Even president-elect Donald Trump has been the victim of a data breach. Several times actually. The payment card system for his Trump Hotel Collection was infected by malware in May 2014 and 70,000 credit card numbers were compromised by the time the hack was discovered several months later. The hotel chain paid a penalty to the State of New York for its handling of that incident. The hotel chain also experienced at least two additional breaches during this past year affecting various properties. From a business perspective, Mr. Trump certainly understands the high costs of cybersecurity in dollars and distraction. But from the Oval Office, it is far less clear what the Trump Administration might do to secure our country’s digital infrastructure and prosecute cybercriminals. Equally uncertain are Mr. Trump’s views on privacy rights and how his presidency might affect federal protections for personal information and cross-border transfers of data. We do not have a crystal ball, but offer some thoughts. Continue Reading The Cyber President? What To Expect From the Trump Administration On Cybersecurity And Privacy
For the next few months, the Mintz Levin Privacy Webinar Series is focusing on the upcoming EU General Data Protection Regulation (GDPR) to help businesses understand the reach and scope of the GDPR and prepare for the potentially game-changing privacy regulation. The GDPR will affect how US businesses handle and process personal data originating in the EU and may require changes to business process.
Next week, we’ll present a webinar focusing on the data security and accountability requirements of the GDPR, including reviews and documentation of internal policies and procedures and data impact assessments. We will also take a look at the onerous breach notification requirements and recommend actions that companies can take in advance to mitigate the need for breach notification.
Make sure to join us for this important webinar!
Registration link is here.
The Article 29 Working Party (WP29) has released a brief updated statement on the final form of the Privacy Shield adequacy decision and supporting annexes. WP29 is an important advisory group made up of representatives of each of the EU’s national data protection authorities. In a nutshell, WP29 has said that Privacy Shield isn’t perfect, but it will wait until the first annual review to raise specific objections, which gives the Privacy Shield program enough time to get up and running. The WP29 statement promises that, during the first annual review of Privacy Shield, “the national representatives of the WP29 will not only assess if the remaining issues have been solved but also if the safeguards provided under the EU-U.S. Privacy Shield are workable and effective.” WP29 goes on to say that “[t]he results of the first joint review regarding access by U.S. public authorities to data transferred under the Privacy Shield may also impact transfer tools such as Binding Corporate Rules and Standard Contractual Clauses.”
While WP29’s statement has been interpreted by at least one legal news source as a one-year moratorium on Privacy Shield litigation, that seems rather unlikely. The WP29 does not have the legal power to deprive any EU data subject of his or her right to challenge Privacy Shield on human rights grounds, or to materially delay such a challenge. If a national DPA refused to hear a complaint on the basis of the putative WP29 moratorium, the national courts would most likely find against the DPA.
A more modest — and realistic- – interpretation of the WP29 opinion would be that the DPAs themselves won’t seek to scupper Privacy Shield during its first year. Instead, they will leave that to Max Schrems and other individuals who remain skeptical of the EU-US privacy deal.
The EU Commission has formally adopted Privacy Shield and the US Department of Commerce will go live with a new Privacy Shield registration website on August 1. US companies that had been registered under Safe Harbor will need to complete a new internal review, self-certification and registration to take advantage of Privacy Shield.
Much of the negotiation of Privacy Shield has focused on enforcement and oversight of the program by US authorities (as well as on the US intelligence agencies’ own collection and use of EU personal data). Companies that are already familiar with Safe Harbor will find Privacy Shield’s general privacy principles to be very similar. However, companies will want to take note of the more stringent conditions for onward transfers to third parties, which are likely to require companies to review their contracts with service providers and business partners. Companies will also need to scrutinize their data retention practices carefully. Overall, annual data protection reviews will be necessary as part of continued self-certification. The Department of Commerce is expected to take a more active role in proactively monitoring compliance, so companies will need to be prepared for inspections even if no complaints have been made.
The final version of Privacy Shield and its appendices, along with a press release and FAQ, are available here.
The final version of Privacy Shield (which has not yet been officially published) passed the Article 31 Committee vote on July 8th and is being presented today to the LIBE committee of the European Parliament. LIBE’s vote is advisory, but it may provide some early indications as to how well Privacy Shield will survive anticipated legal attacks once it is formally adopted and implemented.
Formal adoption of Privacy Shield is widely expected to happen this week. Once that happens, the US Department of Commerce or FTC should publish the final text and start processing registrations. Companies considering certifying under Privacy Shield should note that it requires a greater degree of internal scrutiny and documentation than Safe Harbor did.
Companies that have put standard clauses in place following the demise of Safe Harbor will want to consider the pros and cons of participating in Privacy Shield rather than continuing to rely on the standard clauses. Neither approach is guaranteed to be risk-free: The standard clauses have been sent to the Court of Justice of the EU for review under the second round of the Schrems case in Ireland, and Privacy Shield is virtually certain to end up before the Court of Justice at some point within the next year or two.
Not all the news coming out of Europe these days is about Brexit. In fact, the forces of unity and harmonization remain a top priority for European regulators hoping to combat digital security threats and create a safer and more secure environment for the entire online community. To this end, on July 6, 2016, the European Parliament adopted the Network and Information Security (“NIS”) Directive in an effort to enhance cybersecurity and incident reporting at a national level across all of its member states (“NIS Directive”). This move followed an announcement the day before from the European Commission (the “Commission”) that it had launched a public-private initiative that will steer €1.8 billion of investment into cybersecurity by 2020. Continue Reading EU Adopts Cybersecurity Directive: What US Companies Need to Know
According to several news reports, the Commission has sent a revised draft of the Privacy Shield adequacy decision to the Article 31 Committee. One tech industry news source, Ars Technica, has made available a purportedly leaked draft of the version of Privacy Shield that is being reviewed by the Article 31 Committee. The Commission has reportedly asked the Committee to vote to adopt Privacy Shield on Monday. Whether or not the Article 31 Committee will act swiftly remains to be seen, but we expect further news early next week.
US companies and policy makers will no doubt spend a good chunk of the day today considering the possible implications for them of yesterday’s UK vote for Brexit. Mark Carney, Governor of the Bank of England, has issued a statement to calm the markets. I will content myself with a much more modest statement to calm US companies who have been working hard to fill in the gap left by the demise of Safe Harbor and to prepare for the implementation of the GDPR in May 2018: Brexit will have very little, if any, impact on the UK’s approach to data protection laws, at least in the medium term (say the next five years or so).
Why is that? First and foremost, the UK has no interest in doing anything that would impede the flow of personal data between the UK and the rest of Europe. The GDPR, like the current laws under the Data Protection Directive, provides a pathway of least resistance for data transfers: If a country’s laws “ensure[ ] an adequate level of protection” for the personal data, the Commission can issue an adequacy decision to allow data transfers to that country (without the need for model clauses or BCRs). The most straightforward way for the UK to get an adequacy decision is to adopt and implement the GDPR (or at least all of the material parts of the GDPR) as part of its national legislation.
Second, of all the things that the UK will need to negotiate with the EU over the coming years, any quibbles that the UK may have about data protection legislation is likely to be low on the list, far behind passporting of banking services and new immigration arrangements. The UK did have some concerns about the GDPR, as communicated by the ICO in its initial comments on the Commission’s early draft of the GDPR. However, none of them were deal-breakers for the UK.
Third, as a practical matter, UK companies that are part of international corporate groups with a European presence would probably not make it a priority to push hard for UK legislation that eases their burden under UK law, while they still have to comply, in effect, with the GDPR with respect to their European operations (both of their affiliates and with regard to UK companies’ own sales into Europe).
Looking past the medium term, how might the UK’s approach change later on, once the key Brexit negotiations are finished? The ICO did say a couple of weeks ago at a conference that it would consider other approaches, such as the data protection frameworks used in New Zealand or Australia, that meet EU adequacy requirements. However, all of those existing frameworks will need to be reviewed again against the GDPR in order to keep their adequacy decisions in place, so those legal frameworks may look a lot more like the GDPR within a couple of years.
So until the ICO tells us otherwise, US companies working on preparing for the implementation of the GDPR should continue with that work even if their primary EU activities are only in the UK. (And don’t forget that the actual exit is not taking place immediately.)
While it’s making few headlines, the European Commission is still working to finalize Privacy Shield, and it’s even possible that Privacy Shield will pass a key hurdle by the end of this month. The Commission is still scrambling to address the concerns raised by the Article 29 Working Party and the European Data Protection Supervisor concerning the Privacy Shield arrangements that the Commission had negotiated with the US. (The European Parliament has also criticized Privacy Shield.) Some of the concerns raised so far have made it necessary for the Commission to negotiate further with the U.S. State Department. And now the Commission is shortly to present a proposed final version of Privacy Shield to the Article 31 Committee, which represents the Member States.
If the Art. 31 Committee agrees with the Commission, Privacy Shield will be submitted to the College of the Commission for formal adoption. If the Art. 31 Committee does not endorse the Privacy Shield arrangements, the Commission will need to consider further how to proceed. Also, the Council or Commission could intervene as permitted by the comitology procedure (which could result in more pressure on the Commission to negotiate further with the US).
News sources have speculated as to the status of the Article 31 negotiations (see here and here (scroll down)), but given the lack of specific information from the Commission on this point, it’s tough to tell what the real status is. In any event, while we expect to have some more concrete news by the end of June as to the progress of Privacy Shield, it is unlikely that Privacy Shield will be formally adopted by then.
And it’s important to keep in mind that, as soon as Privacy Shield limps over the finish line (assuming it doesn’t succumb to death by a thousand objections), it will almost certainly face immediate litigation seeking to have the Court of Justice of the EU invalidate it.
PS – for those who’ve been wondering, Brexit (should it occur) is unlikely to result in the UK taking a divergent path from the EU on general data protection rules.
Mintz Levin’s Immigration Law Blog is running a series titled “Innocents Abroad” addressing issues in an increasingly globalized economy where employers assign employees all over the globe.
These are big questions, reflecting some of the practical concerns in our international marketplace. The series focuses on the well-intentioned Global HR Director, Ned Help, who will raise hot topics and difficulties his company faces when sending their employees abroad. We will then explore the common pitfalls and offer practical solutions to the difficulties Ned Help faces. This month’s edition: Privacy Considerations – follow the rest of the series at Innocents Abroad.
From: Carrie Counselor
To: Ned Help
Date: May 24, 2016
RE: Privacy considerations for employees working abroad
I understand that one of your employees will be engaging a six-month temporary assignment around Europe to scope market opportunities, and you’d like to have a better understanding of what to be thinking about in terms of privacy. Great question! This is an area where many employers struggle because other jurisdictions protect privacy and personal data quite differently than we do here in the United States.
Generally speaking, federal and state laws applicable to employee information do not have “extraterritorial” effect beyond the information that remains in the United States, meaning that American employees working abroad (even temporarily) will not benefit from US legal protections with respect to personal information collected, stored or transmitted outside of the country.
What makes this area of the law particularly crucial and daunting for employers is that non-US countries frequently offer greater protections to employees and establish far higher compliance obligations on the part of employers. Of particular concern for you should be the data protection landscape across the European Economic Area (referred to as the “EEA,” encompassing all European Union (EU) Member States as well as Iceland, Liechtenstein and Norway) because each country has passed its own set of national laws governing the collection, use, retention and transmission of personal data. Companies must consider these local laws before electronically monitoring an employee outside the United States or transferring an employee’s personal information back home. Let’s talk specifics: Continue Reading Innocents Abroad: Privacy Considerations for Employers