The Trump Administration’s new tariff initiatives are reshaping the importing environment in ways that extend far beyond the tariff rates themselves. Increased duties are driving higher customs bond requirements, new executive actions are signaling a more aggressive enforcement posture, and importers are facing growing pressure to ensure that their compliance programs can withstand heightened scrutiny.

This four-part series examines these developments and their practical implications for multinational companies. This first article addresses one of the most immediate consequences of the current tariff environment: rising customs bond requirements and growing demands from sureties for collateral. As tariff rates increase, many importers are discovering that customs bonds are no longer simply a compliance requirement. They have become a significant capital management, liquidity, and operational issue.

Many importers have seen their continuous bond requirements rise not because import volumes increased, but because higher duties, taxes, and fees increased the amounts counted toward bond sufficiency. Because a customs bond is a financial guarantee to CBP that duties and other obligations will be paid, higher tariff rates can automatically drive higher bond requirements even when shipment patterns remain stable.

This has created a new reality for importers with otherwise steady operations and strong compliance histories. Companies are being required to carry larger bonds, while sureties are often imposing stricter underwriting standards, additional collateral requirements, and larger letters of credit.

To help companies navigate these challenges, this article explains why rising tariff rates are leading to enhanced bonding requirements and outlines practical steps importers can take to manage the resulting financial and operational risks. Subsequent articles in this series will examine how the Administration intends to leverage enhanced customs enforcement authorities, what importers should expect from an increasingly aggressive enforcement environment, and why certain tariff-mitigation strategies that may appear attractive in the short term can create significant legal and financial exposure over the long term.

What Is a Customs Bond?

A customs bond is a three-party financial instrument. The importer serves as the principal, the surety company serves as the guarantor, and CBP, on behalf of the United States government, is the beneficiary. The bond guarantees payment of duties, taxes, fees, penalties, and compliance-related obligations arising under customs law.

Without an active bond, a commercial importer generally cannot secure release of goods through formal entry procedures. There are two primary bond types:

• Single transaction bonds, which apply to one entry only; and
• Continuous bonds, which cover all entries made during a twelve-month period and are the standard bond vehicle for regular importers.

Most commercial importers with ongoing entry activity use a continuous entry bond.

How CBP Calculates the Continuous Bond Amount

CBP generally sets the required amount of a continuous importer bond using a formula based on the importer’s historical duties, taxes, and fees. The baseline calculation is typically 10% of the total duties, taxes, and fees paid or payable over the preceding twelve months, subject to minimum thresholds and rounding rules.

CBP reviews bond sufficiency on a rolling twelve-month basis. If duties, taxes, and fees rise significantly during the year, the agency may determine that the existing bond is insufficient and require an increase before the bond’s anniversary date.

After CBP applies the 10% formula, the number is not left as an exact figure. The amount is subject to a minimum and then rounded upward under fixed rules, with the key points being as follows:

• Minimum requirement: The standard minimum continuous importer bond is $50,000.
• General rounding rule: Bond amounts are generally rounded up to the nearest $10,000 increment.
• Higher-duty accounts: For importers whose annual duties, taxes, and fees exceed $1 million, calculations may be rounded up in $100,000 blocks.

Because CBP rounds upward, the final required bond can exceed the raw 10% calculation. To illustrate:

• If an importer paid $250,000 in duties, taxes, and fees over the prior year, 10% would equal $25,000, but the importer would still need the $50,000 minimum bond.
• If an importer paid $900,000, 10% would equal $90,000, which would generally become the required bond amount.
• If an importer paid $1,150,000, 10% would equal $115,000. Depending on the applicable rounding convention for accounts above the $1 million threshold, the required bond could increase materially above that raw figure.

How Importers Calculate Their Required Continuous Entry Bond Amount

To estimate whether a current continuous bond remains sufficient, importers generally need four core pieces of information:

• the total duties, taxes, and fees paid over the prior twelve months;
• the current trend in duty exposure, including expected tariff increases;
• confirmation of the sufficiency figures reflected in CBP systems, often obtained through the ACE portal or through a licensed customs broker; and
• a reasonable projection of estimated imports and applicable tariffs going forward one year.

It is important to focus on actual duties, taxes, and fees paid to the government, not the entered value of imported merchandise. In a period of tariff volatility, duty trend data may be more important than shipment count alone.

The recent wave of tariff actions has intensified the bond issue because bond sufficiency is directly tied to duties, taxes, and fees. When tariffs increase through executive orders, trade remedies, new Section 301 announcements, or due to new antidumping/countervailing duty orders, the bond formula rises mechanically. This means an importer can face a bond increase even where business volume remains flat.

That is one reason the issue is expected to become even more pronounced if additional Section 301 tariffs take effect. Importers that maintain bonds at or near the minimum required level may face repeated insufficiency notices if expected tariff increases are not built into their forecasts.

Why Surety Underwriting Often Exceeds the CBP Formula

Many importers are finding that the surety market is reacting more aggressively than CBP’s regulatory formula. CBP’s bond requirement is largely mechanical. It is based primarily on historical duties, taxes, and fees and projected bond sufficiency under the agency’s rolling twelve-month methodology. Sureties, however, are not limited to that formula. They underwrite to worst-case exposure, timing risk, collectability risk, and the possibility that liabilities will remain open or increase well after entries are filed.

That distinction is especially important in the current tariff environment. CBP may calculate a bond amount using standard historical metrics, but a surety may conclude that the importer’s actual risk profile is materially higher because of tariff volatility, the possibility of retroactive duty increases, or the extended tail associated with unliquidated entries, audits, protests, and post-entry adjustments. In practice, this means an importer may technically meet CBP’s bond formula and still be asked by the surety to provide collateral, a letter of credit, indemnity support, or additional financial documentation.

In evaluating an importer, sureties may consider:

• Unliquidated entries. Open entries extend the period during which liability can change, particularly where final duty treatment remains uncertain.
• Tariff volatility. Rapid changes in applicable duty rates can increase projected exposure even where shipment volume is stable.
• Financial statements, liquidity, and working capital. Sureties assess whether the importer has the financial strength to absorb higher duty obligations or reimburse the surety if a claim is paid.
• Industry risk. Certain sectors are viewed as higher risk because of enforcement activity, trade remedy exposure, valuation disputes, or country-of-origin complexity.
• Prior claims history. Past bond claims, compliance issues, or payment problems can materially affect underwriting.
• Concentration of sourcing or commodity exposure. Heavy dependence on a single country, supplier base, or tariff-sensitive product category can increase perceived risk.
• Exposure to trade remedies such as antidumping and countervailing duties. AD/CVD issues remain among the most significant drivers of conservative surety underwriting.
• Section 232 exposure. Imports of steel, aluminum, and derivative products, as well as products subject to quota, melt-and-pour, or derivative classification questions, may receive heightened scrutiny.
• Section 301 and IEEPA-related exposure. Sureties may evaluate whether current sourcing patterns are vulnerable to sudden tariff increases or changes in executive trade actions.
• Classification, valuation, and origin complexity. Where the tariff treatment depends on difficult classification issues, substantial assists, transfer pricing questions, or country-of-origin determinations, sureties may see greater risk of post-entry adjustments.
• Importer maturity and business history. Newer companies, rapidly growing importers, and businesses without a long financial or compliance record may face more demanding underwriting.
• Open audits, investigations, or reconciliations. Participation in reconciliation programs, pending Focused Assessments, or other agency reviews can increase concern about unresolved exposure.
• Customs broker and compliance controls. Weak internal controls, limited visibility into ACE data, or lack of a documented compliance program may also affect underwriting outcomes.

Sureties may also react strongly to other indicators of contingent customs liability. These can include:

• significant use of first sale valuation, transfer pricing, or other valuation methods that could be challenged later;
• repeated or high-value post-summary corrections or protests;
• substantial reliance on free trade agreement claims or special tariff programs where eligibility may later be questioned;
• imports involving forced labor, sanctions, export controls, or admissibility concerns, which may signal broader compliance risk;
• high-volume imports from jurisdictions subject to changing trade policy or geopolitical risk; and
• evidence that the importer routinely sizes bonds close to the minimum required threshold rather than building in capacity for duty fluctuations.

The result is that surety underwriting frequently exceeds the narrow CBP formula. CBP’s approach establishes the minimum amount of bond security the agency expects based on historical duties and projected exposure. The surety market, by contrast, prices and underwrites the risk that liability will rise, remain unresolved, or become difficult to recover from the importer. In a period marked by tariff volatility, Section 301 uncertainty, Section 232 complexity, and ongoing AD/CVD enforcement, that distinction has become increasingly important. For many importers, the real constraint is no longer CBP’s minimum bond formula alone, but the broader private-market underwriting standards applied by the surety.

Why AD/CVD Orders and Section 232 Duties Have an Outsized Bond Impact

Importers of merchandise subject to antidumping and countervailing duties often face the most demanding bond and underwriting conditions. AD/CVD exposure creates both duration risk and magnitude risk: entries can remain unliquidated for years because of administrative reviews, litigation, and scope disputes, and final duty liability can increase materially above the cash deposit rate paid at entry. That long-tail exposure is difficult for sureties to quantify and close out, which is why AD/CVD entries frequently trigger heightened scrutiny, larger collateral demands, and, in some cases, bond structures more stringent than the standard continuous bond formula.

This risk is not limited to importers with obvious AD/CVD exposure. Companies operating in sectors commonly affected by AD/CVD orders may also be viewed as higher risk because of the possibility of scope challenges, supplier-specific rate changes, classification disputes, and post-entry adjustments. As a result, even indirect AD/CVD exposure can influence a surety’s willingness to write or expand a bond without substantial security.

Section 232 duties also can have a disproportionate effect on bond requirements, particularly for importers of steel, aluminum, copper, and derivative products. In the current environment, Section 232 is not simply an added duty line item; it is a moving regulatory framework shaped by shifting tariff rates, evolving derivative product coverage, product exclusions, country-specific treatment, quota arrangements, and origin-related requirements. For steel and aluminum in particular, questions involving classification, derivative scope, melt-and-pour rules, smelt-and-cast rules, and the interaction of Section 232 with other duty regimes can make ultimate liability less predictable. Copper-related measures and potential expansions add another layer of uncertainty for importers whose products may fall within changing enforcement priorities or derivative coverage analyses.

That uncertainty matters for bond purposes. Because continuous bond amounts are tied to duties, taxes, and fees, changes in Section 232 treatment can increase the bond amount directly. Beyond the formula itself, sureties may take a more conservative view where imports are exposed to classification disputes, changing scope interpretations, or policy shifts affecting steel, aluminum, copper, and related derivatives. In those cases, the bond amount may reflect not only current duties paid, but also the broader uncertainty associated with future tariff treatment, post-entry review, and unresolved exposure.

Collateral Demands Are Becoming More Common

As bond amounts rise and underwriting standards tighten, more importers are being asked to provide collateral in order to keep bonds in place. Typical forms of collateral include:

• cash collateral;
• irrevocable letters of credit;
• corporate guarantees;
• personal indemnities; or
• combinations of the above.

The letter of credit is the most common structure because it secures the surety’s risk without requiring immediate cash payment to the surety. It does, however, tie up bank capacity, trigger fees, and can affect broader financing arrangements. Cash collateral directly reduces liquidity. In some cases, importers may find that the surety’s collateral demand approaches or even exceeds the amount of the bond required by CBP. This can become a significant capital allocation issue, particularly for smaller and mid-sized importers.

Stacking Liability and Extended Exposure

One of the most important concepts in customs bond underwriting is stacking liability. Each continuous bond term creates a separate period of exposure. When a bond renews annually, liabilities from prior bond periods do not disappear immediately. Entries from earlier periods may remain unliquidated or subject to review for years.

From the surety’s perspective, this means exposure can accumulate across multiple bond periods until all entries are liquidated and no further adjustments are possible. The stacking effect is one reason sureties may demand more collateral than the CBP formula alone would suggest.

This issue is particularly relevant where importers make repeated bond increases mid-term. Frequent upward adjustments can complicate the surety’s risk profile and raise concern about expanding open exposure.

Cash in Lieu of a Surety Bond

Importers are not limited to traditional surety-backed bonds. One lawful and sometimes overlooked alternative is cash in lieu of a surety bond. Under this approach, the importer files the standard customs bond form, commonly Form 301, and secures the bond with cash deposited directly with the U.S. Treasury rather than through a private surety.

This can eliminate private underwriting concerns, including collateral multiples, letters of credit, or personal indemnity requirements. However, the tradeoff is that the importer’s own cash is tied up for the life of the bond and potentially longer while liabilities remain open. The funds generally do not earn interest, and additional cash may need to be posted if CBP later determines that the bond amount must increase.

For some companies, especially where surety underwriting has become difficult or costly, this may still be a practical option.

Hybrid Funding Strategies

Some importers use a hybrid approach, combining surety support with partial cash collateral or bank-issued letters of credit. This can help preserve liquidity while addressing underwriting concerns. Depending on the importer’s balance sheet, trade profile, and banking relationships, hybrid structures may offer a more flexible path than an all-cash or fully collateralized surety model.

Practical Steps for Importers

Given the current environment, importers should consider taking the following steps:

• Review current bond sufficiency using rolling twelve-month duties, taxes, and fees;
• Model expected duty exposure under current and anticipated tariff actions, including Section 301 developments;
• Confirm CBP bond sufficiency data through ACE or a licensed customs broker;
• Prepare internally for collateral requests, including coordination with finance, treasury, and lending partners;
• Evaluate whether mid-term bond increases are likely and whether a larger initial bond may be more prudent;
• Assess AD/CVD exposure carefully, including indirect commodity or sector risk;
• Consider whether cash in lieu of a surety bond is viable if private underwriting becomes too restrictive; and
• Explore hybrid structures that balance liquidity preservation against surety demands.ĚýĚýĚýĚýĚýĚýĚýĚý

Continuous customs bond requirements are driven first by CBP’s formula, which is linked to duties, taxes, and fees, and second by the private surety market’s reaction to risk, timing, and collectability. Elevated tariffs imposed through executive authority in 2025 have increased baseline bond requirements for many importers even where shipment volumes remain stable. At the same time, sureties have responded with tighter underwriting, more collateral demands, and greater sensitivity to open liability and tariff volatility.

For importers, especially smaller and mid-sized companies, customs bond planning is now a strategic issue that intersects with compliance, liquidity, and overall capital management. Companies that understand how bond amounts are calculated, how sureties evaluate exposure, and what options exist for satisfying bond requirements will be better positioned to manage risk and avoid disruption as tariff pressure continues to build.

Of course, importers should understand that the financial pressures associated with rising bond and collateral requirements are only one part of the broader customs enforcement landscape. In addition to CBP’s increased scrutiny of bond sufficiency, duty exposure, and importer compliance, the Department of Justice is becoming a more prominent player in tariff enforcement. The next two articles in this series will focus on the rapidly rising enforcement risks in the importing area.

Would you like more practical compliance tips like these? The Foley International Trade & National Security Team is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our biweekly What Every Multinational Should Know articles.

Our white paper on Managing Import and Tariff Risks During a Trade War outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on Managing Supply Chain Integrity Risks provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.

(And How Importers Can Head Off Its Attempts To Keep Billions of Dollars of Unlawfully Collected IEEPA Tariffs)

For months, the U.S. Government has signaled it would challenge the Court of International Trade’s (CIT) authority to require refunds of IEEPA tariff payments for “finally liquidated” entries (those more than 90 days after liquidation). That challenge has now arrived. In recent CIT filings and in its appeal to the U.S. Court of Appeals for the Federal Circuit (CAFC), the Government has argued that the CIT cannot order the return of finally liquidated IEEPA tariff payments, except for plaintiffs that have filed protective actions under 28 U.S.C. § 1581(i).

A version of this article was initially published as What Every Multinational Should Know About … the Government’s Appeal of Judge Eaton’s Universal IEEPA Tariff Refunds Order (and Why It Is Claiming It Can Keep Billions of Dollars of Unlawfully Collected IEEPA Tariffs) on June 11, 2026.

This position creates significant uncertainty for importers who have not filed protective actions at the CIT:

• The most immediate issue involves “finally liquidated” entries, with the U.S. Government arguing it can retain $30 billion or more in unlawfully collected IEEPA tariffs.
• The concern, however, is not limited to those entries. Other categories outside CAPE Phase 1, including reconciliation entries and entries involving antidumping or countervailing duty (AD/CVD) issues, may also face delayed, uncertain, or disputed refund treatment depending on how CAPE Phases 2 and 3 develop and the full arguments the DOJ chooses to raise on appeal.

More than 3,500 importers have already filed protective actions, but many more have not. Importers with a meaningful volume of entries more than 80 days past liquidation—or with substantial reconciliation or AD/CVD-affected entries — should consider filing a section 1581(i) protective action to preserve refund rights and potentially improve their position for earlier relief, if they have not already filed such actions.

What is the Status of the CIT’s Oversight of IEEPA Refunds?

In late May, Judge Eaton signaled increasing concern about the Government’s pace of complying with the CIT’s IEEPA refund orders. In response to the court’s requests for briefing, the Government stated on May 29^th that it intended to appeal the refund orders as impermissible universal injunctions, arguing that the CIT cannot extend relief to non-parties that did not file protective actions under Section 1581(i). The Government also stated that, for finally liquidated entries, it would seek to limit relief to the named plaintiffs. The number of such entries continues to grow every day.

On June 3, the Government filed its appeals in the Federal Circuit, again pressing its universal-injunction argument. Then, at a June 9^th hearing, a CBP representative stated that CAPE Phase 3 — covering, among other things, finally liquidated entries — will begin processing refunds, but only for importers that filed Section 1581(i) actions.

The net result is straightforward: importers that have filed Section 1581(i) protective actions are best positioned to recover their full IEEPA refunds. Importers that have not filed are likely, at a minimum, to face significant delays while the appeals process unfolds. Depending on the ultimate outcome, they may not recover certain refunds at all.

What is Happening at the Federal Circuit?

It is not yet clear how the Federal Circuit will resolve the Government’s appeal of the CIT’s refund orders. The Government will rely heavily on Trump v. CASA, 606 U.S. 831 (2025), arguing that Judge Eaton’s orders are impermissible universal injunctions because they extend relief beyond the named plaintiffs. The Government also likely will argue that any importer has an adequate remedy by filing its own Section 1581(i) action.

Plaintiffs, by contrast, are likely to argue that CASA does not control because the CIT is not an ordinary district court, and its customs jurisdiction is closely tied to the administration of a uniform tariff regime. From that perspective, requiring CBP to refund unlawfully collected tariffs on a uniform basis is not an improper extension of relief to non-parties, but a necessary consequence of the court’s role in supervising the lawful administration of customs duties. Plaintiffs are also likely to argue that limiting refunds for finally liquidated entries to importers that filed Section 1581(i) actions would undermine the constitutional and statutory requirement of uniformity by allowing the Government to retain unlawful tariff payments from some importers while refunding identical payments to others.

Plaintiffs may also argue that the statutory rules barring refunds of “finally liquidated” entries do not apply in this context at all, as that statutory restriction presupposes any tariff collection was lawful. Here, however, the Supreme Court has ruled the opposite. That creates a substantial argument that the usual rules governing finality of liquidation do not control, or at least cannot override the Supreme Court’s merits ruling.

Another potentially important distinction is that this case does not present the usual concern associated with nationwide or universal injunctions. In the ordinary case, the objection is that a single trial court is effectively making national policy before the merits have been finally resolved. Here, by contrast, the CIT is the only court that can ever consider the IEEPA refunds issue, meaning any ruling is automatically universal.

In practical terms, the appeal divides importers with non-Phase 1 refund claims into two groups: those that have filed protective actions and those that have not. Importers in the latter category may face material delays, additional administrative obstacles, and potentially the loss of refunds for finally liquidated entries or other categories outside CAPE Phase 1.

Why Is the Set of Finally-Liquidated IEEPA Tariff Entries Important?

In some respects, the Government has moved surprisingly quickly to implement refunds. It has represented that more than $95 billion of the approximately $166 billion in IEEPA tariff payments has already been queued for refund through CAPE. The problem is that the entries the Government is now contesting consist of those liquidated more than 80 days ago (90 days minus a ten-day buffer) and are therefore “finally liquidated” under the Government’s current view of CAPE Phase 1.

At first glance, that category might appear relatively narrow because CBP often liquidates entries approximately 314 days after importation. In practice, however, CBP frequently liquidates entries much sooner than 314 days after importation, particularly for lower-value informal entries or those where companies filed post-summary corrections.

As a result, for many importers, the universe of entries more than 80 days past liquidation is much broader than it first appears.

Bottom Line — What Should Importers Do Now to Best Preserve IEEPA Tariff Refunds?

Importers that have not filed protective actions under 28 U.S.C. § 1581(i) may face substantial delays — or potentially no recovery at all — for certain categories of IEEPA tariff refunds outside CAPE Phase 1. Against that backdrop, the most prudent course is twofold: continue pursuing refunds through CAPE, but also consider filing a protective Section 1581(i) action.

The same analysis applies to reconciliation entries and entries involving AD/CVD issues. Although such entries may be addressed in CAPE Phase 2, the timing and scope of that relief remain uncertain. There is also risk that disputes over those categories could become entangled in the Government’s broader appellate arguments about the availability of relief for non-parties. A protective Section 1581(i) action may therefore offer an additional advantage by putting importers in a better position to seek earlier or more targeted relief.

A protective Section 1581(i) action does not require an importer to abandon CAPE or assume that full litigation will be necessary. Rather, it functions as an insurance policy, preserving the importer’s own claim while the courts decide whether the Government can lawfully withhold refunds from non-parties for finally liquidated or otherwise excluded entries.

If you would like more information about potentially filing a Section 1581(i) protective filing, please reach out to the authors or your Foley relationship attorney.

Frequently Asked Questions: Preserving the Right to IEEPA Tariff Refunds

FAQ #1: What are the IEEPA tariffs, and how can companies determine how much they paid?

The IEEPA tariffs were imposed by the Trump Administration in 2025 under the International Emergency Economic Powers Act (IEEPA). These tariffs included:

• Fentanyl-related tariffs announced in February 2025 on China, Mexico, and Canada;
• Global and reciprocal tariffs announced in April 2025 (“Liberation Day”) addressing trade imbalances; and
• Country-specific tariffs announced later in 2025 on India and Brazil.

Although the Supreme Court directly reviewed only the first two tariff programs, the logic of the Court’s decision—that IEEPA does not authorize broad-based tariffs—likely has implications for all tariffs imposed under IEEPA.

Importantly, IEEPA tariffs do not include:

• Section 232 sectoral tariffs (e.g., steel, aluminum, copper, lumber, automotive tariffs);
• Section 301 tariffs on China;
• antidumping or countervailing duties; or
• the normal HTS tariffs in Chapters 1–97.

Companies can determine their IEEPA tariff exposure by reviewing data in Customs’ Automated Commercial Environment (ACE). This typically involves running reports beginning February 1, 2025 and filtering for entries containing the relevant Chapter 99 tariff provisions associated with IEEPA measures (such as 9903.01.xx or 9903.02.xx).

If a company does not have ACE access, its customs broker can typically generate the necessary reports.

FAQ #2: What is the deadline to file a §1581(i) action?

Section 1581(i) actions are generally subject to a two-year statute of limitations under 28 U.S.C. § 2636(i). But there is significant uncertainty as to when that period begins to run, including whether it could be tied to:

• the date duties were paid;
• the date of liquidation; or
• the date of the Supreme Court’s decision.

Because the Government may raise timeliness defenses under any of these theories, importers should consider filing sooner rather than later.

There is also a separate timing concern: Section 1581(i) is a residual jurisdictional provision and may become unavailable if another avenue of review is deemed adequate. For that reason, waiting may create additional risk. The safest course for importers that want to preserve judicial options is to evaluate protective filing promptly.

FAQ #3: Can companies still recover refunds if their entries have already been liquidated?

Possibly, but liquidation creates additional risk. Ordinarily, liquidation makes duties final and conclusive unless the importer files a timely protest. In the IEEPA litigation, however, the CIT has indicated that, at least for importers that filed Section 1581(i) actions, the court may have authority to order relief even for liquidated entries.

The greatest concern now is with finally liquidated entries—that is, entries liquidated more than 90 days earlier, or more than 80 days earlier under CBP’s current CAPE framework. The Government has expressly argued that refunds for those entries should be limited to importers that filed protective Section 1581(i) actions.

That issue is particularly important because the universe of finally liquidated entries is larger than many companies assume. CBP often liquidates entries more quickly than the outer statutory timeline, especially for lower-value or informal entries, and post-summary corrections can also accelerate liquidation.

FAQ #4: Will refunded IEEPA tariffs include interest?

Yes.

FAQ #5: What information is required to file a §1581(i) action?

A typical filing includes a summons, complaint, and supporting disclosures. To complete the filing, importers generally must provide:

• the identity of the importer and its principal place of business;
• the importer’s corporate ownership structure, including publicly held parent companies and affiliates;
• identification of any real party in interest, if different from the importer;
• whether the importer has requested extensions of liquidation from CBP; and
• whether the importer has filed post-summary corrections or protests relating to IEEPA entries.

FAQ #6: What happens if an importer does not file a protective action?

An importer that does not file may face substantial uncertainty. At a minimum, it may have to wait while the Federal Circuit and potentially the Supreme Court address the scope of the CIT’s refund authority. More specifically, it may face:

• the risk that refunds will be limited to parties before the court;
• additional complications arising from liquidation finality;
• delays or uncertainty as to reconciliation and AD/CVD-related entries; and
• reliance on administrative refund mechanisms that may be incomplete or delayed.

In the worst case, an importer that does not file may be unable to recover certain refunds at all.

FAQ #7: Can non-importers of record recover IEEPA tariffs?

Generally, only the importer of record has standing to obtain duty refunds directly from CBP. That said, other parties that ultimately bore the economic burden of the tariffs may have contractual or commercial arrangements with the importer regarding the allocation of any refund recovery.

The Foley International Trade & National Security Practice

The Foley International Trade & National Security Team covers the full gamut of international trade needs, including for tariffs, customs, supply chain/supply chain integrity, trade remedies/antidumping/countervailing duty, export controls, economic sanctions, and CFIUS national security filings. Our Tariff & International Trade blog regularly publishes practical guidance, like this client alert, on all international trade topics and compiles it by topic area on the Foley Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our What Every Multinational Should Know articles.

For much of the past year, the principal focus of the IEEPA tariff litigation has been whether the tariffs were lawful and whether importers would ultimately be entitled to refunds. Following the Supreme Court’s February 2026 decision invalidating the tariffs and the subsequent proceedings before the Court of International Trade, those questions have largely been answered. The focus has increasingly shifted from whether refunds should be paid to how those refunds will be processed, administered, and distributed.

As CBP continues implementing refunds through the CAPE process and related reliquidation procedures, however, a new issue is beginning to emerge. For many companies, the most significant disputes associated with IEEPA refunds may no longer involve the government at all. Instead, they may involve customers, suppliers, distributors, shareholders, bankruptcy stakeholders, and other private parties seeking to claim a portion of the resulting recoveries.

At first glance, the answer may appear straightforward. The importer of record paid the duties and therefore receives the refund. From a customs perspective, that is generally correct. CBP’s relationship is with the importer of record, and refund payments are ordinarily made to the party that paid the duties.

The more difficult question is whether other parties may possess contractual, equitable, or commercial claims to some portion of those funds once they are received.

For many companies, that question may prove significantly more complicated than the underlying tariff litigation itself.

Why Refund Ownership May Become the Next Major Dispute

The emerging disputes surrounding IEEPA refunds arise from a fundamental distinction between customs law and commercial reality.

From CBP’s perspective, the analysis is relatively straightforward. The importer of record paid the duties and receives the refund. The customs process generally does not attempt to determine which participant in a supply chain ultimately absorbed the economic burden of those duties.

Commercial relationships, however, often operate very differently.

Over the course of the IEEPA tariffs, many companies took steps to offset the financial impact of the duties. Some imposed tariff surcharges. Others increased product prices. Still others renegotiated supply agreements, implemented cost-sharing arrangements, modified purchasing terms, or otherwise attempted to pass tariff costs through the supply chain. In many industries, the economic burden of the tariffs ultimately moved well beyond the importer of record.

As a result, the party that paid the tariffs to the government may not be the same party that ultimately absorbed those costs. In some situations, the importer may have borne the full burden of the tariffs. In others, the costs may have been passed entirely to customers. In still others, the burden may have been shared among multiple participants throughout the supply chain.

This distinction between paying the tariff and bearing the cost of the tariff lies at the heart of the disputes that are now beginning to emerge. As refunds begin to flow, downstream purchasers, distributors, retailers, consumers, and other commercial counterparties are increasingly asking whether they possess a claim to some portion of those recoveries if they previously reimbursed another party for tariff-related costs.

There is unlikely to be a single answer to that question. Rather, the outcome will often depend on the specific facts surrounding the transaction, including the contractual arrangements between the parties, the manner in which tariff costs were allocated, the existence of tariff pass-through provisions, and the representations that were made when those costs were incorporated into pricing decisions.

Businesses receiving significant IEEPA refunds should therefore begin evaluating not only whether they are entitled to receive the refund from CBP, but also whether other parties may claim an interest in those funds once they are received.

Why Consumer Refund Claims Face Significant Obstacles

A number of consumer class action lawsuits have been filed seeking recovery of tariff-related price increases. Although the legal theories vary, the underlying premise is generally the same: companies allegedly increased prices in response to IEEPA tariffs and therefore should not be permitted to retain tariff refunds if those tariffs are ultimately returned by the government.

At a practical level, this argument has intuitive appeal. Consumers may reasonably ask why a company should be permitted to retain a refund if the economic impact of the tariff was previously reflected in higher prices.

The legal analysis, however, is considerably more complicated.

One of the threshold challenges facing many consumer plaintiffs is establishing that they possess a legal entitlement to any portion of a tariff refund in the first place. Consumers generally purchased products at prevailing market prices, not contractual rights to future tariff recoveries. The fact that a company increased prices while tariffs were in effect does not necessarily create a legal obligation to reduce prices or issue refunds if the company’s costs subsequently decline.

Even if such a theory were recognized, significant evidentiary challenges would remain. During the period in which IEEPA tariffs were in effect, businesses faced numerous factors affecting pricing decisions, including inflation, transportation costs, labor expenses, supply-chain disruptions, inventory management concerns, and broader market conditions. Isolating the precise impact of tariffs on any particular product, transaction, or consumer purchase may prove difficult.

Additional complications arise where tariff costs were incorporated into broader pricing decisions rather than separately identified as a distinct surcharge. In many cases, tariffs became only one of many factors influencing overall pricing decisions. Determining whether a particular consumer paid more as a result of tariffs, and if so by how much, may therefore require a highly fact-intensive analysis.

For these reasons, while consumer litigation is likely to continue, many of these cases may face substantial hurdles long before a court reaches the ultimate question of whether any refund should be passed through to consumers. The central issue may not be whether tariffs affected prices. Rather, it may be whether consumers possess a legally enforceable right to recover funds that were refunded to the importer years after the original purchase occurred.

Why Business-to-Business Claims May Present the Greater Risk

While consumer lawsuits have received significant attention, the more consequential disputes for many companies may arise within commercial supply chains.

Unlike consumer transactions, business-to-business relationships are frequently governed by detailed contracts addressing pricing, tariff allocation, cost-adjustment mechanisms, reimbursement obligations, and other commercial matters. As a result, commercial counterparties often possess legal theories that are considerably stronger than generalized claims of unfairness or unjust enrichment.

Indeed, the key distinction is that consumer plaintiffs frequently rely on broad equitable arguments, while commercial counterparties may possess express contractual rights. As IEEPA refunds begin to flow, reports are already emerging of downstream purchasers asserting that they are entitled to all or a portion of those recoveries because they previously reimbursed suppliers for tariff-related costs.

For many companies, the central question will be whether the parties merely agreed that tariff costs would be passed through to the purchaser, or whether they also addressed what would happen if those tariff costs were subsequently refunded. Unfortunately, many agreements were drafted when the possibility of a large-scale judicial invalidation of tariffs seemed remote, leaving little guidance regarding how future refunds should be allocated.

As a result, companies may find themselves revisiting provisions that were originally drafted to address tariff increases rather than tariff refunds.

Among other things, parties may need to evaluate:

• Whether tariffs were expressly addressed in the contract.
• Whether tariff costs were separately identified and passed through.
• Whether the agreement contained change-in-law provisions.
• Whether tariff surcharges were temporary, permanent, or subject to adjustment.
• Whether the parties addressed the possibility of future tariff refunds.
• Whether pricing adjustments were intended to reimburse actual tariff costs or merely reflect changing market conditions.
• Whether the purchaser agreed to bear the tariff burden permanently or only while the tariffs remained in effect.

The answers to these questions may vary significantly from one contract to another.

Why Cascading Claims Increase Litigation Risks

The complexity increases further because these disputes may not remain confined to a single contractual relationship.

In many industries, tariff costs moved through multiple levels of the supply chain before ultimately reaching the end customer. Manufacturers passed costs to distributors. Distributors passed costs to wholesalers. Wholesalers passed costs to retailers. Retailers passed costs to consumers. If refunds are later paid to an importer near the beginning of that chain, multiple parties may argue that they bore some portion of the economic burden and therefore possess a claim to the resulting recovery.

This creates the possibility of cascading claims throughout the supply chain. A downstream purchaser may seek recovery from its supplier. That supplier may then seek reimbursement from another entity further upstream. Additional parties may in turn attempt to pursue recovery from other participants in the chain.

In complex supply chains involving multiple intermediaries, determining who ultimately absorbed tariff costs may become extraordinarily fact-intensive. The analysis may require reviewing years of pricing decisions, contract amendments, surcharge programs, customer communications, and cost-allocation practices. Matters become even more complicated where products were sourced from multiple countries, tariff costs fluctuated over time, or pricing changes were driven by a combination of tariffs and broader market conditions.

As a result, future disputes may involve a wide range of legal theories, including breach of contract, unjust enrichment, indemnification, contribution, declaratory judgment actions, and other commercial claims. What initially appears to be a straightforward customs refund may therefore evolve into a much broader dispute concerning how tariff costs were allocated throughout the supply chain and who ultimately bore the economic burden of those costs.

For many companies, this may prove to be the most significant unresolved issue arising from the IEEPA refund process. The litigation over whether refunds would be paid may be winding down. The litigation over who ultimately owns those refunds may only be beginning.

Litigation Is Not the Only Risk

Even where no lawsuit is filed, companies should not assume that the receipt of a significant IEEPA refund will be free from scrutiny.

Many organizations spent months or years explaining the impact of IEEPA tariffs to customers, suppliers, investors, lenders, and other stakeholders. In some cases, companies imposed tariff surcharges, implemented price increases, renegotiated contracts, or otherwise communicated that tariffs were increasing costs and affecting commercial decisions. As refunds begin to flow, those same stakeholders may naturally ask what happens next.

Organizations that publicly attributed price increases to IEEPA tariffs may face questions from customers, suppliers, investors, regulators, and the media regarding how refund proceeds are ultimately used. Even where no legal obligation exists to pass refunds through to downstream parties, companies may nevertheless confront commercial pressure to explain why they are retaining recoveries associated with costs that were previously passed through the supply chain.

Conversely, companies that elect not to pursue available refunds may face a different set of challenges. Shareholders, lenders, bankruptcy stakeholders, private equity sponsors, and other interested parties may question whether management exercised appropriate diligence in protecting corporate assets. For some organizations, particularly those facing financial pressure or operating in distressed situations, decisions regarding whether and how to pursue refunds may themselves become the subject of scrutiny.

The result is that many companies may face difficult questions regardless of which path they choose. Pursuing refunds may create expectations among customers, suppliers, or other counterparties regarding how those funds should be allocated. Declining to pursue refunds may generate concerns regarding corporate stewardship and the preservation of value.

As a result, businesses should view IEEPA refunds not merely as a customs issue, but as a broader legal, commercial, financial, and reputational issue. The companies best positioned to navigate this next phase will be those that evaluate refund-related decisions holistically, considering not only what they are legally entitled to receive, but also how those decisions may be viewed by the various stakeholders affected by the original tariff costs.

What Companies Should Be Doing Now

Companies expecting substantial IEEPA refunds should consider undertaking a proactive review of their contractual and commercial arrangements before refunds are received.

Areas warranting particular attention include:

• Tariff pass-through provisions.
• Price-adjustment mechanisms.
• Change-in-law clauses.
• Reimbursement obligations.
• Indemnification provisions.
• Settlement agreements.
• Customer communications regarding tariffs.
• Public statements concerning pricing decisions.
• Internal analyses regarding tariff cost allocation.

Companies should also consider preserving documentation demonstrating how tariff costs were allocated throughout the supply chain and whether those costs were ultimately absorbed, shared, or passed through to other parties.

Organizations that wait until a demand letter arrives may find themselves reconstructing decisions that were made years earlier under very different business conditions.

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The litigation surrounding IEEPA tariffs continues to evolve. The initial disputes focused on whether the tariffs were lawful and whether importers would ultimately be entitled to refunds. More recent proceedings have focused on the mechanics of obtaining those refunds, including the scope of CBP’s refund obligations and the procedures for returning unlawfully collected duties.

As those issues move closer to resolution, attention is increasingly shifting to a different set of questions. For many companies, the most significant remaining disputes may no longer involve the government at all. Instead, they may involve customers, suppliers, distributors, shareholders, bankruptcy stakeholders, and other private parties asserting competing claims to the resulting recoveries.

The fact that a refund is paid to the importer of record does not necessarily resolve who ultimately bears the economic benefits or burdens associated with that refund. Those questions may depend on contractual arrangements, tariff pass-through provisions, pricing decisions, commercial communications, and the specific manner in which tariff costs were allocated throughout the supply chain.

As a result, companies receiving substantial IEEPA refunds should view those recoveries not simply as customs matters, but as potential sources of broader legal, commercial, financial, and reputational risk. Organizations that proactively evaluate these issues before refunds are received will generally be better positioned to manage the disputes and stakeholder expectations that may follow.

The principal legal question surrounding IEEPA tariffs was once whether refunds would be paid. Increasingly, the more important question may be who ultimately has the right to keep them.

What is it really like to start your career at Foley?

This June, summer associates from across the firm came together in Chicago for a multi-day retreat designed to answer that question in a real, tangible way.

The program offered a closer look at how the firm operates day to day, how attorneys collaborate, and how associates contribute early in their careers. Through conversations with firm leadership, clients, and associates, the experience connected the firm’s broader strategy with the realities of everyday practice.

Opportunities throughout the program also gave summer associates the chance to connect across offices and practice areas, reinforcing how collaboration shapes both the work and the associate experience at Foley.

Understanding How the Firm Works in Practice

Understanding a firm’s platform is one thing — seeing how it comes together in real client work is another.

Through sessions with department leaders, summer associates gained insight into how teams across Corporate, Litigation, and Intellectual Property work together to deliver seamless client service. They also heard from Chairman and CEO Daljit Doogal and Managing Partner Steve Vazquez, who shared perspective on the firm’s direction and priorities, including client service, collaboration, and innovation, and how those priorities translate into the associate experience.

A personal branding workshop complemented these discussions, encouraging summer associates to be intentional about how they show up, contribute, and build credibility from day one.

Hearing What Clients Value Most

A highlight of the retreat was a client panel featuring in-house counsel, who shared direct, candid feedback on what differentiates strong junior associates. The conversation underscored how small, day-to-day habits build trust over time.

Key takeaways included:

• Be well prepared and know the details of your work.
• Communicate clearly and deliver work product that is easy for clients to use and act on.
• Take the time to understand the client’s business and the broader context of their work.
• Take ownership and build trust through accountability and follow-through.
• Ask thoughtful questions and contribute meaningfully to the team.

Building Relationships From Day One

Relationships are central to the Foley experience — and to long-term success as an associate.

The retreat created opportunities to connect across offices and practices through both structured and informal programming. During the Affinity Group Leads Expo, summer associates met with firm leaders and learned how to get involved in communities that support mentorship, development, and inclusion.

Those connections continued beyond the conference room, with events across Chicago — including a river and fireworks boat cruise and an evening at the Field Museum — giving summer associates additional opportunities to connect more personally with peers and attorneys.

Connecting Work With Community Impact

The retreat also reinforced that a career at Foley extends beyond client work. As part of the firm’s partnership event with the Boys & Girls Clubs of America, summer associates heard from community leaders and participated in a hands-on service activity supporting local Chicago Clubs.

The experience highlighted another dimension of the Foley experience, with opportunities to engage meaningfully with and contribute to the communities we serve.

Moving From Summer Experience to Full-Time Practice

In a candid associate panel, Foley attorneys shared their experiences moving from the summer program into full-time roles, offering practical guidance on managing assignments, navigating competing priorities, and incorporating feedback early in their careers.

Together, these conversations reinforced a clear message: success at Foley starts early, with initiative, strong communication, and a willingness to engage fully with both the work and your colleagues.

As the retreat came to a close, one theme stood out: the summer experience at Foley is intentionally designed to reflect what life at the firm is really like — collaborative, engaging, and grounded in meaningful client work. We’re excited to see the impact this class will make throughout the summer and as they continue their careers.

The manufacturing sector is at the forefront of technological transformation. From artificial intelligence (AI), internet of things (IoT), and robotics, digital tools are embedded into nearly every stage of production. These technologies deliver significant efficiencies but also increase exposure to cyber threats, particularly within complex, globally distributed supply chains.

Manufacturers are prime targets because they rely heavily on digital connectivity and a broad ecosystem of suppliers, contractors, and technology providers. A cyber incident at any point in this chain can compromise sensitive data, disrupt operations, create financial and legal liabilities, and damage reputations.ĚýManufacturing remains one of the most targeted sectorsĚýfor cyberattacks, and in an industry where supply chain performance is critical for competitive advantage, robust cybersecurity risk mitigation is essential.

By integrating cybersecurity best practices into core operations, organizations can transform risk management into a competitive differentiator and support secure, sustainable growth. The following five strategies offer actionable steps that organizations can take to manage, mitigate, and reduce cyber threat risks across manufacturing supply chains.

Key strategies for managing and mitigating cyber threat risks in supply chains

1.     Leverage advanced threat intelligence

Manufacturing supply chains can involve hundreds of vendors, from raw materials providers to logistics partners. This interconnectedness creates multiple entry points for attacks. The utilization of threat intelligence is a critical step in helping to secure supply chains against sophisticated cyber threats.

Threat intelligence enables organizations to understand, anticipate, and respond to existing and emerging risks. For example, a manufacturer relying on multiple suppliers might detect an uptick in phishing attempts targeting a smaller vendor. With timely threat intelligence, the manufacturer can alert the vendor, tighten controls, and block malicious domains, cutting off an attack route before it affects production.

Beyond operational benefits, threat intelligence supports legal and regulatory defensibility. An organization that can demonstrate it  is better positioned to show regulators, insurers, and courts that it implemented “reasonable security” measures to defend against cyberattacks.

2.     Implement, maintain, and regularly test an Incident Response Plan (IRP)

Even with strong protections, cyber incidents are inevitable. A robust IRP helps ensure organizations react quickly and effectively when attacks occur. A comprehensive IRP should outline:

• Processes for threat assessment, detection, and analysis
• Steps for containment, eradication, and recovery
• Internal and external communication strategies
• Regulatory and contractual notification obligations
• A “lessons learned” process to drive continuous improvement

Critically, the IRP must address not only information technology (IT) systems but also operational technology (OT). OT environments — such as industrial control systems and production equipment — are central to safety, reliability, and efficiency. Their unique vulnerabilities and operational constraints require tailored response protocols.

With that said, an IRP cannot be a static document. It must be regularly maintained, tested, and updated to reflect evolving threats, new technologies, and organizational changes. Tabletop exercises are an effective way to test readiness. These discussion-based simulations walk incident response teams and key stakeholders through realistic scenarios—such as ransomware impacting a critical supplier or a phishing campaign compromising production scheduling systems.

Such exercises should be conducted at least annually and tailored to the organization’s specific risks, including supply chain dependencies. They help clarify roles and responsibilities, reveal process gaps, refine communication strategies, and build confidence. When a real incident occurs, organizations that have practiced their response are better positioned to minimize downtime, protect critical assets, and meet regulatory and contractual obligations.

3.     Integrate security-by-design into the digital transformation process

Digital transformation initiatives — such as deploying robotics, IoT sensors, augmented reality tools, and cloud platforms — can significantly enhance productivity and flexibility. However, if security is treated as an afterthought, these technologies can introduce exploitable vulnerabilities.

Security-by-design requires embedding security considerations into the earliest stages of system and product development, as well as into process improvements and new technology acquisitions. Rather than bolting-on controls after deployment, organizations should integrate security into architecture, configuration, and operational practices from the outset.

For instance, a manufacturer adopting IoT technologies to monitor equipment performance should implement safeguards such as encrypted data transmission, strong authentication, secure firmware updates, and network segmentation as part of the initial design. This approach reduces the risk that attackers will exploit IoT devices as entry points into production networks or broader enterprise systems.

Industry frameworks can guide security-by-design efforts. By using such frameworks — such as ) — manufacturers can identify and remediate defects earlier in the lifecycle, when they are less costly and disruptive to fix, and improve the overall resilience of their supply chains.

4.     Foster a collaborative cyber-resilient culture

Technology alone cannot deliver cyber resilience. Effective risk management requires collaboration across the organization, including the C-suite, IT, OT, legal, procurement, and operations teams. When departments work in silos, security measures may not reflect operational realities, and critical risks can be missed.

A collaborative approach brings together diverse expertise to:

• Conduct more comprehensive risk assessments
• Align security controls with operational and safety requirements
• Accelerate detection, escalation, and response to incidents
• Ensure security investments are prioritized based on business impact

Leadership plays a central role in establishing this culture. Executives should visibly support cybersecurity initiatives, allocate sufficient resources, and define clear expectations for shared responsibility. Training, awareness campaigns, and regular communication about risks and incidents can further reinforce the message that cybersecurity is a core element of operational excellence, not just an IT issue.

5.     Develop a comprehensive vendor oversight and management program

Supply chain security depends heavily on the cybersecurity posture of third-party vendors, including suppliers, contractors, and service providers. A single weak link can create significant risk. Accordingly, organizations should implement a structured vendor oversight and management program that addresses the full vendor lifecycle, from due diligence to ongoing monitoring. Key components include:

• Vendor due diligence: Prior to onboarding a new supplier, organizations should assess the vendor’s privacy and security practices. Evaluations should also consider the vendor’s compliance with applicable laws, regulations, and industry standards. Many organizations require vendors to complete detailed security questionnaires and provide supporting documentation (e.g., certifications, audit reports, or policy summaries) before signing an agreement. This process provides insight into strengths, weaknesses, and potential gaps that could affect the manufacturer’s risk profile.

• Robust vendor agreements: Contracts with vendors should include clear cybersecurity and data protection requirements, including allocation of liability and responsibilities, minimum security measures, and incident notification timelines and related procedures. These agreements should also mandate regular security training for vendor personnel and require vendors to “flow down” equivalent security obligations to subcontractors. Given the rapidly changing regulatory landscape, vendor contracts should be periodically reviewed and updated to reflect new legal, regulatory, and industry standards.
• Ongoing audits and assessments: Vendor oversight does not end once the contract has been executed. Organizations should regularly assess and, where appropriate, audit vendors to verify their cybersecurity controls and compliance with contractual obligations. This may include reviewing updated security documentation, evaluating audit results, or conducting on-site assessments for high-risk vendors.

Conclusion

As manufacturers deepen their reliance on interconnected digital ecosystems, supply chain cybersecurity must be treated as a core operational and strategic priority, not an afterthought. By leveraging these risk management strategies, organizations can significantly reduce their exposure to cyber risks. Taken together, these measures help protect critical operations, safeguard sensitive data, support legal and regulatory compliance, and position manufacturers to pursue innovation and growth with greater confidence and resilience.

This article originally appeared on Supply & Demand Chain Executive in

Key Takeaway

Notices from government funding agencies about noncompliance with iEdison reporting obligations should be taken seriously — failure to comply can put patent ownership at risk. However, a good-faith effort to remediate reporting deficiencies is likely to resolve the situation.

Introduction

Government-funded inventions trigger reporting requirements by which government contractors must keep funding agencies up to date on inventions and patent filings, typically via an online reporting platform called iEdison. Noncompliance with those reporting obligations can lead to worrisome notices from the government.

Although commentators widely observe that the U.S. government has never exercised its “march-in rights” under the Bayh-Dole Act, noncompliance with reporting requirements potentially opens a different door to loss of title to inventions — one which has, at least in one public incident, resulted in a contractor assigning title in a patent to the U.S. government.[1] Any notices or letters on this topic should therefore be taken seriously.

We received a notice indicating we failed to elect title or properly submit information on government-funded inventions to iEdison. What should we do?

A good-faith effort to remediate the reporting deficiencies is very likely to appease the demands of funding agencies.

These letters can be threatening on their face; for example, stating that the agency requests that a company convey title to the government. However, such a letter is much more likely to be tied to agency staff tasked with clearing notifications in iEdison than to a political or other higher-level decision to take a company’s patents.

Steps to remediate iEdison reporting omissions include:

• Access iEdison and review the invention records, patent records, and notifications in the system
• Cross-check that data with patent filings and any grant-related documentation to confirm what information may have been omitted from iEdison
• Enter any missing information and documents into iEdison
• If a letter was received from an agency, respond to agency staff confirming the steps taken to resolve the issues raised in their letter

How do we access our iEdison account?

If an organization is not aware of having an iEdison account, the government may have created one for the organization without giving access to any individuals. For example, when the Department of Energy began using the iEdison platform, it imported its existing invention data into iEdison and created accounts for corresponding companies without — in the instances we are aware of — giving access to those accounts to anyone at the companies.

Access can be gained by contacting the . The Help Desk asks for proof of access to nonpublic data reflected in the company’s iEdison account, such as invention titles, docket numbers, inventor names, and the like. The trick, of course, is that you are trying to get access to see that same data; however, patent counsel should be able to aggregate sufficient data to pass the test and gain access.

What common fixes are needed in iEdison reporting remediation efforts?

iEdison populates a variety of notices based on what information is missing from the records. A few common ones are:

(1) Failure to Elect Title. iEdison invention records include a drop-down menu to indicate whether the contractor elects to retain title. A notification will populate if no selection is made. Even if the regulatory deadline to elect title has long passed (as in the scenario of a remediation effort), the system will allow the user to change the election to “Retain Title.”

(2) Patent Data. If an invention was reported into iEdison but patent data was not entered, a notification is generated indicating that a patent application must be filed. Resolving this will typically require entering the relevant patent numbers and related bibliographic data. All patent applications in the relevant families should be reported into iEdison.

(3) Government Support Clauses. iEdison checks whether reported patents include government support clauses (i.e., statements in the patents themselves indicating that the invention was made with government funding such that the government retains certain rights in the invention). In some instances, this may simply require uploading a copy of the patent showing the statement was already included. However, in handling these types of projects we have found situations where the statements are missing from patents, in which case they should be added by filing certificates of correction with the patent office (see discussion below).

(4) Confirmatory Licenses. The government automatically has license rights in patents for government-funded inventions due to the terms of the underlying grant agreements. iEdison requires that a license confirming the government’s license rights be signed and uploaded for each patent family. iEdison will auto-generate the form license, so this can be resolved by downloading the agreements, signing them, and uploading the signed versions.

(5) Utilization Reports. Utilization reports relate to annually providing information to the funding agency about commercialization of government-funded inventions. Information required may differ by funding agency.

What should we do if our patents were reported in iEdison but do not include government funding statements?

U.S. patents or patent applications for government-funded inventions are required by 35 U.S.C. § 202(c)(6) to include a statement that the government has rights in the invention (see also and 37 C.F.R. § 1.77(b)(3)).

By cross-checking data in an iEdison account against patent publications, it may be discovered that certain patents were reported to the government as being directed to government-funded inventions but lacking the required government funding statement.

The statement can be added to granted patents by certificate of correction (and via amendment in pending applications). found thousands of such corrections in USPTO data.

Because this is a statutory requirement for the patents themselves, we recommend prioritizing this aspect of any remediation effort.

How complex is this task?

Interacting with iEdison itself is largely a data-entry task. However, collecting and understanding the notices, relevant patent data, and other context can be complicated and requires experience with patents and information on a company’s patent portfolio. The scale of any remediation project will of course vary with the size of the government-funded patent portfolio and the extent of the reporting gaps.

Other considerations?

In the scenarios contemplated above, reporting deadlines set in the Bayh-Dole regulations will have long passed. It is impossible to go back and achieve perfect compliance after the fact. The goal here is to show a good faith effort toward compliance so that agency staff turns its attention elsewhere. Continued compliance will also be needed following a remediation effort.

Additionally, beyond the nuts and bolts of proper reporting, complex strategic considerations should be considered when building an IP portfolio for a business with government funding — for example, considering how government funding can be deployed without creating a scenario where the government’s license rights become a material drag on the value of the company’s intellectual property. Assessing and understanding the practical impact of government funding on a company’s intellectual property portfolio, for example, in the context of due diligence. More on that next time.

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[1] Campbell Plastics Engineering & Mfg., Inc. v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004)

On June 2, 2026, the White House issued a new Executive Order titled “Promoting Advanced Artificial Intelligence Innovation and Security.” The order arrives at a moment of significant public attention to the capabilities of next-generation AI systems and the cybersecurity risks they may present. Below, we summarize what the EO does — and, importantly, what it does not do — and offer practical guidance for companies navigating this evolving landscape.

Why Now?

The EO responds to concerns surrounding two recently announced next-generation frontier AI models — Anthropic’s Mythos and OpenAI’s 5.5 Cyber — which are currently in limited testing and have not been released to the public. Researchers have noted that these models may represent a tenfold increase in capability and speed over current systems, raising the prospect that bad actors could use them to identify and exploit software vulnerabilities or launch cyberattacks at unprecedented scale.

The White House and allied governments have expressed concern about the potential impact on critical infrastructure, government systems, and the private sector. They have also expressed frustration that they were not consulted before these models entered development or given a meaningful role in shaping their safety guardrails. This EO is the Administration’s first formal response to those concerns.

What Does the EO Do?

At the outset, it is critical to understand what the EO does not do. It does not create new federal law. It does not establish a licensing regime, a preapproval process, a permitting requirement, or any other form of regulation over the development, publication, release, or distribution of AI models. The EO itself expressly states this.

What the EO does do is take three principal actions:

• Federal Agency Directives. It directs federal agencies — including DHS, DOD, and Treasury — to prioritize the cyber defense of National Security Systems and federal information systems, including those of government contractors. Agencies are instructed to issue binding operational directives and guidance to facilitate access to AI-enabled cybersecurity tools for federal, state, and local authorities, as well as critical infrastructure operators such as hospitals, banks, and utilities.
• Voluntary Industry Framework. It establishes a voluntary framework with frontier AI labs to create a cybersecurity vulnerability clearinghouse, an information-sharing regime, and a mechanism for the government to receive advance copies of new “covered frontier models” for up to 30 days before public release. It also calls for a classified benchmarking process to assess models for advanced cyber capabilities.
• Enforcement and Funding. It calls for increased funding for cybersecurity research and directs the Attorney General to prioritize criminal prosecution of those who use AI to commit crimes.

The Voluntary Framework: Key Details

The centerpiece of the EO is the proposed cybersecurity clearinghouse, which would analyze threats, coordinate with industry and critical infrastructure operators, and work to identify and remediate software vulnerabilities in real time. The concern motivating this initiative is straightforward: once models like Mythos and 5.5 Cyber become publicly available, bad actors may be able to identify and exploit vulnerabilities within hours rather than weeks.

The 30-day pre-release government access provision is likely to draw scrutiny. Labs like OpenAI and Anthropic have historically resisted providing pre-release access to the government, citing intellectual property concerns and the risk of leaks. How this voluntary framework is received—and whether it remains truly voluntary — will be an important development to watch.

What This Means for Our Clients

We want to be direct: this EO does not impose new legal obligations on private companies. It is not a regulation, and it does not require any company to obtain a license, submit to preclearance, or change its operations. Companies developing, deploying, or using AI systems are not subject to any new mandatory compliance framework as a result of this order.

That said, the signal the EO sends is clear. The entire federal government is now squarely focused on the security risks that advanced frontier models present. Companies — whether they are developing AI, integrating it into their products, or simply operating systems that may be targeted by AI-enabled threats — should take this signal seriously.

In practical terms, we recommend that clients consider the following steps:

• Reassess cybersecurity budgets and posture. If the threat landscape is about to shift as dramatically as researchers suggest, security spending and staffing should be reviewed now rather than after an incident.
• Explore AI-driven defensive tools. The same AI capabilities that create new attack vectors can also power more effective defenses. Companies should evaluate whether their existing security stack is adequate for the emerging threat environment.
• Shift toward real-time vulnerability management. Weekly or monthly patching cycles may no longer be sufficient if adversaries can identify and exploit vulnerabilities within hours. Organizations should move toward continuous monitoring and rapid remediation.
• Monitor the voluntary framework’s development. If the clearinghouse and information-sharing mechanisms become operational, participating may offer early access to threat intelligence. Conversely, if the “voluntary” framework evolves toward mandatory requirements — through procurement conditions, regulatory guidance, or legislation — companies will want to be positioned to respond.

Looking Ahead

Executive Orders are not legislation, and they can be modified or revoked by subsequent administrations. However, they do shape the priorities and conduct of federal agencies in meaningful ways — particularly with respect to procurement, enforcement, and interagency coordination. We expect this EO to accelerate existing trends toward heightened cybersecurity expectations for government contractors, critical infrastructure operators, and companies in regulated industries.

We also anticipate that Congress will use this EO as a springboard for legislative proposals. Whether those proposals take the form of mandatory disclosure requirements, funding authorizations, or more prescriptive regulatory frameworks remains to be seen.

We will continue to monitor developments and will publish additional analysis as the voluntary framework takes shape and agency directives are issued. In the meantime, please do not hesitate to reach out if you have questions about how this EO may affect your organization.

* * *

This alert is provided for informational purposes only and does not constitute legal advice. If you have questions about how these developments may affect your business, please contact your relationship partner or any member of our Technology Transactions, Data Privacy, or Government Contracts practice groups.

In honor of Pride Month, ·¬ÇŃÉçÇř; Lardner welcomed back for the sixth year in a row to help us continue to advance in our journey of allyship. This year’s virtual workshop for all firm members, titled “So What’s Next? Developing Advanced Ally Skills,” was held on June 9 and led by PFLAG Vice President of Learning & Inclusion Jamie Henkel (she/her).

Henkel set the tone by reminding attendees to treat the workshop as a safe learning space, assume we each can learn from anyone, and navigate disagreements with kindness. PFLAG Senior Manager of Learning & Inclusion Mackenzie Harte (they/them) co-presented the workshop, which included an interactive Q&A that prompted attendees to reflect on behaviors they associate with being an ally.

The workshop focused on how allies can move beyond supportive intentions and take meaningful action to create more inclusive spaces for lesbian, gay, bisexual, transgender, and queer (LGBTQ+) equality.

Henkel began by reviewing foundational terminology, including sexual orientation, gender identity, gender expression, and pronouns. She also explained the spectrum of allyship that people who want to learn more can move through to equip themselves to intervene, correct misinformation, and support the LGBTQ+ community.

“No matter where you are on this journey, there are things you can do to take action and show up for those in the LGBTQ+ community,” she said.

The central focus of the workshop was to provide strategies to help attendees close the gap between feeling like an ally and acting like an ally. “Many people want to be supportive but may experience a gap between intention and action due to lack of knowledge, tools, skills, or courage,” Harte said. They offered practical ways to model allyship in the workplace and beyond, including:

• Signal your allyship. Using appropriate terminology, inclusive pronouns, and gender-neutral language in your everyday interactions is a great place to start. Knowing these things yourself also enables you to correct unkind language or misinformation that comes up in conversation.

• Model conscious inclusion every day. How you respond (and when you remain silent) can send a powerful message to those around you. Avoid conflict by giving others grace, while still standing up for members of the LGBTQ+ community.
• Be visibly as well as vocally supportive. Visual cues like pins, accessories, and/or apparel can be helpful in creating conversation. However, remember to prepare to be a resource by being ready for conversations that are likely to occur as a result of your visible allyship, such as by having your own ally story to share.
• Get involved. Join groups and programs designed to create a sense of belonging. Take time to educate yourself on the issues facing the communities with which you are allied and support the organizations doing good work on their behalf.

The session closed with an important reminder: it is a privilege to be able to avoid conversations about gender identity, sexual orientation, and LGBTQ+ issues. Active allyship means recognizing that privilege and still choosing to advocate for inclusion, safety, dignity, and respect.

This timely program was presented by Foley’s LGBTQIA+ & Allies Affinity Group to help us navigate this more difficult environment and honor the views of those we may disagree with. Follow the link to learn more about Diversity, Equity, & Inclusion at the firm.

A newly published California decision, AVL Test Systems, Inc. v. Hensel Phelps Construction Co. (Cal. Ct. App. Apr. 28, 2026), is worth close attention for contractors, specialty trades, equipment suppliers, and anyone operating in the gray area between “supplying equipment” and “performing construction.” 

In AVL Test Systems, the Fourth District Court of Appeal addressed a recurring and high-stakes issue under California’s Contractors State License Law: when does the installation of equipment require a contractor’s license, and when does it fall within the exemption for finished products that do not become a “fixed part of the structure”?  

Why This Case Matters Ěý

California Business and Professions Code Section 7031 remains one of the most unforgiving statutes in the construction industry. If a license is required and the claimant was not properly licensed during performance, the result can be complete forfeiture of payment claims. 

AVL supplied and installed vehicle emissions testing equipment on a public project. In a payment dispute, the general contractor argued AVL’s claims were barred because AVL allegedly performed licensed contractor work before obtaining the proper license. AVL argued its work was exempt under Section 7045, which excludes the sale or installation of finished products that do not become a fixed part of the structure. 

The Court’s HoldingĚý

The Court of Appeal reversed summary judgment for the general contractor. 

Importantly, the court did not decide that AVL was exempt from licensing. It held that the issue could not be resolved as a matter of law because the record contained conflicting evidence — including competing expert opinions — on whether AVL’s equipment became a “fixed part of the structure.” The court reaffirmed that this is generally a fact question.  

Key Takeaway Ěý

This decision is a reminder that California licensing disputes are often not as simple as asking whether equipment was bolted down, tied into utilities, or supported by structural work. The court identified several practical considerations that may bear on whether installed products become a fixed part of the structure, including:  

• How the items are attached. 
• How difficult they are to remove.  
• Whether removal damages the product.  
• Whether removal damages the building.  
• Whether the items are designed for replacement.  
• Whether they are reusable.
• Whether they are pre-manufactured or assembled off-site.  
• Whether the installed connections are incidental or instead part of the building itself.  

Why This Is Especially Relevant Now Ěý

Modern projects increasingly involve prefabricated systems, specialty equipment, controls packages, lab systems, industrial/process equipment, EV infrastructure, and other integrated technologies. Those scopes often do not fit neatly into traditional licensing categories.  

This case is therefore highly relevant to:  

• Equipment suppliers that also install.  
• Specialty subcontractors with hybrid scopes.  
• Design-build teams. 
• Public works participants. 
• General contractors evaluating downstream licensing risk.  

Practical Implications Ěý

For contractors and suppliers â€“ If your scope is described as “furnish and install,” do not assume you are outside the licensing statutes simply because the core deliverable is equipment. The installation details matter, and they may determine whether payment rights are preserved or lost.  

For owners and general contractors â€“ Licensing defenses remain powerful, but AVL shows they may require a developed factual record. That makes early diligence on subcontractor licensing status and scope characterization even more important.  

For construction lawyers â€“ This is a useful published decision on Section 7045. It confirms that the “fixed part of the structure” analysis is fact-intensive and that expert testimony may be central in close cases.  

Bottom Line Ěý

AVL  does not relax California’s strict licensing rules. It does, however, reinforce that where a party invokes the Section 7045 exemption, courts may need to closely examine the nature of the installed product and the method of installation before deciding whether licensure was required.  

For companies operating at the intersection of equipment supply and construction, that question can be outcome-determinative.