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Focus on Regulation

No Antitrust Immunity for State Boards Run by Market Participants

The Supreme Court ruled on February 25 that state professional boards controlled by private entities must be “actively” supervised by state governments to fall within the scope of the state-action antitrust immunity doctrine. North Carolina State Board of Dental Examiners v. FTC, S. Ct. No. 13–534 (Feb. 25, 2015). Companies and private market actors that participate on state regulatory boards, as part of hybrid agencies, or in trade associations should be aware of the decision’s potential impact on their activities.

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The FCC’s Wild West: Allocating Spectrum Above 24 GHz for Mobile Broadband Services

Today’s wireless mobile broadband networks largely operate on spectrum below 3 GHz, but engineers and policymakers are actively looking to higher frequency bands for the development of next-generation “5G” platforms.  As U.S. Federal Communications Commission (FCC) Chairman Tom Wheeler noted, these technologies “could theoretically dramatically increase wireless broadband speeds and throughput – up to 10 gigabits per second.”

On October 17, 2014, the FCC released a Notice of Inquiry (NOI) exploring the wireless industry’s interest in using millimeter wave (mmW) spectrum for wireless mobile services.  In particular, the FCC asked whether mmW spectrum above 24 GHz band could be used for next-generation (5G) wireless mobile broadband services.  The FCC also sought comment on recent mmW technological developments, the preferred type of licensing regime, proposed technical rules, and other related issues.  Comments were due January 15, 2015.

Many equipment manufacturers and developers filed comments that highlighted their ongoing research into mmW technologies and the feasibility of using mmW spectrum for both next-generation mobile services and novel “Internet of Things” applications.  A number of commenters identified the deployment of mmW spectrum in small-cell systems as a promising initial use, one that could greatly expand the capacity of existing mobile networks.  Commenters stressed the importance of global harmonization in the development of mmW standards, especially in light of parallel ITU-R and WRC-19 proceedings.  They, along with wireless service providers, also cautioned the FCC not to get ahead of industry developments and to adopt technology-neutral rules.

Mobile wireless providers also expressed support for the allocation of mmW spectrum to facilitate mobile broadband operations, although many encouraged to FCC to focus on increasing the availability of lower-band spectrum.  Commenters supported a variety of licensing mechanisms, including licensed, unlicensed, and hybrid approaches.  Advocates of exclusive-use licenses stated that this approach would maximize investment and innovation in emerging mmW technologies.  Other commenters stressed the utility of making the spectrum available on an unlicensed basis and supported the FCC’s proposal to allow unlicensed Part 15 operations across the entire 60 GHz band.

Incumbent satellite, fixed wireless, amateur radio, and radio astronomy users that operate in the bands above 24 GHz emphasized the importance of protecting incumbent users and asked the FCC to address interference concerns when exploring novel uses of mmW spectrum.

Reply comments were due February 17, 2015, and now the FCC will decide whether it should take any further action regarding the use of mmW spectrum to support next-generation wireless broadband operations.  Chairman Wheeler has already endorsed the use of mmW spectrum as part of a diversified, “all-of-the-above” strategy for meeting U.S. spectrum demand.  With countries such as Japan and South Korea eyeing 5G rollouts within the next five years, it will be important for the FCC to continue monitoring global mmW technological developments that may increase the demand for mmW spectrum and support next-generation mobile wireless services.

The author wishes to thank Jason Qu in our Washington, D.C. office for his assistance in preparing this article.

CFIUS Annual Report – Review Process Appears Increasingly Stringent

The recently published annual report to Congress of the Committee on Foreign Investment in the United States (CFIUS), a U.S. Government interagency committee that conducts national security reviews of foreign acquisitions, suggests that the Committee’s reviews are becoming increasingly stringent.  Sweeping conclusions cannot be drawn from a report that covers only the Committee’s work in 2013, but the report does include some useful insights.  Here are a few of the highlights:

  • Higher percentage of CFIUS cases proceeding to a second-stage investigation - The percentage of cases that CFIUS could not resolve in its initial 30-day review period increased to nearly 50% in 2013 (up from 39% in 2012), meaning that companies – for planning purposes – likely will have to assume CFIUS’s formal review will last 75 days (30 days for the first stage; 45 days for the second stage).
  • More mitigation – The percentage of cases that involved CFIUS imposing conditions to mitigate national security concerns rose from 7% in 2012 to 11% in 2013. The annual report also mentioned one new broad mitigation measure – “Providing the [U.S. Government] with the right to review certain business decisions and object if they raise national security concerns” – that appears similar to the mitigation that CFIUS imposed on SoftBank Corp.’s 2013 acquisition of a controlling interest in Sprint Nextel Corporation.
  • Higher percentage of CFIUS notices withdrawn but not refiled - Seven of the eight CFIUS notices withdrawn in 2013 were not refiled with the Committee. One possible explanation for some of these withdrawn-but-not-refiled cases is that they raised significant national security issues that ultimately scuttled the deals. 2012 saw a spike in the number of CFIUS cases withdrawn – 22 – but more than half of those were refiled.
  • China again tops the list - For the second consecutive year, companies from China submitted more filings to CFIUS than any other country, with nearly a quarter of the filings involving Chinese buyers.

European Commission Action Plan on Antimicrobial Resistance

On 26 February 2015, the European Commission published a progress report concerning the Commission’s five year Action Plan on Antimicrobial Resistance (“Action Plan”).
The purpose of the progress report is to inform the European Parliament, the EU Member States and other stakeholders about progress to date in relation to the implementation of the Action Plan. The Action Plan includes a number of specific action points concerning the prevention and control of antimicrobial resistance and for securing the availability of effective antimicrobial agents in the EU. These actions points concern the following key areas:

  • Ensuring that antimicrobials are used appropriately in both humans and animals;
  • Preventing microbial infections and the spread of such infections;
  • Developing new effective antimicrobials or alternatives for treatment;
  • Cooperating with international partners to contain the risks of antimicrobial resistance;
  • Monitoring and surveillance in human and animal medicinal products;
  • Promoting research and innovation;
  • Improving communication, education and training.

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Department of Energy issues Final Rule amending its nuclear export control regulations

On 23 February 2015 the Department of Energy (DOE) published a Final Rule in the Federal Register (80 Fed. Reg. 9359) (Final Rule) to amend the Part 810 Regulations (10 C.F.R. Part 810), which govern the export and re-export of unclassified nuclear technology and assistance. This Final Rule is the first comprehensive updating of the Part 810 Regulations since 1986, and reflects many of the changes that were included in two prior proposed rulemakings: (i) the Notice of Proposed Rulemaking (NOPR), published in the Federal Register (76 Fed. Reg. 55278) on 8 September 2011; and (ii) the Supplemental Notice of Proposed Rulemaking (SNOPR) published in the Federal Register (78 Fed. Reg. 48629) on 2 August 2013. Our summary of the NOPR can be found here, and our summary of the SNOPR can be found here.

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FDA Publishes Draft Guidances and Memorandum of Understanding on Drug Compounding and Repackaging

On February 13, 2015, FDA issued four draft guidance documents and a draft memorandum of understanding (MOU) regarding the compounding of drug and biological products and the regulation of outsourcing facilities under the Drug Quality and Security Act (DQSA), enacted in November 2013.

Three of the guidance documents clarify the circumstances under which an entity should register as an outsourcing facility and the circumstances under which FDA expects to exercise enforcement discretion as to entities that repackage human prescription drug products or mix, dilute, or repackage biological products. The last guidance addresses adverse event reporting requirements for outsourcing facilities. The agency also published a draft MOU that may be used between a state and FDA concerning responsibilities for oversight of compounding activities. Continue Reading

FDA Authorizes 23andMe to Market DTC Genetic Carrier Test, and Announces Plan to Exempt Certain Carrier Screening Testing from Premarket Review

On February 19, 2015, the U.S. Food and Drug Administration (FDA or the Agency) authorized for marketing 23andMe’s Bloom Syndrome carrier test, a direct-to-consumer genetic test to determine whether a healthy person has a variant in a gene that could lead to their offspring inheriting the serious disorder.[1] The test is intended only for postnatal carrier screening in adults of reproductive age, and the results should be used in conjunction with other available laboratory and clinical information for any medical purposes.

In addition to issuing its authorization, the Agency also announced that it will classify carrier screening tests as Class II, and intends to exempt such products from FDA’s premarket review. The Agency will issue a notice that announces its intentions regarding carrier screening tests, as well as provide a 30-day period for public comment. According to Alberto Gutierrez, Ph.D., Director of the Office of In Vitro Diagnostics and Radiological Health, the proposed administrative action reflects the Agency’s belief that “in many circumstances it is not necessary for consumers to go through a licensed practitioner to have direct access to their personal genetic information.” While this position matches the Agency’s stated intent to create “the least burdensome regulatory path for autosomal recessive carrier screening tests,” it will be interesting to see how FDA defines any proposed limitations on the exemptions for carrier testing, and whether such limitations will expand upon the general limitations found in 21 C.F.R § 864.9.

Carrier tests for genetic disorders differ from other genetic testing in that a person displays no symptoms for the genetic disorder being tested; rather these tests are meant to inform the person of a potential risk for passing the subject genetic disorder on to their offspring. Presently, FDA does not intend to limit who may use these tests. However, the product’s labeling will need to clearly explain to consumers what the results might mean for a prospective parent. The results of such tests will also need to be conveyed in a format that can be easily understood by a lay user. In addition, if the product is sold over-the-counter, the Agency will require 23andMe to include in its labeling, information about how consumers can access a board-certified clinical molecular geneticist (or equivalent) to assist in pre- and post-test counseling. The product requirements described above are reflective of, but also go beyond, the recommendations found in FDA’s Guidance Design Considerations for Devices Intended for Home Use (Nov. 24, 2014).[2]

23andMe supplied 4 studies to support its marketing application: 2 laboratory studies (123 samples and 105 samples) to assess the test’s accuracy in detecting Bloom Syndrome carrier status; 1 usability study (295 participants) to demonstrate that consumers could understand the test instructions and procedures; and 1 user study (302 randomly recruited participants reflecting the U.S. population) to demonstrate the test instructions and results were easy to follow and understand.

Previously, FDA issued a warning letter[3] (dated November 22, 2013) to 23andMe for marketing its Saliva Collection Kit and Personal Genome Service without marketing clearance or approval from the Agency. In its warning letter, FDA noted that the company’s website advertised “‘health reports on 254 diseases and conditions’ including categories such as ‘carrier status,’ ‘health risks,’ and ‘drug response,’ and specifically as a ‘first step in prevention’ that enables users to ‘take steps toward mitigating serious diseases’ such as diabetes, coronary heart disease, and breast cancer.” FDA further noted that most of the proposed uses had not been previously classified and thus would require premarket approval or de novo classification. Though the company submitted two 510(k) notifications in 2012, both submissions were later treated as withdrawn due to the company’s failure to respond to the Agency’s request for additional information. Shortly after receiving FDA’s warning letter, 23andMe posted on its website that it was suspending health-related genetic tests.

It should be noted that 23andMe’s recently authorized Bloom Syndrome carrier test is only for identifying carrier status of a single-rare genetic disorder, thus presenting a lower risk to user safety. In contrast, and of particular concern to the Agency at the time it issued the warning letter to 23andMe, was the company’s Personal Genome Service that claimed to assess a user’s BRCA-related genetic risk and drug responses. These intended uses exposed users to heightened risk due the potential for false-positives and false-negatives, whereby the false result might encourage the user to enter into a drastic treatment plan, or forgo critical diagnostic or necessary treatment measures. Genetic testing that entails such heightened risks to users will almost certainly be subject to a comparably heightened regulatory burden.


FDA’s decision to exempt carrier screening testing from premarket review indicates the Agency’s flexibility concerning “low risk” personal genome services. Based on the Agency’s press release authorizing 23andMe to market its Bloom Syndrome carrier test, and its 2013 warning letter to the company, factors that will likely affect the regulatory pathway of future personal genetic services include:

  • Risk to the user in the event of a false-positive or false-negative result
  • Risk to the user for foregoing, or engaging in, diagnostic or treatment options based on a false test result
  • Status to be identified (e.g. carrier status, drug response, health risk)
  • Purpose of the genetic testing (prevention or mitigation of a disease versus informational)
  • Prevalence of the genetic disorder
  • Risk to the user associated with the genetic disorder
  • Probability of a false test result
  • Likelihood that risks associated with a personal genetic service can be mitigated by:
    • clear and understandable labeling,
    • information on how to access board-certified clinical molecular geneticist or equivalent, and
    • limiting the device to prescription use only.


[1] FDA News Release, FDA Permits Marketing of First Direct-To-Consumer Genetic Carrier Test for Bloom Syndrome, Feb. 19, 2015, http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/UCM435003 (last visited Feb. 19, 2015).

[2] FDA, Design Considerations for Devices Intended for Home Use (Nov. 24, 2014), available at http://www.fda.gov/ucm/groups/fdagov-public/@fdagov-meddev-gen/documents/document/ucm331681.pdf.

[3] FDA Warning Letter to 23andMe (Nov. 22, 2013), Document Number GEN1300666, available at http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2013/ucm376296.htm.

State Department Issues New Export Policy For Military UAS

UASOn February 17, the State Department announced a new policy toward the export of U.S.-origin military and commercial Unmanned Aerial Systems (UAS). This new policy will allow the more widespread export of armed drones for the first time. The announcement by the State Department makes clear the new policy governs the international sale, transfer, and subsequent use of U.S.-origin military UAS. The policy establishes the standards by which the U.S. Government will assess, on a case-by-case basis, potential exports of military UAS, including armed systems. In a sign of continued concerns about national security, the State policy imposes “stringent” conditions on affected sales and transfers, including potential requirements for:

  • sales and transfers of sensitive systems to be made through the government-to-government Foreign Military Sales program;
  • review of potential transfers to be made through the Department of Defense Technology Security and Foreign Disclosure processes;
  • each recipient nation to be required to agree to end-use assurances as a condition of sale or transfer;
  • end-use monitoring and potential additional security conditions to be required; and
  • all sales and transfers to include agreement to principles for proper use.

In addition, the U.S. Government will require that recipients of U.S. origin military UAS agree to the following principles affecting proper use before the U.S. will authorize sales and transfers:

  • recipients are to use these systems in accordance with international law, including international humanitarian law and international human rights law, as applicable;
  • armed and other advanced UAS are to be used in operations involving the use of force only when there is a lawful basis for use of force under international law, such as national self-defense;
  • recipients are not to use military UAS to conduct unlawful surveillance or use unlawful force against their domestic populations; and
  • as appropriate, recipients shall provide UAS operators technical and doctrinal training on the use of these systems to reduce the risk of unintended injury or damage.

The thrust of the State Department announcement clearly relates to military UAS. However, the announcement by the State Department also asserts that the new policy applies as well to sales, transfers, and subsequent use of U.S.-origin commercial UAS, yet the announcement is very short on detail as to what this means. The announcement states that the policy is committed to stringent standards for U.S.-origin commercial UAS, “to include future commercial MTCR Category I systems”, perhaps suggesting the new policy applies especially to this type of commercial UAS. Beyond that, the policy merely asserts that “all commercial UAS will be reviewed under the requirements and licensing policies described in the [existing] Export Administration Regulations”.  Presumably, more detail will need to be forthcoming on whether and to what degree elements of the policy articulated above will be applied to commercial exports.

The text of the State Department announcement can be found here.

Hogan Lovells’ ACER practice nominated in the 2015 Global Competition Review Awards

The Global Competition Review announced the nominees for the 2015 GCR Awards, and our Antitrust, Competition and Economic Regulation practice is shortlisted for the following:

  • Matter of the Year: National Grid follow-on
  • Litigation of the Year – cartel prosecution: National Grid follow-on
  • Lawyer of the Year: Jacques Derenne
  • Lawyer of the Year – Under 40: Logan Breed
  • Litigator of the Year: Nicholas Heaton

Voting is open to all who are interested in participating. Votes may be submitted until February 23 (one per voter).

Cast your vote here.

For a full list of the nominations, visit the GCR Awards website.

Government Contractor Asks U.S. Supreme Court for TCPA Relief Through Derivative Sovereign Immunity

Highlighting the intersection between government contracts, communications privacy, and class action litigation, the United States Supreme Court recently received a petition for a writ of certiorari asking it to rule on whether derivative sovereign immunity should be extended to a government contractor’s violation of the Telephone Consumer Protection Act (TCPA).  The Petitioner, Campbell-Ewald Co., was responsible for the distribution of an unsolicited recruitment text message on behalf of the United States Navy and is now the defendant in a class action suit.  In September 2014, the Ninth Circuit ruled that derivative immunity was not available to Campbell-Ewald, explaining that the doctrine should be narrowly applied to only certain limited scenarios.

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