Title of Regulation: 1VAC45-10. Regulations Governing Disclosure of CID (Civil Investigative Demand) (amending 1VAC45-10-10, 1VAC45-10-30, 1VAC45-10-70, 1VAC45-10-80).

Statutory Authority: § 59.1-9.10 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: May 26, 2021.

Effective Date: June 14, 2021.

Agency Contact: R. Thomas Payne, II, Senior Assistant Attorney General, Section Chief, Department of Law, Office of the Attorney General, 202 North 9th Street, Richmond, VA 23219, telephone (804) 225-2019, or email oagregcoordinator@oag.state.va.us.

Basis: The Office of the Attorney General (OAG) is the promulgating agency. The Attorney General is the chief executive officer of the Virginia Department of Law and is authorized to perform such duties as may be provided by § 2.2-500 of the Code of Virginia. Section 59.1-9.10 of the Code of Virginia authorizes the Attorney General to promulgate rules and regulations to implement and carry out the provisions of the Virginia Antitrust Act (§ 59.1-9.1 et seq. of the Code of Virginia), giving the Attorney General authority to issue a civil investigative demand (CID).

Purpose: The amendments serve the public welfare by promoting enforcement of the Bad Faith Assertions of Patent Infringement law and encouraging coordination between consumer protection authorities operating in different states.

Rationale for Using Fast-Track Rulemaking Process: The proposed regulatory changes were prompted by a periodic review conducted by the OAG. 1VAC45-10 (the CID regulations) were last amended in November 2015 pursuant to another periodic review. The proposed amendments are expected to be noncontroversial because they do not directly affect the public. The direct effect of the CID Regulations is limited to law-enforcement authorities that represent the Commonwealth (and its political subdivisions) in enforcing the Virginia Antitrust Act and other consumer protection statutes that incorporate its CID provisions. In addition, the CID Regulations merely establish a formal, transparent process for the OAG to evaluate information sharing requests it receives from other Virginia law-enforcement authorities that enforce the same laws. One proposed amendment extends coverage to allow the OAG to share CID material it receives with other Virginia law-enforcement authorities that enforce the Bad Faith Assertions of Patent Infringement law. The other amendment makes clear that the CID Regulations do not apply to information sharing requests the OAG may receive from law-enforcement authorities that represent states other than the Commonwealth, similar to the manner in which the CID Regulations do not apply to requests the OAG may receive from federal law-enforcement authorities.

Substance: The first amendment makes clear that the OAG can share CID material with other Virginia law-enforcement authorities that enforce the Bad Faith Assertions of Patent Infringement law. The law gives this authority to local Commonwealth Attorneys. The second amendment makes clear that the CID Regulations do not apply to the OAG sharing CID material with Attorneys General and agencies in other states that enforce similar consumer protection laws. The CID Regulations already make clear that their provisions do not apply to the OAG sharing of CID material with federal law-enforcement authorities. The CID provisions found within the Virginia Antitrust Act, which are incorporated mutatis mutandis into each of the other consumer protection statutes listed, are clear that the OAG can share investigative material with other federal and state law-enforcement authorities that have restrictions governing confidentiality similar to those contained in § 59.1-9.10 of the Code of Virginia.

Issues: The first proposed amendment will benefit the OAG and local Commonwealth Attorneys by allowing the sharing of CID material if it relates to possible violations of the Bad Faith Assertions of Patent Infringement law. The second proposed amendment will benefit the OAG and the Attorneys General and associated agencies in other states that enforce similar consumer protection laws by making clear that nothing in the CID Regulations limits Virginia OAG ability to share CID material with those agencies. The OAG is still limited, however, by the CID statute itself that makes clear that the OAG can only share CID material with federal and state law-enforcement authorities that have similar restrictions governing confidentiality. Neither proposed amendment results in any disadvantages to the public or the agency.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Following a periodic review,¹ the Department of Law (Department) proposes to update this regulation regarding civil investigative demands (CID) to clarify that 1) CIDs issued pursuant to the Bad Faith Assertions of Patent Infringement statutes are subject to this regulation, and 2) this regulation does not apply to law-enforcement authorities in other states.

Background. The Virginia Antitrust Act, the Solicitation of Contributions law, Virginia Consumer Protection Act, and the Virginia Telephone Privacy Protection Act all authorize the Attorney General to issue CIDs. This regulation contains rules on sharing of information obtained through such demands with local law enforcement authorities (e.g., local Commonwealth Attorneys).

Estimated Benefits and Costs. Following a periodic review of this regulation, the Department proposes that the authority to share information obtained through CIDs issued pursuant to the "Bad Faith Assertions of Patent Infringement" statutes, which were enacted by Chapter 810 and 819 of the 2014 Acts of Assembly,² be incorporated in the regulatory text.

The Department states that since 2015 it has handled between 15 and 20 cases involving bad faith assertions of patent infringement, most of which did not involve litigation. Furthermore, the Department asserts that while these CIDs could have been issued under the statute, no CIDs have been issued under the bad faith assertions of patent infringement law during the same time period nor has any of the local Commonwealth's Attorneys with whom it shares enforcement authority requested sharing of such CID material. The proposed change mainly clarifies the existing authority of the Department to issue CIDs and share the information regarding bad faith assertions of patent infringement. Thus, the proposed amendment is not expected to create any economic effects if this change becomes final other than improving the clarity of the text.

Additionally, consistent with the Code of Virginia § 59.1-9.10(M), the Department proposes to clarify that sharing of CID information with law-enforcement authorities representing states other than the Commonwealth is not limited by this regulation. Current language is clear that sharing of CID information with federal authorities is not inhibited by this regulation. The proposed change would clarify that this regulation also does not inhibit the Department's authority to share information with law enforcement authorities from other states. This change is also not expected to create any economic effects upon becoming final other than improving the clarity of the regulatory text.

Businesses and Other Entities Affected. The proposed regulation applies to the Department and the 120 local Commonwealth's Attorneys who have authority to enforce the Bad Faith Assertions of Patent Infringement statutes. As noted, the proposals mainly clarify the regulatory text. Thus, no adverse economic impact³ on any entity is indicated and no entity appears to be disproportionately affected.

Small Businesses⁴ Affected. The proposed amendments do not adversely affect small businesses.

Localities⁵ Affected.⁶ The proposed amendments neither disproportionately affect particular localities nor introduce costs for local governments.

Projected Impact on Employment. The proposed amendments do not affect employment.

Effects on the Use and Value of Private Property. The proposed amendments neither effect the use and value of private property nor affect real estate development costs.

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¹https://townhall.virginia.gov/L/ViewPReview.cfm?PRid=1998

²https://lis.virginia.gov/cgi-bin/legp604.exe?141 ful CHAP0810&141 ful CHAP0810

https://lis.virginia.gov/cgi-bin/legp604.exe?141 ful CHAP0819&141 ful CHAP0819

³Adverse impact is indicated if there is any increase in net cost or reduction in net revenue for any entity, even if the benefits exceed the costs for all entities combined.

⁴Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

^5"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

⁶§ 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to Economic Impact Analysis: The agency concurs with the economic impact analysis performed by the Department of Planning and Budget.

Summary:

Pursuant to Chapters 810 and 819 of the 2014 Acts of Assembly, the amendments provide a uniform procedure for select Virginia law-enforcement authorities to request copies of civil investigative demand (CID) material obtained through CIDs issued pursuant to the Virginia Antitrust Act, Solicitation of Contributions law, Virginia Consumer Protection Act, and Virginia Telephone Privacy Protection Act. The amendments (i) extend coverage to CIDs issued pursuant to the Bad Faith Assertions of Patent Infringement law, which was enacted in 2014 but is not currently included in the list of laws governed by the CID regulations, and (ii) clarify that the chapter does not apply to law-enforcement authorities representing states other than the Commonwealth.

1VAC45-10-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

"Bad Faith Assertions of Patent Infringement law" means Chapter 18.1 (§ 59.1-215.1 et seq.) of Title 59.1 of the Code of Virginia.

"Law-enforcement authority" means any public official, and his designees, (i) representing the Commonwealth, which includes its political subdivisions and its public agencies, and (ii) empowered to bring civil actions to enforce the Virginia Antitrust Act, Virginia Consumer Protection Act, Virginia Telephone Privacy Protection Act, the Bad Faith Assertions of Patent Infringement law, or the Solicitation of Contributions law.

"Material" means any information taken, furnished, received, examined, or copied pursuant to civil investigative demands issued by the Attorney General pursuant to the Virginia Antitrust Act, the Virginia Consumer Protection Act, the Virginia Telephone Privacy Protection Act, the Bad Faith Assertions of Patent Infringement law, or the Solicitation of Contributions law, including, but not limited to, names, testimony, documents, or answers to interrogatories.

"Person" means any natural person, corporation, trust, partnership, association, company, or any other legal entity.

"Solicitation of Contributions law" means Chapter 5 (§ 57-48 et seq.) of Title 57 of the Code of Virginia.

"Virginia Antitrust Act" means Chapter 1.1 (§ 59.1-9.1 et seq.) of Title 59.1 of the Code of Virginia.

"Virginia Consumer Protection Act" means Chapter 17 (§ 59.1-196 et seq.) of Title 59.1 of the Code of Virginia.

"Virginia Telephone Privacy Protection Act" means Chapter 44 (§ 59.1-510 et seq.) of Title 59 of the Code of Virginia.

1VAC45-10-30. Applicability.

This chapter shall apply to all law-enforcement authorities that request material from the Attorney General. This chapter shall not apply to federal law-enforcement authorities or to law-enforcement authorities that represent states other than the Commonwealth.

1VAC45-10-70. Restrictions on use.

The law-enforcement authority and its custodian in receipt of material shall strictly maintain the confidentiality of the material. The law-enforcement authority shall use material provided pursuant to this chapter to conduct an investigation into violations of the Virginia Antitrust Act, the Virginia Consumer Protection Act, the Virginia Telephone Privacy Protection Act and, the Bad Faith Assertions of Patent Infringement law, or the Solicitation of Contributions law or to conduct any litigation related to such violations. Nothing in this section shall preclude the use of the materials provided by this chapter before a court of law except as may otherwise be precluded by law.

1VAC45-10-80. Restrictions on disclosure.

The law-enforcement authority and its custodian in receipt of materials shall not release material provided pursuant to this chapter, either directly or indirectly, to any person not employed by or assigned to the law-enforcement authority for purposes of enforcement of the Virginia Antitrust Act, the Virginia Consumer Protection Act, the Virginia Telephone Privacy Act, the Bad Faith Assertions of Patent Infringement law, or the Solicitation of Contributions law, nor to any other law-enforcement authority.