AI Insights

Texas Takes a Shot at AI Regulation With ‘Responsible Artificial Intelligence Governance Act’

Published

5 days ago

July 2, 2025

The Editors

Quick Hits

The Texas Responsible Artificial Intelligence Governance Act establishes a broad framework for the acceptable development, deployment, and oversight of AI systems in Texas, effective January 1, 2026.
The act identifies certain acceptable and unacceptable uses of AI systems, creates the Texas Artificial Intelligence Council to oversee AI governance, and introduces a regulatory sandbox program for testing AI innovations.
Enforcement authority is vested exclusively in the Texas Office of the Attorney General, with significant civil penalties for violations and structured opportunities to cure noncompliance.

Overview

The Texas Responsible Artificial Intelligence Governance Act marks a meaningful move by Texas to lead on AI regulation at the state level, aiming to balance corporate desires for AI innovation with consumer protection, anti-discrimination, and other ethical considerations. Its reach is broad: the act applies to any person or entity conducting business in Texas, producing products or services used by Texas residents, or developing or deploying AI systems within the state, though certain governmental and healthcare entities are exempted. And, while the set of prohibited AI technologies is restricted, the act applies to just about everyone, so it warrants broad awareness.

The act defines an “artificial intelligence system” as any machine-based system that infers from inputs to generate outputs—such as content, decisions, predictions, or recommendations—that can influence physical or virtual environments. Accordingly, the act should be understood as applying to AI systems that involve machine learning, natural language processing, perception, speech, and content generation. Unlike certain other state AI laws (including the since-vetoed Virginia H.B. 2094), which focus broadly on the risk associated with using certain of these systems, the Texas law focuses on a narrow, explicitly delineated set of harmful uses of AI tools, with a special focus on those that involve biometric information.

Prohibited Practices

The legislation outlines several prohibited AI practices that businesses operating in Texas are required to avoid. These prohibited practices are non-controversial and, although handled differently from some other laws, reflect common concerns in other AI laws, such as commonly voiced fears that AI tools will be used to further discriminatory practices. In particular, the act prohibits the development or deployment of AI systems that are intended to:

manipulate human behavior, particularly to incite or encourage self-harm, harm to others, or criminal activity;
infringe upon constitutional rights or unlawfully discriminate against protected classes, such as race, color, national origin, sex, age, religion, or disability. Unique to the Texas law, however, disparate impact associated with the use of an AI system alone is not considered sufficient evidence to establish an intent to discriminate; or
create illegal content, including by producing or distributing AI-generated child sexual abuse material or deepfake content in violation of the Texas Penal Code.

Additional restrictions apply to certain uses of AI technologies by governmental entities. For example, governmental entities are prohibited from developing or using AI tools to uniquely identify individuals through biometric data or capture images without consent if doing so infringes on constitutional rights or violates other laws. Likewise, governmental agencies that use AI technologies to interact with consumers must generally provide a disclosure to each individual that they are interacting with AI.

Similar obligations apply to healthcare providers, which must provide a clear, written disclosure (such as through a hyperlink) when patients interact with AI systems used in their care or treatment.

Promoting Innovation: The Texas Artificial Intelligence Council and the Regulatory Sandbox Program

The act also establishes the Texas Artificial Intelligence Council, a seven-member body with varied expertise appointed by state leadership. The Council has a broad mandate that appears in part to be focused on expanding the perception of Texas as a hotbed for AI development. In particular, it is tasked with doing things such as:

identifying legislative improvements and providing guidance and legislative recommendations on the use of AI systems;
identifying laws and regulations that impede AI system innovation and proposing reforms; and
evaluating potential regulatory capture risks, such as undue influence by technology companies or burdens disproportionately impacting smaller innovators.

Another unique component of the act is the establishment of a regulatory sandbox, which will be administered by the Texas Department of Information Resources in consultation with the Texas Artificial Intelligence Council. Approved participants can test AI systems for up to thirty-six months, giving them an avenue to experiment with research, training, testing, or other pre-deployment activities required to develop novel AI systems in a meaningful way without running the risk of regulatory enforcement in Texas. In this way, the state hopes to foster innovation while maintaining oversight. Notably, however, the administrative burden associated with participating in the program is meaningful, as participants must submit detailed applications to participate and provide quarterly reports detailing their systems’ performance, risks, benefits, mitigation activities associated with the tool, and stakeholder feedback they have received in relation to the AI system. Moreover, participation in the sandbox is not a “get out of jail free” card, and participants remain subject to core consumer protection provisions, regardless of whether they are playing in the sandbox.

Enforcement and Penalties

The act does not include a private right of action; however, the Texas Office of the Attorney General has enforcement authority, including the power to investigate complaints, issue civil investigative demands, and seek civil penalties and injunctive relief. Penalties range from $10,000 to $12,000 per curable violation; $80,000 to $200,000 per uncurable violation; and $2,000 to $40,000 per day for continuing violations. A sixty-day cure period is provided before enforcement action, and compliance with recognized AI risk management frameworks (such as the National Institute of Standards and Technology (NIST)) may establish a rebuttable presumption of reasonable care. And, in some circumstances, state agencies may impose additional sanctions, including license suspension or monetary penalties, upon recommendation by the attorney general.

Looking Forward

The Texas Responsible Artificial Intelligence Governance Act positions Texas as a leader in state-level AI regulation. It also represents a new approach to AI regulation in the United States that seeks to balance technological progress with consumer protections and common-sense restrictions. While it remains to be seen whether the act has any teeth, given the very limited scope of its prohibitions and potential difficulties in proving discriminatory intent under its AI antidiscrimination provisions, businesses that operate in Texas will nevertheless want to remain mindful of this this new law and consider whether it would be appropriate to consider revisions to their current practices to align with the act or to take advantage of some of the new opportunities arising thereunder, such as participation in the AI regulatory sandbox.

Ogletree Deakins’s Cybersecurity and Privacy Practice Group will continue to monitor developments and will provide updates on the Cybersecurity and Privacy, Technology, and Texas blogs as additional information becomes available.

Benjamin W. Perry is a shareholder in Ogletree Deakins’s Nashville office, and he is co-chair of the firm’s Cybersecurity and Privacy Practice Group.

Lauren N. Watson is an associate in the Raleigh office of Ogletree Deakins and a member of the firm’s Cybersecurity and Privacy Practice Group.

James M. Childs, a law student currently participating in the summer associate program in the Raleigh office of Ogletree Deakins, contributed to this article.

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AI Insights

Roche’s Chugai Breaks Into Aging via Potential $1B+ Deal With AI Outfit Gero

Published

24 minutes ago

July 7, 2025

The Editors

Tokyo-based Chugai Pharmaceutical is joining with the AI-driven biotech Gero, in a research collaboration on age-related diseases potentially worth more than $1 billion.

The collaboration will see Chugai, majority owned by Roche, creating novel antibody drug candidates using its in-house engineering capabilities. The targets sought by those antibodies will be discovered using Gero’s AI target discovery platform, which serves as predictive models of human health trained on longitudinal medical records. Chugai will get exclusive worldwide rights to any drug candidates made in the collaboration.

Under terms of the deal, Chugai will make an undisclosed upfront payment and put up approximately $250 million if certain unannounced development or sales milestones are reached. If Chugai successfully launches a product, the company will pay Gero additional royalties, which could push the total value of the deal to above $1 billion, according to an email sent to BioSpace from a Chugai representative.

Though the companies did not announce any specific indications they will be targeting in the collaboration, Singapore-based Gero’s stated cause is to eliminate the “root causes of age-related diseases.”

“Our AI platform is built to identify therapeutic targets that drive multiple age-related diseases and potentially aging itself,” Gero CEO Peter Fedichev said in a statement. “In this collaboration, we aim to translate those insights into therapeutics that can help restore the lost function. This partnership with Chugai is an important step toward achieving Gero’s mission: to meaningfully target the biological processes of human aging.”

Gero previously inked a deal with Pfizer in January 2023 to apply its AI technology platform to discover targets in fibrotic diseases. Financial terms of that deal were not disclosed, only that Gero would receive an upfront payment and be eligible to receive discovery milestone payments. Gero appears to still be in its early stages, having raised a $6 million series A round in 2023. The company does not have a published drug pipeline on its website.

Chugai, for its part, has partnered with AI companies since late last decade, making it an early entrant into the biopharma-AI space. In 2018 Chugai linked up with the deep learning company Preferred Networks, paying the latter about $5 million (¥‎700 million) for access to its platform. More recently, Chugai partnered with SoftBank in January to use generative AI to accelerate drug development, with the aim of streamlining personnel and costs associated with clinical trials.

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AI Insights

Ascendion Wins Gold as the Artificial Intelligence Service Provider of the Year in 2025 Globee® Awards

Published

35 minutes ago

July 7, 2025

The Editors

Awarded Gold for excellence in real-world AI implementation and measurable enterprise outcomes
Recognized for agentic AI innovation through ASCENDION AAVA platform, accelerating software delivery and unlocking business value at scale
Validated as a category leader in operationalizing AI across enterprise ecosystems—from generative and ethical AI to machine learning and NLP—delivering productivity, transparency, and transformation

BASKING RIDGE, N.J., July 7, 2025 /PRNewswire/ — Ascendion, a leader in AI-powered software engineering, has been awarded Gold as the Artificial Intelligence Service Provider of the Year in the 2025 Globee® Awards for Artificial Intelligence. This prestigious honor recognizes Ascendion’s bold leadership in delivering practical, enterprise-grade AI solutions that drive measurable business outcomes across industries.

Ascendion Wins Gold as the Artificial Intelligence Service Provider of the year in 2025 Globee® Awards

The Globee® Awards for Artificial Intelligence celebrate breakthrough achievements across the full spectrum of AI technologies including machine learning, natural language processing, generative AI, and ethical AI. Winners are recognized for setting new standards in transforming industries, enhancing user experiences, and solving real-world problems with artificial intelligence (AI).

“This recognition validates more than our AI capabilities. It confirms the bold vision that drives Ascendion,” said Karthik Krishnamurthy, Chief Executive Officer, Ascendion. “We’ve been engineering the future with AI long before it became a buzzword. Today, our clients aren’t chasing trends; they’re building what’s next with us. This award proves that when you combine powerful AI platforms, cutting-edge technology, and the relentless pursuit of meaningful outcomes, transformation moves from promise to fact. That’s Engineering to the Power of AI in action.”

Ascendion earned this recognition by driving real-world impact with its ASCENDION AAVA platform and agentic AI capabilities, transforming enterprise software development and delivery. This strategic approach enables clients to modernize engineering workflows, reduce technical debt, increase transparency, and rapidly turn AI innovation into scalable, market-ready solutions. Across industries like banking and financial services, healthcare and life sciences, retail and consumer goods, high-tech, and more, Ascendion is committed to helping clients move beyond experimentation to build AI-first systems that deliver real results.

“The 2025 winners reflect the innovation and forward-thinking mindset needed to lead in AI today,” said San Madan, President of the Globee® Awards. “With organizations across the globe engaging in data-driven evaluations, this recognition truly reflects broad industry endorsement and validation.”

About Ascendion

Ascendion is a leading provider of AI-powered software engineering solutions that help businesses innovate faster, smarter, and with greater impact. We partner with over 400 Global 2000 clients across North America, APAC, and Europe to tackle complex challenges in applied AI, cloud, data, experience design, and workforce transformation. Powered by +11,000 experts, a bold culture, and our proprietary Engineering to the Power of AI (EngineeringAI) approach, we deliver outcomes that build trust, unlock value, and accelerate growth. Headquartered in New Jersey, with 40+ global offices, Ascendion combines scale, agility, and ingenuity to engineer what’s next. Learn more at https://ascendion.com.

Engineering to the Power of AI™, AAVA™, EngineeringAI, Engineering to Elevate Life™, DataAI, ExperienceAI, Platform EngineeringAI, Product EngineeringAI, and Quality EngineeringAI are trademarks or service marks of Ascendion®. AAVA™ is pending registration. Unauthorized use is strictly prohibited.

About the Globee® Awards
The Globee® Awards present recognition in ten programs and competitions, including the Globee® Awards for Achievement, Globee® Awards for Artificial Intelligence, Globee® Awards for Business, Globee® Awards for Excellence, Globee® Awards for Cybersecurity, Globee® Awards for Disruptors, Globee® Awards for Impact. Globee® Awards for Innovation (also known as Golden Bridge Awards®), Globee® Awards for Leadership, and the Globee® Awards for Technology. To learn more about the Globee Awards, please visit the website: https://globeeawards.com.

SOURCE Ascendion

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AI Insights

Overcoming the Traps that Prevent Growth in Uncertain Times

Published

1 hour ago

July 7, 2025

Rachel DuRose

An executive’s guide on developing a momentum-building game plan when the future is foggy. by Rachel DuRose

July 7, 2025

Today, with uncertainty a seemingly permanent condition, executives need to weave adaptability, resilience, and clarity into their operating plans. The best executives will implement strategies that don’t just sustain their businesses; they enable growth.

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