Morrison & Foerster’s Automotive Undertaking Drive represents automotive market clients in their most sizeable authorized issues. With Litigation and Investigations attorneys across places of work in the United States, Europe, and Asia, we offer holistic solutions for compliance, internal investigation, civil litigation, and federal government enforcement issues about the world. We have obtained favorable effects in numerous legal and civil issues. As the automotive field proceeds to turn out to be a lot more tech-focused, we will keep on to leverage our deep expertise in the technological know-how business to meet up with the demands of purchasers working in this evolving house.

We have tapped our multidisciplinary Automotive Endeavor Force to get their opinions on what is probable to materialize in phrases of litigation, investigations, and enforcement steps in the automotive industry in 2022. We hope these predictions will provoke conversations and thoughts on how to navigate the coming yr.

Haima Marlier on SEC Enforcement:

The U.S. Securities and Exchange Commission (SEC) underneath the present-day administration has been hyper-centered on two places that right have an impact on the automotive tech and transportation room: (1) the use of particular intent acquisition organizations (SPACs) by startup and other corporations to go general public and (2) environmental, social, and governance (ESG) and local climate modify disclosures. SPACs have been particularly lively in the car-tech and transportation house, notably in electrification startups. The SEC has been scrutinizing disclosures of conflicts of fascination that can arise involving SPAC insiders and general public shareholders, and will solution deSPAC disclosures like regular original community providing (IPO) disclosures. In December 2021, SEC was specially energetic in pursuing companies working in the automotive sphere which have gone public as a result of the use of SPACs, which involved subpoenaing an electric powered-vehicle (EV) firm linked to revenue projections and statements and coming into into a US $125 million settlement with a zero emissions transportation process service provider associated to deceptive statements to buyers. We hope to see this enforcement development go on into 2022. Turning to ESG and weather alter disclosures, the SEC is conducting a significant-scale inquiry into whether public organizations, which include in the automotive space, are adhering to the agency’s 2010 weather adjust disclosure guidance, with a objective of updating that steering dependent on its findings. ESG disclosures are also an SEC assessment priority for 2022. Last but not least, as with any disclosures, the SEC will concentrate on irrespective of whether ESG disclosures include materials omissions or misstatements about climate change and other concerns.

Brian Kidd on DOJ Enforcement:

With a renewed concentration on white collar and environmental crimes, the U.S. Department of Justice (DOJ), and its different criminal and civil components, will maximize its concentration on the automotive business. This will consist of the continuation of the types of circumstances we have witnessed in the modern earlier, which includes endeavours to manipulate emissions controls and defective or faulty automotive areas. Along with all those investigations, DOJ will probably increase its consideration on the automotive industry’s role in weather improve, and emphasis any failure to comply with the amplified environmental laws that the Biden administration is probable to place in position. In the EV place, this could translate into investigations into attempts to manipulate noted EV ranges and other sorts of “greenwashing.” DOJ’s International Corrupt Procedures Act (FCPA) Unit, National Security Division, and Antitrust Division will also be on the lookout for transnational bribery situations, sanctions violations, and “no poach” agreements, as mentioned underneath.

James Koukios on Anti-Bribery and Corruption Chance:

When EVs will most likely mitigate climate risk, they pose a new sort of chance for automakers: the threat that they will be questioned to spend bribes to get hold of the raw components made use of to electric power EV battery cells. A typical EV involves six occasions the mineral inputs of a standard automobile. Extractive industries have historically confronted substantial corruption hazard, with just one research locating that one in five instances of transnational bribery takes place in the extractive sector. There is no cause to believe that that extracting minerals this kind of as cobalt and lithium, which are important to EV battery performance, will be any different. As much as 70 % of the world’s cobalt supply is mined in the Democratic Republic of the Congo, which rated 170 out of the 180 nations and territories surveyed for their perceived public sector corruption by Transparency Intercontinental (TI). Most lithium is now generated in considerably less corruption-inclined international locations, these as Australia (TI rank 11) and Chile (TI rank 25) but, as demand from customers for lithium skyrockets, automakers might uncover on their own turning to greater possibility countries this kind of as Argentina (TI rank 78) or Zimbabwe (TI rank 157) for their materials. Bribery chance is present even if the automaker is not engaged in extracting the minerals by itself. In an analogous case, in December 2016, a Brazilian chemical organization fixed allegations with U.S. authorities that it had bribed Brazilian officers to get hold of uncooked materials for its products and solutions from the country’s countrywide oil organization at a a lot more favorable price tag. Particularly as they transform to immediate output of EV batteries, automakers should really revisit and update their third-party because of diligence treatments and other compliance steps to mitigate corruption possibility in their battery source chains.

Brandon Van Grack on U.S. Sanctions and Export Controls:

U.S. sanctions and export controls focusing on China continue on to cripple the semiconductor field and the vehicle makers that count on it. Courting back to the Obama administration, and reaching new heights in the Trump and Biden administrations, the nationwide security measures that have been imposed in opposition to China have severely restricted worldwide accessibility to and improvement of semiconductors. And whilst the pandemic has exacerbated this shortage, and the Biden administration is pushing for amplified investments and developments in U.S. semiconductor creation, the ongoing lack is the industry’s fact for the foreseeable upcoming. The U.S. government’s deployment of export controls, sanctions, and other countrywide safety-related resources concentrating on China will even more constrain the semiconductor sector, even just after provide chain problems linked to the pandemic are settled.

Megan Gerking on Antitrust Enforcement:

The DOJ Antitrust Division proceeds to prioritize prison enforcement of anticompetitive perform in labor marketplaces, together with investigating and prosecuting “no poach,” or non-solicit, agreements amid organizations that contend for labor. In Oct 2016, the FTC and DOJ introduced a modify in policy to criminally cost providers and executives that enter into standalone agreements not to seek the services of or solicit personnel from each other. Considering that that time, DOJ has opened various investigations and introduced criminal charges against organizations and unique executives for allegedly entering this kind of agreements with rivals that correctly lessen wages or divide the market place. The Biden administration has reiterated its ongoing precedence of antitrust enforcement in labor markets in its Executive Order on Promoting Level of competition in the American Overall economy and as a result of policy statements and other community remarks by DOJ Antitrust Division management. Whilst the legal fees to day have been minimal to healthcare and engineering solutions industries, no marketplace is immune. And, contrary to other competitors violations, corporations do not need to contend in their sale of merchandise and solutions to be regarded rivals for employees. The development is expanding—antitrust enforcers across jurisdictions are pursuing anticompetitive conduct in labor markets as a priority.

Yuka Teraguchi on ITC Enforcement:

U.S. patent holders can file a criticism with the U.S. International Trade Commission (ITC) to seek out an exclusion order directing U.S. Customs and Border Patrol to stop infringing items from entering the United States and a cease and desist order versus the importers and U.S. sellers of the infringing goods. In 2021, the ITC received 82 new issues, which was much bigger than the once-a-year typical of 65 grievances in 2016–2020. About 10 % of the problems associated solutions in the automotive, manufacturing, and transportation technological know-how spot and 25 p.c involved laptop and telecommunications products, some of which are incorporated into vehicles. For illustration, the latest complaints accused selected built-in circuits for car components, navigation techniques, and motor vehicle control units of patent infringement. As motor vehicles develop into a lot more geared up with personal computer and networking technological innovation, we be expecting the variety of ITC complaints towards the automotive field to enhance. In individual, autonomous driving technological innovation is probable to implicate a new era of patent infringement allegations.

By Tara