategic Registration
In the U.S., copyright protects original works, such as software, manuals, and designs, automatically upon fixation. For enforcement leverage, this entails registering key works with the U.S. Copyright Office — ideally within three months of first publication or before infringement. A federal copyright claim generally cannot be filed until the work is registered (subject to narrow preregistration exceptions), so timely registration preserves access to the courts, unlocks statutory damages and attorneys’ fees, and enables rapid takedowns. To establish a clean chain of title, use U.S. “work‑made‑for‑hire” and assignment clauses with employees, contractors, and vendors, and collect creation records. Other considerations include implementing access controls publishing clear license terms, tracking open‑source and third‑party content to avoid license conflicts, and timing registrations with product launches and marketing to deter copying and support monetization. Globally, the business can rely on Berne Convention national treatment for automatic protection in member countries but should register key works in target jurisdictions where local registration unlocks enforcement advantages.
Trade Secrets: Program the “Reasonableness Measures”
Building on the above patent and trademark posture, effective trade secret protection requires demonstrable “reasonable measures” embedded in day‑to‑day operations to keep secret information valuable in a trade or business. This starts with access control and classification: for example, limiting access on a need‑to‑know basis, encrypting repositories, applying clear labels (confidential/highly confidential/trade secret), and logging access to sensitive folders. Importantly, the framework should be strengthened with contractual guardrails — including NDAs that clearly define protected information, prohibit residuals clauses, provide for injunctive relief, and grant audit rights for critical suppliers. Cross‑border risks should also be addressed — these can involve remote teams, cloud location, travel with devices, and third‑party vendors. Finally, training and process should be institutionalized through onboarding and exit checklists, periodic training, vendor security reviews, and a basic incident‑response plan for leaks or data loss, ensuring secrecy is not just a policy but a practiced discipline.
Enforcing US IP Rights by Recording Your Trademarks and Copyrights With CBP
Recording U.S. trademarks and copyrights with the U.S. Customs and Border Protection (CBP) is a cost‑effective way to flag infringing imports before they enter the market. Once recorded, CBP can detain, seize, and destroy merchandise bearing counterfeit or infringing marks or works. The relatively simple process for recording currently costs $190 per trademark class and $190 per copyright to record, with renewals at $80 per trademark class or copyright — renewals for trademarks typically align with the USPTO renewal cycle, and for copyrights occur every 20 years. To maximize effectiveness, owners may provide CBP with product identification guides, images, lists of authorized manufacturers or importers, and countries of origin, and ensure that they keep records current. Because CBP recordation does not extend to patents, trademark and copyright recordation should be used alongside private monitoring tools.
Common Pitfalls to Avoid
Even with disciplined planning, several recurring missteps can erode IP value. The most damaging is enabling disclosure in marketing, investor decks, or conference presentations before filing, which can narrow or extinguish patent rights. Equally risky are NDAs that include “residuals” clauses or rely on vague definitions of confidential information, undermining trade secret protection and complicating enforcement. Misaligned brand strategy across U.S. and target foreign markets — whether through inconsistent trademarks, classes, transliterations, or delayed filings — invites conflicts and costly rebrands. With copyrights, failing to secure clean ownership and register key works promptly — such as software and marketing assets — can forfeit statutory damages and fee recovery, while poor open‑source and third‑party content hygiene introduces license conflicts and infringement risk. Finally, missing documentation of “reasonable measures” for protecting trade secrets, such as access logs, training records, and incident procedures, weakens trade secret claims.
Conclusion
For inbound investors to the U.S., the essentials for securing IP value are clear: filing enabling patents early, locking trademark priority, programming trade secret controls, and registering copyrights strategically. Investors with a disciplined, pre‑investment IP program project control and credibility, adding value while reducing execution risk at closing and preserving global options.
This article was originally published on Reuters Legal News and Westlaw Today on December 11, 2025.
Troutman Pepper Locke attorneys Joseph Kadlec, Erin Whaley, and Emma Trivax recently authored the Reuters Legal News article “Heightened State Oversight Signals Investors to Refresh Health Care Investment Platforms,” where they discuss increasing state oversight of private equity investments in health care and how investors can stay ahead of the curve.State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.
State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.
Contact our State AG Team at StateAG@troutman.com.
Podcast Updates
The 12 Days of Regulatory Insights
We are excited to share our special holiday series, “The 12 Days of Regulatory Insights,” as part of our Regulatory Oversight podcast. This 12-part series covers a variety of critical regulatory topics, offering concise and insightful discussions from members of our Regulatory Investigations, Strategy + Enforcement practice group, State Attorneys General team, and several esteemed colleagues across various areas of the firm.
- 12 Days of Regulatory Insights: Day 1 – Potential Impacts of 2025–2026 State AG Elections
- 12 Days of Regulatory Insights: Day 2 – How AGs Are Shaping Health Care Markets
- 12 Days of Regulatory Insights: Day 3 – How the BBB Shapes Regulatory Outcomes
- 12 Days of Regulatory Insights: Day 4 – Open Records Realities
- 12 Days of Regulatory Insights: Day 5 – Privacy Under the Microscope
State AG News
HelloFresh Agrees to Oregon AVC Over Alleged Discount and ‘Free’ Claims
By Troutman Pepper Locke State Attorneys General Team
The Oregon Department of Justice and Grocery Delivery E-Service USA, Inc. d/b/a HelloFresh (HelloFresh), recently filed an Assurance of Voluntary Compliance (AVC) in Oregon Circuit Court to resolve allegations by the Department of Justice (DOJ). HelloFresh is a meal-kit company, providing meal kits, ready-to-eat meals, and other products directly to consumers.
Delaware Imposes Nearly $1M Penalty on Investment Adviser for Registration, Supervision, and Recordkeeping Failures
By Troutman Pepper Locke State Attorneys General Team
On November 21, Delaware Attorney General Kathy Jennings’ Investor Protection Unit (IPU) announced a $995,180 penalty against Kovack Advisors, Inc. (Kovack) for a series of violations of the Delaware Securities Act. The enforcement action — resolved through a consent order — highlights the IPU’s growing focus on registration accuracy, supervisory systems, and books-and-records compliance for investment advisers operating in the state.
Texas AG Secures $41.5M Settlement With Pfizer and Tris Pharma Over Allegedly Adulterated ADHD Drug: What Health Care Stakeholders Should Know
By Troutman Pepper Locke State Attorneys General Team
The Texas attorney general (AG) announced a $41.5 million settlement with Pfizer and Tris Pharma related to allegations that the companies provided adulterated pharmaceutical products to children and manipulated testing to secure Medicaid reimbursement in violation of the Texas Health Care Program Fraud Prevention Act (THFPA).
Virginia’s Vapor Product Directory Challenged in Federal Court
By Bryan Haynes, Agustin Rodriguez, and Zie Alere
Earlier this fall, a small manufacturer and retailer (the plaintiffs) sued Virginia Attorney General (AG) Jason Miyares and Tax Commissioner James Alex (the defendants) in the U.S. District Court for the Eastern District of Virginia, seeking to enjoin their enforcement of Virginia’s vapor product directory regime, Va. Code Ann. §§ 59.1-293.14 to .21, which the General Assembly passed in 2024.
AG of the Week
Nick Brown, Washington
Nick Brown is Washington state’s 19th attorney general (AG), elected in November 2024 and sworn into office in January 2025. As AG, Brown leads the state’s chief legal office, which provides legal services to more than 230 state agencies, boards, and commissions. He is committed to using the legal tools and authority of the office to uphold and enforce Washington’s laws, protect people’s rights, and keep residents safe.
Brown’s priorities as AG include protecting public safety, advancing environmental and worker protections, defending civil rights, and holding powerful interests accountable when they violate state laws. The AG’s office also works to protect consumers and seniors from fraud, support veterans, and ensure fair treatment for workers.
Brown grew up in Steilacoom, WA, and is a graduate of Morehouse College and Harvard Law School. He served as an Army JAG lawyer and was awarded the Bronze Star. Brown previously served as lead counsel for Governor Jay Inslee and as U.S. attorney for the Western District of Washington. Before his election as AG, he worked in the private sector, assisting public, private, and nonprofit clients with complex civil litigation and constitutional issues, including defending landmark gun safety legislation.
Washington AG in the News:
- On December 8, a federal judge ruled in favor of Brown and a coalition of 18 AGs, vacating the Trump administration’s indefinite freeze on offshore and onshore wind project approvals as arbitrary and capricious, thereby protecting states’ clean energy commitments and the economic benefits of wind power.
- Following an AG investigation that found Confluence Health failed to refund hospital patients later approved for charity care, the system has reimbursed more than $1.8 million with 12% interest, and an agreement filed on December 8 ends the AG probe.
- On December 4, Brown announced Shinn & Son will pay $300,000 and provide $5,000 to $25,000 to affected workers under a Washington consent decree resolving allegations that it misled jobseekers and discriminated against local and female farmworkers by replacing them with H-2A guest workers and denying equal terms.
Upcoming AG Events
- January: AGA | Human Trafficking Training | Virtual
- February: RAGA | Virtual Fund Retreat | Big Sky, MT
- February: DAGA | Policy Conference | San Francisco, CA
For more on upcoming AG Events, click here.
Troutman Pepper Locke’s State Attorneys General team combines legal acumen and government experience to develop comprehensive, thoughtful strategies for clients. Our attorneys handle individual and multistate AG investigations, proactive counseling and litigation, and manage ancillary regulatory issues. Our successful approach has been recognized by Chambers USA, which ranked our practice as a leader in the industry.