Lead Story

Franchising is emerging as one of the most powerful models for business expansion, allowing established brands to enter new markets without carrying the entire cost and operational burden of expansion themselves. For entrepreneurs, it offers access to an established brand, business system, intellectual property, training and operational support.

But as franchising becomes increasingly international, the legal framework surrounding it is becoming equally important.

What was once largely a commercial arrangement between a brand owner and a local operator is developing into a complex legal relationship involving intellectual property, competition law, consumer protection, disclosure obligations, employment, data protection, taxation, real estate, supply chains and dispute resolution.

The result is a growing global market not only for franchises, but also for specialist legal services supporting them.

From Business Expansion to Legal Discipline

At its core, a franchise allows a franchisor to permit a franchisee to operate a business using its brand, intellectual property, know-how and established business system.

The World Intellectual Property Organisation (WIPO) describes franchising as a system in which a proven business model is replicated by a franchisee under the supervision and support of the franchisor. Intellectual property — including trademarks, trade names, copyright, designs, know-how and trade secrets — is therefore at the heart of the relationship. This makes the franchise agreement far more than a simple licence.

It determines how the brand can be used, what standards must be maintained, where the franchise can operate, how fees and royalties are calculated, who controls suppliers, what training must be provided, how marketing funds are used, what happens when the relationship breaks down and what happens to the business when the agreement expires.

As international expansion accelerates, these questions are becoming more complicated.

Regulation is Becoming More Sophisticated

One of the most significant global trends is the move towards greater transparency and protection for prospective franchisees.

The US provides one of the best-known examples. Under the Federal Trade Commission's Franchise Rule, franchisors must provide a Franchise Disclosure Document containing 23 specified categories of information. A prospective franchisee must generally receive the document at least 14 days before signing a contract or paying money.

Australia has also significantly strengthened its regulatory framework. A new Franchising Code of Conduct came into effect on April 1, 2025, with further provisions taking effect from November 1, 2025. The reforms include greater disclosure of significant capital expenditure, additional obligations concerning specific-purpose funds, protections relating to returns on investment, compensation in certain early-termination situations and restrictions concerning restraint-of-trade provisions.

Australia also operates a franchise disclosure register. New franchisors must generally establish a profile before entering into franchise agreements, adding another layer of transparency to the market.

These developments point towards a wider international trend: franchise regulation is increasingly concerned not only with the agreement itself, but with the quality and timing of information available to the franchisee before the deal is signed.

Vaisakh Unnikrishnan, Legal Director at UAE-based legal consultancy Kaden Boriss, says: “Franchising is no longer simply a commercial arrangement between a brand owner and an operator. As businesses expand across borders, the legal architecture behind the franchise becomes increasingly important. A successful franchise model must protect the brand while creating a clear, balanced and commercially workable framework for the franchisee.”

Europe: Franchising Meets Competition Law

Europe presents a different regulatory landscape. The European Union does not have a single, dedicated franchise law governing every aspect of franchising. Instead, franchise arrangements can be affected by a combination of national contract and franchise rules, intellectual property legislation and EU competition law.

The EU's Vertical Block Exemption Regulation is particularly important because franchise agreements can contain restrictions governing pricing, territories, online sales, distribution and other aspects of the commercial relationship.

Regulation 2022/720 provides a framework for assessing certain vertical agreements under Article 101 of the Treaty on the Functioning of the European Union. It also recognises that vertical agreements may contain provisions concerning the use or assignment of intellectual property rights, subject to the applicable conditions.

For international franchisors, this means that a contract that works in one jurisdiction cannot simply be copied and used in another.

The Rise of Cross-border Franchising

The next major phase of franchising is likely to be increasingly international.

Brands are looking beyond their domestic markets for growth, while franchisees are seeking established international concepts in sectors ranging from food and hospitality to education, healthcare, fitness, retail, professional services and technology.

Master franchising, area development agreements, multi-unit franchising and joint ventures are among the structures being used to manage international expansion.

But cross-border franchising creates another layer of legal complexity. A franchisor entering a new jurisdiction must establish whether its trademarks and other intellectual property are adequately protected. WIPO notes that intellectual property rights are territorial, making protection in the target market a critical consideration for businesses expanding internationally.

Lawyers therefore increasingly become involved before the commercial negotiations are completed.

They may need to conduct intellectual property searches, assess local franchise legislation, review foreign investment restrictions, structure the transaction, prepare disclosure documents, draft or adapt franchise agreements, examine tax implications and advise on dispute-resolution mechanisms.

Unnikrishnan says the legal strategy should begin well before the franchise agreement is signed. “The real opportunity in franchising lies in taking a proven business model into new markets, but international expansion cannot be approached with a one-size-fits-all contract. Each jurisdiction brings its own regulatory, intellectual property, competition and commercial considerations. Legal strategy must therefore be part of the expansion plan from the outset.”

A Growing Role for Specialist Law Firms

The expansion of franchising is creating opportunities for law firms to develop specialist franchise practices.

A franchise transaction can require lawyers from several disciplines. Corporate lawyers may structure the investment. Commercial lawyers draft the franchise and development agreements. Intellectual property lawyers protect trademarks and know-how. Competition lawyers examine territorial and pricing restrictions. Real estate lawyers deal with premises and leases. Employment lawyers address staffing issues, while tax lawyers consider royalties, withholding taxes and cross-border payments.

The legal adviser is therefore moving from being a document drafter to becoming a strategic adviser throughout the life cycle of the franchise.

Increasingly, law firms are also advising clients on franchise systems before they are launched.

This can include developing a franchise-ready business model, creating standard documentation, establishing compliance procedures, preparing disclosure materials and identifying potential regulatory risks in target markets.

Technology is Changing the Franchise Relationship

Technology is another major force reshaping franchising. Digital ordering, online marketplaces, artificial intelligence, customer data, automated marketing and cloud-based management systems are becoming integral to franchise operations. This raises new legal questions.

Who owns customer data generated by a franchise outlet? Can the franchisor require franchisees to use a particular technology platform? Who is responsible if an AI-generated marketing campaign infringes copyright or makes a misleading claim? Can a franchisor control a franchisee's online sales territory?

The traditional franchise agreement may not have been designed for these questions.

Future agreements are therefore likely to contain increasingly detailed provisions dealing with digital platforms, data ownership, cybersecurity, AI systems, online sales and technology upgrades.

Australia's new rules concerning disclosure of significant capital expenditure illustrate this evolution. Technology and software upgrades can fall within the type of expenditure that must be disclosed where they meet the applicable requirements.

Franchisee Protection Will Remain a Central Issue

The growth of franchising also raises questions about the balance of power. The franchisor normally controls the brand, business model and operating standards, while the franchisee contributes capital and assumes much of the day-to-day commercial risk. That imbalance has become an important regulatory concern.

Modern franchise regulation is increasingly focused on ensuring that franchisees receive meaningful information before investing and are not subjected to unexpected financial obligations or unfair contractual terms.

Disclosure of marketing or specific-purpose funds is one example. Under Australia's new framework, franchisors must provide detailed information about such funds, including their purpose, contributions and permitted expenses.

This trend could influence regulatory thinking in other markets as governments attempt to encourage entrepreneurship while protecting small business investors.

New Opportunities for Legal Professionals

The evolution of franchising creates significant opportunities for the legal sector.

Law firms can expect demand for franchise due diligence, regulatory mapping, intellectual property protection, contract drafting, transaction structuring, dispute resolution and compliance audits.

There is also potential for a new generation of technology-enabled legal services. AI-assisted contract review, automated disclosure checks, digital franchise management platforms and data-driven due diligence could make franchise transactions faster while allowing lawyers to concentrate on higher-value strategic and regulatory issues.

For international brands, another emerging opportunity is the development of multi-jurisdictional franchise compliance programmes that allow a single business model to be adapted for different legal systems.

The Road Ahead

Franchising is no longer simply a way for a successful restaurant, retailer or service provider to open more outlets. It is becoming a sophisticated international business structure.

As brands cross borders, regulators are demanding greater transparency, franchisees are becoming more legally informed and technology is transforming the way franchise businesses operate.

The legal profession is consequently moving closer to the centre of the franchise economy.

Unnikrishnan believes this evolution will create a broader role for lawyers in the years ahead. “We are seeing franchising evolve into a much more sophisticated legal and business ecosystem. Technology, data, artificial intelligence, intellectual property and increasingly detailed disclosure requirements are creating new questions for both franchisors and franchisees. This will create significant opportunities for legal advisers who can combine regulatory knowledge with a genuine understanding of the client’s commercial objectives.”

The next generation of franchise lawyers will not simply draft agreements. They will help brands decide where to expand, how to structure their relationships, how to protect their intellectual property, how to manage regulatory risk and how to resolve disputes when commercial relationships fail.

For businesses, the message is equally clear: franchising may provide a powerful route to global growth, but the strength of the legal architecture behind the franchise could ultimately determine whether that growth is sustainable.

As the franchise model continues to evolve, so too will the law surrounding it — creating a new and expanding frontier for businesses, regulators and the legal profession.

Jeejo Augustine is the Executive Editor of The Law Reporters. He regularly writes on legal developments, regulatory changes and emerging issues affecting businesses, professionals and the wider community, with a particular focus on developments in the UAE and the GCC.

A US appeals court has allowed thousands of lawsuits against Meta Platforms, Alphabet’s Google, ByteDance’s TikTok and Snap’s Snapchat to move forward over claims that their products were designed to be addictive to young users.

The San Francisco-based 9th US Circuit Court of Appeals rejected an appeal by Meta and TikTok seeking to overturn a lower court ruling that requires them to face more than 3,000 lawsuits filed in federal court. The appeals court said the companies had appealed too early.

The companies had argued that Section 230 of the Communications Decency Act of 1996 – which generally shields online companies from liability over content posted by users – also bars lawsuits alleging that they failed to warn the public about the addictive nature of their platforms.

Most appeals are filed after a case has concluded with a ruling or verdict. The companies argued that they should not have to wait until the litigation ends to challenge the lower court’s rejection of their Section 230 defence. However, the 9th Circuit said Section 230 provides a defence against liability, rather than immunity from lawsuits, making the appeal premature.

The court also rejected Meta’s bid to postpone a trial that was due to begin on Wednesday in a lawsuit brought by 29 state attorneys general. The states allege that Meta illegally collected and used children’s data, designed its social media platforms to keep young users hooked and misled consumers about their safety.

Meta had argued that the trial could not proceed while its appeal was pending.

The ruling comes days after a New Mexico judge found that Meta had created a public nuisance in the state and ordered the company to pay $567 million into a fund for teen mental health and implement youth-safety measures.

A Meta spokesperson declined to comment. Representatives for TikTok did not immediately respond to requests for comment on Monday’s ruling.

Lexi Hazam and Previn Warren, attorneys representing thousands of school districts and individuals suing Meta and other companies in the federal litigation, said the ruling would allow the states’ trial to proceed, as well as a trial involving claims brought by school districts scheduled for February.

They said the trial would allow the public to learn what Meta knew about its products’ impact on children, when it knew it and what it did with that knowledge.

Thousands of Lawsuits

Filed by states, municipalities, school districts and individuals, the lawsuits allege that social media companies intentionally designed their platforms to be addictive to young users, contributing to rising levels of depression, anxiety and body-image problems and a broader mental health crisis among American young people.

Parents, school districts, states and other plaintiffs had argued that the trial court’s ruling was not final and therefore could not be appealed. They also challenged the companies’ reliance on Section 230, arguing that it does not cover claims concerning how the platforms are operated and designed.

The cases have been consolidated before US District Judge Yvonne Gonzalez Rogers in Oakland, California. Plaintiffs are seeking damages, penalties and restitution from the companies.

The companies appealed orders issued by Judge Rogers in 2023 and 2024 that largely allowed the litigation to proceed.

The companies are also facing hundreds of additional lawsuits involving similar claims in state courts, including approximately 3,300 cases consolidated in California state court.

In the first lawsuit to go to trial in the California litigation – a closely watched test of how juries might respond to similar claims – a Los Angeles jury in March found Meta and Google negligent for designing social media platforms that harmed young people. The jury awarded $6 million to a young woman who said she became addicted to Instagram and YouTube as a child.

The New Mexico public nuisance ruling against Meta followed an earlier phase of the trial, in which a jury in March ordered the company to pay $375 million after finding that it had misled consumers about the safety of its platforms.

Meta and Google, which have denied the allegations in those cases, have said they will appeal.

The US Supreme Court is facing a growing public approval problem, with President Donald Trump’s repeated attacks on the justices adding to concerns over the institution’s political standing and legitimacy, according to Bloomberg Law.

Recent polls indicate that confidence in the court has weakened following an ideologically divisive term, with one survey recording its lowest approval rating since measurements began more than two decades ago.

The decline has been particularly notable among Republicans. Bloomberg Law reports that the drop has come despite the court’s conservative majority and a term in which the justices advanced several longstanding Republican priorities.

The findings come as the US heads towards the midterm elections, with the Supreme Court already emerging as an important political issue as Democrats seek to regain control of Congress.

A majority of Americans now believe the justices are more likely to base their decisions on political considerations than legal principles, raising concerns among legal experts about the consequences for public confidence in the judiciary.

Jesse Wegman, a senior fellow at New York University’s Brennan Center for Justice, told Bloomberg Law that the justices are expected to maintain some distance from the country’s day-to-day politics so that people believe they will receive fair treatment regardless of the outcome of a case.

Increasingly, however, millions of Americans do not appear to share that confidence, Wegman said.

The Supreme Court’s reputation has suffered in recent years amid increasingly partisan confirmation battles, controversial rulings and ethics controversies. One prominent example has involved Justice Clarence Thomas’ acceptance of expensive trips funded by a Republican megadonor.

Democratic dissatisfaction has also intensified following major conservative decisions involving abortion, elections and the scope of governmental power.

The controversy has fuelled proposals for structural changes to the court, including congressional efforts to introduce term limits for justices or expand the number of seats to reduce the current 6-3 conservative majority.

Republican Support Falls

A Gallup survey conducted in July found that only 33 per cent of Americans approved of the way the Supreme Court was handling its job. According to Bloomberg Law, that was the lowest level recorded since Gallup began measuring the court’s standing in 2000.

Republican approval fell by 21 percentage points from September, dropping from 79 per cent to 58 per cent. The poll had a margin of error of plus or minus four percentage points.

The decline came despite a term in which the court moved decisively on several issues important to Republicans.

The justices strengthened presidential authority, expanded gun rights, removed campaign spending restrictions and weakened the Voting Rights Act as a means of ensuring Black and Hispanic representation in Congress.

At the same time, the court handed Trump three significant defeats. It struck down his global tariffs, blocked his restrictions on birthright citizenship and, at least temporarily, prevented him from removing Federal Reserve Governor Lisa Cook.

Trump responded by attacking members of the court who ruled against him, including two justices he appointed.

After Neil Gorsuch and Amy Coney Barrett joined decisions invalidating his tariffs, Trump described them as “an embarrassment to their families”.

John Malcolm, vice-president of the Edwin Meese III Institute for the Rule of Law at conservative organisation Advancing American Freedom, attributed the decline in Republican support to Trump’s criticism of the court.

He said attacks by Trump and his supporters could prompt Republicans to conclude that something was wrong with the court.

Polls Show Mixed Picture

Not all surveys point to such a dramatic decline. A Marquette Law School poll found that 74 per cent of Republicans approved of the Supreme Court’s performance, compared with 81 per cent in July 2025.

Overall approval stood at 47 per cent, down slightly from 49 per cent a year earlier. The poll had a margin of error of plus or minus 3.2 percentage points.

The survey also revealed an apparent gap between public attitudes towards the court as an institution and its individual decisions.

Respondents were asked about 13 recent Supreme Court rulings, and majorities said the justices had reached the right decision in 11 cases.

Charles Franklin, director of the Marquette poll, said the difference could partly reflect the limited attention Americans pay to the court outside major rulings.

The public, he said, is not particularly well-informed about the Supreme Court or closely focused on its work throughout the year. Major decisions, however, attract considerable attention.

The Marquette survey found that 58 per cent of respondents believed the court’s decisions were driven mainly by politics rather than the law.

It also found that 63 per cent of Republicans incorrectly believed that the Supreme Court rarely or never rules in Trump’s favour.

Questions Over Legitimacy

Supreme Court justices have traditionally maintained that public opinion should not influence their decisions.

Justice Samuel Alito made that position clear in the 2022 ruling that overturned the constitutional right to abortion, citing a 1992 opinion by then Chief Justice William Rehnquist. The judiciary’s legitimacy, Alito wrote, comes from determining whether government action complies with the Constitution rather than following public opinion.

Former Justice John Paul Stevens expressed the principle more directly in 2002, writing that judges should be indifferent to unpopularity.

Yet the justices have also acknowledged that the court depends on public and governmental acceptance of its authority.

The institution can function effectively only if officials and the public are prepared to accept rulings they disagree with, rather than treating the court as simply another political body.

Following the 2022 abortion ruling, liberal Justices Elena Kagan and Sonia Sotomayor warned that the court risked damaging public confidence in the legal system by moving too quickly to overturn established precedents.

Kagan has more recently rejected suggestions that the court operates as an extension of the Trump administration.

Speaking at a judicial conference in July, she pointed to several occasions when the court had ruled against the administration, saying the justices had told the president that certain actions could not be taken.

But such arguments have done little to satisfy the court’s critics.

Bloomberg Law reports that proposals to restructure the Supreme Court could become a significant issue in the 2028 presidential campaign. Potential Democratic contenders, including Pete Buttigieg and Kamala Harris, have already expressed support for adding seats to the court.

Wegman argues that the court is unlikely to change its approach on its own and that structural reform may therefore be necessary.

The debate reflects a broader question confronting the Supreme Court: whether it can maintain public confidence as its decisions become increasingly entangled with the country’s political divisions.

Dubai is set to introduce a dedicated rental index for shared housing units as part of new regulations aimed at improving transparency and bringing greater structure to the emirate’s growing shared accommodation sector.

Under Dubai Law No. 4 of 2026 regulating shared housing, the Dubai Land Department (DLD) will establish and periodically update the index, according to practical guidance published by LexisNexis Middle East on the new legislation.

The index will consider the technical and service specifications of individual shared housing units. However, details on its launch date, rental calculation methodology and whether rates will be determined based on individual units, rooms, bed spaces or allocated residential areas have not yet been announced.

Dubai currently operates a rental index that serves as an official benchmark for calculating permitted rent increases during tenancy renewals. The new index will specifically apply to properties licensed for shared housing, creating a separate framework for this segment of the market.

A note published by Mitchell’s Commercial Real Estate said the initiative could help standardise pricing practices, reduce informal rent-setting arrangements and improve transparency across the shared housing sector.

For landlords, the new system may limit excessive pricing practices in unregulated arrangements while providing greater predictability in rental returns and ensuring closer alignment with market conditions.

The DLD will also develop standard tenancy and management contract templates for shared housing and make them available on its website.

These contracts must include essential details such as the landlord’s information, the number of occupants, property details and the specific space allocated for shared accommodation.

The law also requires the creation of an electronic Shared Housing Register, which will maintain records of approved units, tenancy contracts and residents. The register will be connected to a unified digital permit platform operated by Dubai Municipality.

Permits Required for Shared Housing Operations

Under the new regulations, individuals and companies will not be permitted to convert properties into shared housing units without obtaining an official permit.

Permits will generally remain valid for one year and may be renewed for additional periods. Property owners can apply for two-year permits, while renewal requests must be submitted at least 30 days before the expiry date.

Dubai Municipality has stated that permit applications will be processed through its digital platforms once the relevant procedures and requirements are announced.

Authorities will issue permits only after confirming that properties comply with planning, construction, health, fire safety, sanitation, security and electrical safety standards.

The approval process will also consider factors including maximum occupancy limits, minimum space requirements per resident and the availability of shared facilities.

Existing owners and operators of shared housing facilities will have one year from the implementation of the law to ensure their properties and operations comply with the new requirements. The Director-General of Dubai Municipality may grant a one-time extension where necessary.

Non-compliance with the law may lead to fines ranging from Dh500 to Dh500,000. Repeat violations committed within one year may result in double penalties, subject to a maximum fine of Dh1 million.

The introduction of a dedicated rental index and mandatory licensing framework marks a significant step towards formalising Dubai’s shared housing market, ensuring better oversight while creating clearer rights and obligations for landlords and residents.

As artificial intelligence becomes an increasingly common source of emotional support and mental health advice, US lawmakers are moving to tighten oversight of AI-powered therapy chatbots amid growing concerns about patient safety, misleading claims and the lack of a unified federal regulatory framework.

The latest wave of state legislation follows a series of lawsuits and mounting evidence that millions of people, particularly young adults and adolescents, are turning to AI chatbots for mental health guidance despite concerns that such tools may not be equipped to respond safely to vulnerable users.

According to a report by Bloomberg Law, states including Tennessee, Colorado and Maine have enacted new measures this year to restrict how AI can be marketed or used in mental health settings. Their actions build on legislation introduced in Illinois, Nevada and Utah in 2025, reflecting a broader trend of state governments attempting to regulate an area where federal standards remain limited.

Lawsuits Highlight Safety Concerns

The regulatory push gained momentum following legal action against Character Technologies Inc., the company behind the Character.ai platform.

In May, Pennsylvania sued the company, alleging that one of its AI chatbots, named "Emilie", falsely presented itself as a licensed therapist with seven years of professional experience and qualifications from Imperial College London. According to the lawsuit, those credentials were entirely fictional, despite the chatbot reportedly engaging in more than 45,000 conversations with users seeking psychological support.

The Pennsylvania case followed an earlier lawsuit filed in Kentucky, which accused the company of exposing minors to harmful interactions through its chatbot platform.

Character.ai has rejected suggestions that its platform is intended to replace professional care. A company spokesperson said its platform contains clear disclaimers stating that users should not rely on its chatbots for professional advice. The company added that it remains committed to working with regulators, safety experts and other stakeholders to improve safeguards on what it describes as an entertainment-focused AI platform.

AI Becomes an Increasingly Common Source of Support

The popularity of AI for emotional wellbeing has risen sharply over the past year.

According to research cited by Bloomberg Law, a survey involving more than 42 million young people and adults in the United States found that almost one in five had used AI chatbots for mental health advice. Of those users, approximately 43 per cent reported consulting the technology every month.

The rapid adoption has raised concerns among clinicians, particularly because many users may disclose deeply personal information or seek help during mental health crises without understanding the limitations of AI-generated responses.

Mental health professionals say the distinction between general-purpose AI chatbots and clinically validated digital therapeutic tools remains poorly understood by the public.

States Restrictions

Several US states have begun drawing clearer legal boundaries around AI's role in mental healthcare.

Tennessee recently passed legislation prohibiting companies from advertising AI systems as licensed mental health professionals. Senator Page Walley, a clinical psychologist who sponsored the measure, said lawmakers wanted to establish a clear legal boundary before AI systems became widely accepted as substitutes for qualified therapists.

Speaking to Bloomberg Law, Walley said digital therapeutic technologies are expanding rapidly and many have genuine clinical value. However, he said lawmakers considered it necessary to prevent businesses from presenting general-purpose AI chatbots as professional therapists without appropriate regulation.

Other states have adopted broader measures.

Colorado, for example, strengthened protections following reports linked to a federal lawsuit alleging that a 13-year-old died by suicide after prolonged interactions with a Character.ai chatbot in 2023.

Vermont and Rhode Island have also recently approved restrictions relating to AI-assisted therapy, while Illinois introduced legislation in 2025 limiting how licensed healthcare professionals may use AI tools when interacting directly with patients.

Illinois Representative Bob Morgan, who sponsored that legislation, told Bloomberg Law that the law was designed to address the growing number of companies marketing AI chatbots as therapists. However, he acknowledged that state legislation cannot realistically regulate how every general-purpose AI model responds to individual users.

Debate Over General-purpose AI

Experts say one of the biggest regulatory challenges is distinguishing between specialised therapeutic AI applications and general-purpose conversational AI systems such as ChatGPT or Claude.

Unlike purpose-built digital therapeutic platforms, which are developed using clinical data and operate within tightly controlled safety frameworks, general AI chatbots are designed primarily for broad conversational tasks and may not reliably identify or respond appropriately to users experiencing severe mental health crises.

Ankur Varma, a psychotherapist and co-founder of Brown Man Therapy, told Bloomberg Law that while he does not actively encourage patients to seek therapy from AI, he is willing to discuss their chatbot interactions during treatment.

His greatest concern, he said, is for individuals who lack access to professional care and may depend entirely on AI systems while dealing with serious emotional distress or suicidal thoughts.

Professional Bodies Call for Federal Standards

Mental health experts increasingly argue that state-by-state regulation may create inconsistent standards that fail to address the complexity of AI-assisted healthcare.

1. Vaile Wright, Senior Director of Health Care Innovation at the American Psychological Association, told Bloomberg Law that some state laws unintentionally restrict legitimate digital wellness applications while leaving general-purpose AI largely unaffected.
   
   

She argued that comprehensive federal regulation would provide more consistent safeguards and better reflect the complexities of mental healthcare.

According to Wright, regulations that overlook important clinical nuances may ultimately fail to achieve their intended purpose, leaving both patients and healthcare providers uncertain about appropriate AI use.

FDA Yet to Approve AI Mental Health Chatbots

The US Food and Drug Administration (FDA) has already authorised approximately 1,200 AI-enabled medical devices across various healthcare fields. However, none currently involve generative AI systems designed specifically for mental health therapy.

During an FDA advisory committee meeting last year, experts urged the agency to modernise its regulatory framework for AI-based mental health technologies and establish a publicly accessible database of approved AI therapeutic tools.

Bethany Russell, a licensed therapist specialising in youth mental healthcare, warned the committee that unregulated AI systems could misdiagnose patients or provide unsafe advice to individuals experiencing suicidal thoughts. She argued that AI should complement, rather than replace, qualified mental health professionals.

Perplexity AI must continue defending a lawsuit brought by Reddit after a Manhattan federal judge rejected most of its attempt to dismiss claims that it unlawfully scraped data from the online discussion platform to train its AI-powered search engine.

US District Judge Paul Engelmayer ruled that Reddit could proceed with allegations that Perplexity and three data-scraping companies bypassed protective measures to obtain content for artificial intelligence training.

The judge also held that Reddit had legal standing to pursue claims over the alleged misuse of content posted by its users.

A divided panel of the Seventh Circuit Court of Appeals has rejected President Donald Trump’s interpretation of mandatory detention for non-citizens arrested inside the United States, becoming the sixth federal appeals court to reject a legal argument central to the administration’s mass deportation agenda.

The government argued that non-citizens already living in the US should nevertheless be treated as individuals "seeking admission" to the country, in the same way as those arriving at the border. That interpretation "doesn't hold water", Judge Joshua Kolar wrote in Thursday’s opinion, saying the government's position "rests upon the illogical use of both legal fiction and ordinary meaning for the same term".

For around three decades, including during Trump’s first term, successive presidential administrations recognised that non-citizens arrested within the US were generally entitled to a bond hearing, where they could argue for release from immigration detention. Such hearings are not available to individuals apprehended while "seeking admission" to the country.

Last year, however, the administration adopted a new interpretation of the law, arguing that even undocumented immigrants who had lived in the US for years were still "seeking admission" and were therefore subject to mandatory detention.

Jaciel Cirrus Rojas, the petitioner in the underlying district court case, "has never applied for anything that counts as 'admission' to the United States. Nor can he successfully 'seek' admission, as his unlawful entry renders him inadmissible," Kolar wrote in the majority opinion, which was joined by Judge Candace Jackson-Akiwumi. Both judges were appointed by former President Joe Biden.

In a dissenting opinion, Judge Diane Sykes, who was appointed by former President George W. Bush, argued that relying on the ordinary meaning of words such as "seeking" was of limited value when interpreting a statute as complex as the Immigration and Nationality Act (INA).

The law clearly provides that both newly arriving non-citizens and those already living in the country are deemed "applicants for admission", Sykes wrote. Consequently, they are all "subject to the same mandatory detention requirement".

"At this point, only the Supreme Court can bring uniformity and settle this question once and for all. I anticipate that it will do so soon," Sykes wrote, adding that, in her view, the Seventh Circuit had "joined the wrong side" of an increasingly deep circuit split.

The Seventh Circuit’s ruling was issued only hours after the Ninth Circuit also rejected the Trump administration’s claim of broad mandatory detention authority under the INA. The Second, Sixth, Tenth and Eleventh Circuits have reached similar conclusions in recent months, while the Fifth and Eighth Circuits have sided with the administration.

The Fifth Circuit has agreed to rehear the issue before its full bench later this year, examining the mandatory detention policy from the perspective of constitutional due process rather than statutory interpretation.

Both the government and immigrant rights advocates have separately petitioned the US Supreme Court to resolve the dispute over mandatory detention.

Despite repeated setbacks in the lower courts, the administration has continued to defend its interpretation of the law. Immigrant rights advocates argue that the policy advances the administration’s mass deportation objectives because people held in detention are less likely to successfully challenge their removal and more likely to agree to leave the country voluntarily.

Cirrus Rojas is represented by the American Civil Liberties Union Foundation and Layde & Parra SC.

The case is Cirrus Rojas v. Olson, Seventh Circuit, No. 25-03127, opinion issued on 30 July 2026.

The US Justice Department has proposed granting immigration judges the power to impose civil contempt fines on immigration lawyers, migrants and other individuals appearing before them — a move that would significantly expand their authority within immigration court proceedings.

Under the proposed rule unveiled by the Trump administration, immigration judges would, for the first time, be permitted to “sanction contemptuous action or inaction” by attorneys appearing before them through monetary civil penalties under an authority enacted by Congress three decades ago.

The proposed contempt powers would apply not only to lawyers but also to migrants involved in immigration proceedings and witnesses appearing before immigration judges. Individuals could face financial penalties for conduct deemed disruptive or damaging to court proceedings.

However, lawyers representing Immigration and Customs Enforcement (ICE) would be exempt from such penalties under the proposal. The regulation states that immigration judges would not be allowed to exercise contempt authority against federal government lawyers acting in their official capacity. Witnesses testifying as federal government employees in their official roles would also be excluded.

The draft regulation, scheduled for publication in the Federal Register, represents the first formal attempt to fulfil a requirement under a 1996 law requiring the attorney general to establish rules defining immigration judges’ statutory authority to impose civil monetary sanctions.

According to the proposal, contempt powers would allow immigration judges to “control the proceedings before them” and discourage conduct that could interfere with the administration of justice.

The idea of expanding such powers dates back decades. Alberto Gonzales, who served as attorney general during President George W. Bush’s administration, had previously supported regulations allowing immigration judges to have stronger tools to manage courtrooms and safeguard the immigration adjudication system from fraud and abuse.

Immigration judges, who are employees of the Justice Department rather than part of an independent judicial system, have become a key element of President Donald Trump’s immigration enforcement agenda. The administration has focused on increasing the number of judges, speeding up deportation proceedings and reducing delays in asylum cases.

The Justice Department’s Executive Office for Immigration Review (EOIR), which oversees the immigration courts, has appointed more than 300 military lawyers, former ICE attorneys and other legal professionals as immigration judges while dismissing more than 100 judges, according to a Bloomberg Law analysis. The appointments include 41 new permanent and temporary judges who were sworn in on Wednesday.

During Trump’s first term, the Justice Department had also considered introducing regulations on immigration judges’ authority to impose civil monetary penalties, with such plans included in the administration’s Spring 2020 unified agenda.

The latest proposal has drawn criticism from immigration judges and legal advocates. Jeremiah Johnson, executive vice president of the National Association of Immigration Judges, said treating immigration lawyers differently from ICE attorneys raised concerns about equal treatment and due process.

“Proceedings are not fundamentally fair when one party is subject to penalties and the other is not,” Johnson said. He was among the immigration judges removed by the Trump administration last year.

The proposed rule now opens a broader debate over the balance between giving immigration judges greater control over courtrooms and ensuring fairness in a system where judges operate within the executive branch rather than an independent judiciary.

US President Donald Trump has asked the US Supreme Court to overturn an $83.3 million jury award granted to writer E. Jean Carroll in her defamation lawsuit, according to a petition reviewed by Bloomberg News.

The petition, filed on Tuesday, marks Trump's latest legal battle with the former Elle magazine advice columnist, who accused him of sexually assaulting her in the mid-1990s. The filing comes just a month after the Supreme Court declined to hear his appeal against a separate $5 million verdict in Carroll's related sexual abuse case.

Trump's appeal centres on the argument that his statements denying Carroll's allegations, made while he was serving as President during his first term, were official acts protected by presidential immunity.

In the petition, Trump's lawyers argued that allegations concerning a President's fitness for office are matters of public concern and that responses to such accusations made in an official capacity should be immune from civil liability.

A spokesperson for Carroll's lawyer, Roberta Kaplan, declined to comment.

Trump is also awaiting the Supreme Court's decision on his request to reconsider its refusal to hear his appeal in the separate $5 million case. He has denied any wrongdoing in both lawsuits.

Carroll alleged that Trump defamed her in 2019 by calling her a liar after she publicly claimed he had sexually assaulted her in a dressing room at Bergdorf Goodman in New York in 1996. She argued that Trump falsely accused her of fabricating the allegation for political motives and to promote her book.

A New York jury awarded Carroll $83.3 million in January 2024 after finding that Trump's statements had defamed her. The verdict was later upheld by the US Court of Appeals for the Second Circuit.

Unlike Carroll's other successful lawsuit, this case concerns statements Trump made while serving as President. He contends that the Supreme Court's landmark ruling on presidential immunity should shield him from liability because his comments were made in the course of his official duties.

Trump further argues that the appeals court wrongly concluded he had forfeited his immunity defence by failing to raise it earlier in the litigation.

In the Supreme Court petition, his lawyers described the judgment as unprecedented, arguing that it was the first time a US court had imposed civil damages on a President for conduct undertaken while in office.

The legal team also criticised the appeals court for upholding what it called an "exorbitant" $83.3 million award without first determining whether presidential immunity applied to Trump's statements, which were made from the White House in response to media questions.

Trump is represented by Robert J. Giuffra Jr., co-chair of Sullivan & Cromwell, and Michael Martinich-Sauter of the James Otis Law Group.

The US Department of Justice is expected to ask the Supreme Court to allow it to intervene on Trump's behalf. It has previously indicated that it will seek to substitute the US government as the defendant under the Westfall Act of 1988, which grants federal employees immunity from personal liability for actions taken within the scope of their official duties.

If the substitution is permitted, the lawsuit would be dismissed because the US government cannot be sued for defamation. Similar requests were previously rejected by both the trial court and the appeals court.

The central issue is whether Trump, as President, was acting within the scope of his official duties when he denied Carroll's allegations.

Carroll's separate civil action was brought under a temporary New York law that allowed survivors of historic sexual assaults to pursue civil claims. That case also included a defamation claim based on statements Trump made in 2022 after leaving office, when he was a private citizen.