By: Madison Bruner

The neurotechnology (neurotech) industry is experiencing remarkable expansion as venture capital (VC) interest floods the cutting-edge sector. Brain computer interfaces (BCIs) and nerve stimulator technologies frequently transition from research labs to commercial ventures. Investors are left to navigate a vibrant ecosystem of innovation. Investors, entrepreneurs, and lawyers are required to navigate a complex financing landscape, comprising unique development timelines, intellectual property complexities, and a plethora of FDA regulations. While this overview is not exhaustive, the principal issues facing neurotechnology financing will be discussed.

Money, Money, Money: Tracking Investment Momentum

Venture capital investment in neurotech has exploded recently, with total industry funding reaching $2.3 billion in 2024. This is greater than a three-fold increase from 2022 levels, despite broader market volatility. Recently, startups specializing in BCIs are dominating the field, although neuromodulation, neurostimulation, and neuro-AI diagnostics have attracted substantial venture capital interest as well. 

Among the highest-profile startups are:

1. Neuralink is a company founded by Elon Musk, developing implantable BCIs to restore autonomy to individuals with paralysis. Neuralink has received $680 million over six funding rounds and is reportedly valued at $8 billion. 
2. Synchron is a company developing a solution that avoids the need for open brain surgery by using a minimally invasive procedure. Syncrhon raised $145 million in venture capital funding and is reportedly valued at $385 million.
3. Neurable is a company developing non-invasive BCI headphones and pairing with Neurable AI to enhance focus and reduce burnout. Neurable has raised over $30 million in funding and is valued between $50 million and $100 million.
4. Paradromics is a company developing a high-data-rate, high-reliability BCI. Paradromics has raised $108 million in funding and is valued between $100M and $500M.
5. Blackrock Neurotech is a company developing BCIs to provide new hope for people with paralysis & other neurological disorders. Blackrock Neurotech has raised $49.7 million in funding and is currently valued at $350 million. Notably, Tether, a cryptocurrency company, invested $200 million in Blackrock Neurotech in 2024.

NeuroTech Futures’ 2024 Funding Snapshot. https://rb.gy/fic5so

Neurotech’s Real Assets: Intellectual Property and the People Behind It

Multi-Dimensional IP Portfolios

Neurotech startups present unique due diligence challenges as they have multi-dimensional intellectual property (IP) portfolios. Neurotech startups hold an intricate collage of intellectual property spanning disciplines such as neuroscience, engineering, materials science, and AI. As such, neurotech startups will likely touch every type of IP:

1. Patents: Protects hardware innovations like implantable electrodes, pharmaceuticals, and wearable brain activity monitors. Patents also apply to biological and methodological breakthroughs, including brain mapping techniques and neural stimulation methods.
2. Trade Secrets: Protects proprietary software algorithms, neural data sets, process know-hows, etc. Trade secret protection is also common for internal processes and other competitive techniques that are difficult to protect under other IP regimes.
3. Copyright: Applies to research papers, brain databases, and software code used in device interfaces.
4. Trademarks: Used to protect brand identity, company names, product lines, and logos in a growing and increasingly competitive neurotech market.

Academic Tech Transfer Challenges

IP complexities are compounded when the startup is a spin-out of university research. Founders are typically still affiliated with their research institutions, even after starting a startup. This means investors and their counsel must navigate Bayh-Dole compliance, university licensing agreements, material transfer restrictions, and other complexities. Expert legal counsel is required to maintain and implement proper protections for these dynamic IP portfolios and ensure these protections align with a startup’s business model.

Talent Retention in a Highly Specialized Field

Neurobiologists and neurotech engineers are a valuable but rare form of human capital. Thus, they are heavily recruited by competitors. VCs may demand aggressive IP assignment, non-compete enforcement (despite tumultuous waters), and robust retention incentives.

The FDA Regulatory Maze

Neurotech companies face shifting regulatory landscapes that carry huge investment risks. The evolving approach of the Food and Drug Administration (FDA) to neurotech plays a vital role in investment planning. Firstly, neurotech startups must determine whether their product falls under the FDA’s classification system (Class I, II, or III). All three classes mandate certain regulatory requirements. Most technologies will fall under Class II, which requires FDA clearance through the 510(k) process. More invasive devices, such as implantable BCIs used by Neuralink, fall under Class III, requiring Pre-market Approval (PMA). Clinical trials are required for PMAs, and an Investigational Device Exemption (IDE) can be granted to allow the technology to be tested in a clinical trial in order to collect safety and effectiveness data.

Technology for treating serious conditions (such as paralysis, epilepsy, or severe depression) may qualify for Breakthrough Device Designation. This Designation provides a faster and more interactive pathway through the regulatory system. Other technologies that target conditions affecting fewer than 8,000 individuals annually may fall under the Humanitarian Device Exemption, which is exempt from certain provisions of the Food, Drug, and Cosmetic Act but has certain profit and use restrictions. Where neurotech is paired with AI or other forms of software, the Software as a Medical Device (SaMD) framework is applicable and will require clinical evaluation by the FDA. These overlapping regulatory pathways require that startups have strong in-house compliance teams or hire external counsel.

Once FDA approval is granted, companies have to comply with Good Manufacturing Practices (GMP), which ensure that the device is produced under conditions that assure quality, consistency, and safety.

Deal Structure Innovation: Milestones

Given the highly innovative technology of the neurotech field, deal structures need to be flexible and tailored. These structures accommodate the specific challenges that come along with technological milestones, FDA approvals, and market uncertainty. One of the most common models is milestone-based financing, which links funding to specific, clearly defined milestones such as FDA approval. However, FDA milestones may be a moving target, thereby not offering a concrete baseline. Hybrid models that blend technical, clinical, regulatory, and sales milestones offer additional flexibility.

Privacy and Ethics of Neurotech

Beyond IP and FDA obstacles, there is an emerging debate regarding the ethics of neurotech. Neurotech startups are collecting, processing, and storing extremely sensitive data that is directly sourced from brain activity. This data is more personalized and uniquely intimate as compared to other forms of biometric data, such as fingerprints or facial recognition. Neural data consists of the brain’s electrical signals, thus offering a window into a person’s thoughts, intentions, emotions, and cognitive patterns.

Most existing privacy frameworks, such as the Health Insurance Portability and Accountability Act (HIPAA) and the EU’s General Data Protection Regulation (2018) (GDPR), do not explicitly address the protection of neural data. Therefore, there is an urgent need for new laws or amendments that recognize cognitive data as a special class meriting heightened protection. Some forward-thinking jurisdictions, such as California and Colorado, are already paving the way.

For investors and entrepreneurs alike, ethical frameworks are not only a commodity but a necessary prerequisite to risk mitigation. VC firms are now evaluating startups not just on the strength of their ethical governance as well as technological feasibility or commercial potential.

Conclusion: Implications for Startups and Investors

Neurotech is one of the most promising but legally intricate frontiers in venture capital today. Investors and founders alike must navigate complex challenges spanning regulatory compliance, intellectual property protection, team building, capital allocation, and data governance. With sophisticated legal counsel, investors, and entrepreneurs can navigate the complex neurotech landscape more effectively and capitalize on this new frontier. In a world where data is the new oil, investors are eager to find the next unicorn that leverages cutting-edge technology and neural data, effectively turning our wildest science fiction dreams into reality.

#Neurotech #VentureCapital #FDARegulations

By: Joseph Valcazar

The rap industry is no stranger to a diss track. Whether it was the rap battles of Tupac v. Notorious B.I.G., Nas v. Jay-Z, N.W.A. v. Ice Cube, or Eminem v. Ja Rule, music has been and continues to be a medium for artists to express their opinion of others in the industry. Typically, this bad blood stays within the confines of lyricism; but on occasion the legal system gets involved. An ongoing legal battle between one of the largest artists and largest record labels is the latest adventure of a rap battle turning legal. 

A diss track is a song targeted at a specific individual or group (usually another artist) that includes lyrics meant to publicly attack or disrespect them. In 2024, Kendrick Lamar and Drake, two of the largest rap artists in the world, traded diss tracks, bringing in millions of views every day, and generating months of online discourse. While the musical back and forth ended in May 2024, the artists’ feud reached a new boiling point in January 2025 when Drake filed a civil lawsuit in federal court against Universal Music Group (UMG) — the record label that represents both Kendrick and Drake. The lawsuit raises interesting questions on First Amendment free speech and defamation stemming from song lyrics.

The Timeline

While the story of Kendrick and Drake’s contentious relationship can be traced back over a decade, this saga began with the release of “First Person Shooter,” a collaboration between Drake and J. Cole containing a verse that crowned Drake, J. Cole, and Kendrick the big three of rap. This sparked a response from Kendrick in a featured verse on Future’s album, where he dismissed the big three and declared “it’s just big me.” 

This began a multi-month back and forth, consisting of eight tracks, that escalated into personal callouts between the two artists. On May 4, 2024, Kendrick would release his final track of the back and forth, and the song at issue in the lawsuit, “Not Like Us.” The track contains lyrics insinuating Drake has had inappropriate relationships with minors, which lay at the center of his claim against UMG. This song would transcend the rap battle and enter the mainstream; topping the Billboard Hot 100, amassing over one billion streams, and earning Kendrick Grammys for “Record Of The Year,” “Best Rap Performance,” “Best Rap Song,” and “Best Music Video.” Eight months after the release of Not Like Us, Drake would file his lawsuit against UMG.

The Lawsuit

Drake is clear in his complaint that this is not a lawsuit against Kendrick Lamar. Rather, the lawsuit has been filed against UMG, one of the largest record labels in the world. The lawsuit filed by Drake — whose legal name is Aubrey Graham — claims that the label has defamed him by promoting the song “Not Like Us”, which, as mentioned, insinuates Drake had inappropriate relationships. It is further alleged that UMG has artificially inflated streams through botting to boost the perceived success of the song. Drake believes the combination promotion and inflated popularity has directly led to threats and harassment, all of which have led to Drake suffering reputational harm, while the record label profited from the success of Kendrick’s song. Drake filed this lawsuit one month before Kendrick Lamar would perform “Not Like Us” to a live audience of over 130 million at the Super Bowl halftime show. In response, an amended complaint to claim that Kendrick’s performance and Grammy success further damaged his reputation. 

The Defamation Claim

Does Drake’s claim hold any weight? The answer isn’t crystal clear. 

To succeed on a typical defamation claim a plaintiff must establish four elements: 

1. A false statement is made that is presented to be fact; 
2. The statement is published or communicated to a third party;
3. Defendant’s fault in releasing the statement amounts to at least negligence; and 
4. Some reputational harm occurred to the person targeted by the statements. 

Here, Drake will have to establish an additional element. In the Supreme Court’s landmark New York Times v. Sullivan opinion, the Court established a legal doctrine that requires a plaintiff to prove actual malice when they are a public figure (someone who has achieved prominence and/or influence in society’s affairs). Establishing actual malice requires a heightened “clear and convincing” evidentiary standard; a middle ground between the civil “preponderance” standard and criminal “beyond a reasonable doubt” standard. 

Drake is undeniably a public figure. To show actual malice he must prove that UMG promoted Not Like Us with “reckless disregard of whether [the statement] was false or not.” Given this heightened standard, proving a defamation claim as a public figure is substantially more difficult than for an average citizen.  

UMG filed a motion to dismiss which raised the “rhetorical hyperbole” defense. Rhetorical hyperbole refers to exaggerated statements that a reasonable person would not take literally. This is an interesting legal doctrine in the context of rap battles. After all, the objective is to one-up each other’s lyrical call-outs until one artist is declared the “winner” through public opinion. It’s not as if “Not Like Us” came out of nowhere. Drake was an active participant in this back-and-forth. His own lyrics made claims that Kendrick was unfaithful and physically abusive to his partner. 

This would not be the first time UMG has raised a successful rhetorical hyperbole defense. In 2005, record producer Armen Boladian sued UMG about a verse performed by George Clinton containing  lyrics that painted Boladian as an abuser. The lyrics referred to him as “a disgrace to the species.” The Sixth Circuit Court of Appeals held that Boladian “failed to meet their burden of showing an actual, objectively verifiable defamatory statement”. The court noted the colorful lyrics to be the “kind of puerile taunt that, for better or worse, is typical of rap music.” Do Kendrick’s lyrics fall within this typicality of rap music? This will be a central question as litigation continues.

Conclusion

Is this a case of “be careful what you wish for?” Or has Kendrick overstepped the traditional protections afforded to musical works by courts and into defamation territory? Either way the legal battle for Drake appears to be an uphill one. Concerns about the potential chilling effect that artists may face if Drake were to win have also been raised. If litigation becomes the primary response to any perceived notion of defamation, a natural consequence of this would be the stifling of artistic expression as artists attempt to avoid liability that they previously felt insulated from. Whatever the end result, what started as a rap battle for the ages will be discussed and read about by law students in their entertainment law course for decades to come.

#WJLTA #DrakevsKendrick #Defamation 

By: Olivia Bravo

On April 2, 2025, the Supreme Court issued a ruling that reaffirmed the Food and Drug Administration’s authority to regulate flavored e-cigarettes, denying a challenge brought by vape manufacturers. This decision is a significant landmark for administrative law and public health advocates. Why was this decision so controversial? And what does it tell us about how courts balance corporate interests with public well-being?

Background

The Food and Drug Administration (FDA) is the administrative agency responsible for overseeing the introduction of new food and drug products into interstate commerce. Before approving new products to be marketed to the general public, the FDA requires manufacturers to submit premarket applications with  “robust” scientific data for review, demonstrating that their products are “appropriate for the protection of public health.” The FDA has the specific authority to regulate the manufacture, distribution, and marketing of tobacco products under the 2009 Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act). In 2016, the Tobacco Control Act was amended under the Obama Administration to include e-cigarettes as products subject to agency review. 

Like many federal agencies, the FDA must act in accordance with the Administrative Procedure Act of 1946 (APA), which defines the limits of its regulatory authority and outlines the procedures it must follow when creating or enforcing rules. The APA, mandates transparency, consistency, and fairness in agency actions. That legal framework became central to the industry’s challenge. (See APA, 5 U.S.C. § 553). 

The Legal Challenge: FDA v. Wages and White Lion Investments, LLC

In the precursor Fifth Circuit case FDA v. Wages and White Lion Investments, LLC, plaintiffs White Lion and other manufacturers of e-cigarettes submitted to the FDA applications to market their flavored tobacco products – but were rejected for lacking long-term studies demonstrating health benefits and marketing plans that met regulatory standards. 

The companies pushed back hard, arguing that the FDA had applied inconsistent and opaque standards, effectively moving the goalposts without notice. They claimed that flavored vapes were unfairly singled out and that the FDA’s review process was arbitrary, violating the APA. They contended that this created an uneven playing field, treating flavored e-cigarettes more harshly than other tobacco products and leaving applicants to guess at the “robust standards” they needed to meet. The Fifth Circuit ultimately agreed, holding that the FDA acted outside the scope of its authority. The case was then appealed to the Supreme Court, which granted cert.

FDA Denial and Industry Pushback

What is the crux of the matter? Why did the FDA  deny the companies’ applications to sell their e-cigarettes? 

E-cigarettes and vapes are only two of the many electronic delivery system (ENDS) products that use an “e-liquid” nicotine derived from tobacco (as well as flavorings) as an aerosol that is inhaled. In this case, White Lion’s rejected products included flavors like Killer Kustard Blueberry, Rainbow Road, and Pineapple Express, sold in brightly colored packaging resembling candy or cartoons. The FDA argued that this targeted marketing posed a significant risk to youth. In the last decade, the United States has seen an explosive rise in adolescents’ vaping and the renormalization of smoking, especially among high schoolers. In 2024, 1.63 million middle and high school students used e-cigarettes. Recent statistics show that flavor is one of the most important factors adolescents consider when trying e-cigarettes for the first time. 

The vaping industry continues to frame flavored e-cigarettes as a public health innovation—a tool for adult users seeking an alternative to traditional cigarettes. Companies like Triton and Vapetasia claim their flavored vapes provide a public good by helping adult smokers quit cigarettes, with flavors making it more likely that adult smokers will transition away from combustible tobacco. However, the FDA found that e-cigarettes pose a “known and substantial” risk to youth, and concluded that the risks of bringing a new product to market outweighed any potential benefit. 

Supreme Court Review: Reversing the Fifth Circuit

Earlier this month, in the unanimous Supreme Court decision, Justice Alito agreed with the FDA that the flavored e-cigarettes and vapes proved a danger to the health of young people, writing “the kaleidoscope of flavor options adds to the allure of e-cigarettes and has thus contributed to the booming demand for such products among young Americans.” The Court found that the FDA’s actions did not violate the APA and were consistent with its regulatory responsibilities. 

The Supreme Court and the Fifth Circuit’s decisions differed based on their standards of procedural adherence. While the Fifth Circuit applied a stringent standard, arguing that the FDA acted arbitrarily and capriciously by shifting its standards, the Supreme Court deferred to the FDA’s expertise when no formal policy changes were in place, arguing that their decisions were not outside the scope of their authority. This divergence highlights the broader tension between judicial oversight of agency action and deference to agency expertise in complex regulatory matters, especially those that will have long-term effects on public health.

Conclusion

The Supreme Court’s decision affirms the FDA’s authority to prioritize public health and interstate commerce. In terms of implications for the vaping industry, it is clear the court has drawn the line in the sand between commercial interest and public health priorities, and set a standard for the prioritization of the youth impact over the harm to adult cigarette smokers. While this Court might have previously made different decisions concerning federal agency regulation, it is clear that the targeted health risk to youth was enough of a concern to find in favor of the FDA, whereas in another case, the Court might have gone the other direction.  

Overall, the controversy in this case was a big wake-up call for the FDA and all regulatory agencies that set guidelines for growing and advancing industries. While it might have been easier to set standards for cigarettes when the harmful effects of lung cancer were widely known, the technological and marketing advances of e-cigarettes and other alternative tobacco products have made it difficult for the FDA to keep up with both the pace of innovation and the health implications. Why leave the question of clear regulatory standards and guidelines up for interpretation? Change requirements to keep pace with the advancing world and give notice of those changes in line with transparency.  

#E-cigarettes #FDA #Regulatoryauthority #WJLTA

By: Miranda Glisson

            Recently, I’ve developed a growing interest in car racing – particularly open-wheel, sports car, and touring car disciplines. As a result, I entered the world of Forza video games, including Forza Horizon and Forza Motorsport. While I practiced my driving skills in a not-too-fancy simulator playing Forza Motorsport, I wondered about the challenges Forza and other video games must face with licensing trademarked subject matter like cars after the AM General LLC v. Activision Blizzard, Inc. decision. 

IP Licensing in Video Games

Video games represent the pinnacle of interactive intellectual property, often requiring developers and producers to secure numerous licenses for a single game. Video game licensing refers to an agreement between a video game producer and an external company granting the producer permission to use the company’s intellectual property in their game. Game producers may employ licenses to use copyrighted and trademarked works in their games.

            Video game producers and external companies negotiate and agree upon each license.  Each license can have differing stipulations depending on how an external company wants their copyrighted or trademarked logo/work used within the game, ensuring the user’s perception of the external company’s work aligns with that company’s desire in how they are perceived.

Video game developers may want to obtain permission to use a third party’s trademark in their game to bring their creative vision to life. Incorporating trademarks from other companies can enhance realism, enable parody, or support commentary. However, obtaining the permission to use a trademark in a video game varies in difficulty, and the licenses can boast specific terms and conditions regarding use, scope, duration, quality control, and fees.

AM General LLC v. Activision Blizzard, Inc.

Trademark licenses may not be required when video game developers use the trademarked subject matter artistically or expressively. When one’s trademark is used in an artistic or expressive way by another, courts have narrowly interpreted the Lanham Act (the primary federal statute governing trademark law in the United States) to avoid suppressing protected speech under the First Amendment. In AM General LLC v. Activision Blizzard, Inc., AM General brought a trademark infringement claim against Activision Blizzard for using Humvees in their game, Call of Duty, without obtaining permission. The court determined the inclusion of Humvees in the game was intended to enhance realism, deeming their use as an expressive form of creativity. As a result, Activision Blizzard was within its rights to incorporate real-world subjects for artistic purposes and thus did not infringe upon AM General’s trademark.

AM General LLC v. Activision Blizzard, Inc. had significant impacts on video game licensing by establishing that real-world objects that are depicted in video games enhance artistic realism are protected under the First Amendment. As a result, video game developers do not need to obtain a license from trademark holders if the use is to enhance artistic realism. However, it is unclear how far the holding of AM General LLC v. Activision Blizzard, Inc. reaches. A major factor in the AM General LLC v. Activision Blizzard, Inc. decision was that consumer confusion was unlikely between the plaintiff’s Humvees and the defendant’s game, as there was no evidence of significant market overlap or direct competition. Accordingly, it would be expected that if there was market or consumer overlap between one party’s work and the other’s trademark, there would not be protected use of that mark, and therefore, a license would be required.

            I, as a very novice video game player, enjoy video games’ depictions of realism as it enhances immersion. As video games incorporate brands and products into their games to enhance realism, developers are required to navigate when trademark licensing agreements are required or not. Decisions like AM General LLC v. Activision Blizzard, Inc. show that trademarks can be used if they are for artistic or expressive purposes, if there is little likelihood of consumer confusion. However, this boundary is uncertain and likely creates difficulty for video game developers as, ultimately, video games are a mix of art, collaboration, and commerce, creating difficult intellectual property challenges.

#videogames #artisticrealism #trademarks