A recent decision from a federal court in Pennsylvania highlights the importance of a carefully crafted statement of work (“SOW”) when commissioning an investigative report in response to a data security breach. A convenience store chain recently learned this lesson the hard way when it was ordered to produce to plaintiffs’ counsel a report it commissioned from a cybersecurity consultant to determine the scope of a data breach. The store — which is the defendant in a class action stemming from a 2019 malware attack that compromised customer information — argued that the report was protected from discovery under the attorney-client privilege and/or work product doctrine because the consultant was hired by counsel. The defendant had engaged that counsel for advice on any notification obligations flowing from the attack.
While a uniform federal privacy law in the United States continues to be an uncertain prospect overshadowed by other national priorities such as infrastructure and COVID relief, state legislatures have pushed forward with their own privacy regimes, resulting in an increasing patchwork of laws which businesses must parse in order to remain compliant. State legislatures across the country continue to develop and expand privacy protections for their citizens, as Colorado recently became the third state in the USA to create a privacy regime with echoes of the European Union’s General Data Protection Regulation (“GDPR”), and Nevada adjusted its existing data broker law in a manner that will require companies doing business in that state to reassess their exposure and compliance needs.
This is the second installment of our summary of the Virginia Consumer Data Protection Act (“VCDPA”). In our first post, we covered the goals of the law as well as its applicability and thresholds, what qualifies as personal data, the consumer rights created by the VCDPA, and introduced the concepts of controllers and processors. In this post, we address some of the specific requirements for controllers and processors, as well as de-identification and pseudonymization of personal data, and enforcement of the VCDPA.
On May 12, 2021, President Biden issued Executive Order No. 14028, entitled “Improving the Nation’s Cybersecurity”, setting out new and enhanced cybersecurity standards for federal government agencies and the commercial software products utilized by them. The Biden administration’s order comes in the wake of increasingly damaging and sophisticated cyber-attacks on American companies and infrastructure, most notably the recent Colonial Pipeline ransomware attack, which temporarily shuttered the nation’s largest fuel pipeline, creating gasoline shortages and inducing panic-buying at gas stations throughout the southeastern United States. Recognizing the gravity of the cybersecurity threat, President Biden’s order calls for “bold changes and significant investments in [cybersecurity in] order to defend the vital institutions that underpin the American way of life[,]” and identifies “the prevention, detection, assessment, and remediation of cyber incidents [a]s a top priority and essential to national and economic security[.]” The executive order has two main areas of focus: bolstering and harmonizing cybersecurity standards across the federal government, and calling for the creation of new, stricter cybersecurity requirements for commercial software products utilized by federal government agencies.
Virginia recently joined California in enacting a comprehensive data protection law intended to protect the privacy of its residents. The Virginia Consumer Data Protection Act (the “VCDPA”) is scheduled to take effect on January 1, 2023, so impacted businesses have significant lead time to prepare. This is the first of two posts covering the VCDPA.
The VCDPA has two main goals: (1) providing Virginia residents with expanded rights in connection with their personal data, and (2) imposing obligations on businesses, such as securing personal data, limiting use of personal data to disclosed purposes, and flowing down requirements to processors receiving personal data. While many of the details differ, the overall approach of the VCDPA is very reminiscent of the European Union’s General Data Protection Regulation (“GDPR”) but without some of the more prescriptive elements. Businesses with existing GDPR or California Consumer Privacy Act (“CCPA”) compliance programs will be well positioned for VCDPA compliance.
On November 10, the European Data Protection Board (EDPB), the European Union’s top data privacy regulator, issued long-awaited guidance setting out a framework for navigating transfers of data out of the European Economic Area (EEA) in light of this July’s landmark ruling from the Court of Justice of the European Union (CJEU) inData Protection Commissioner v. Facebook Ireland and Maximilian Schrems (otherwise known as Schrems II). The EDPB also issued a document describing the “essential guarantees” that must be respected in order to ensure that interference with data subjects’ privacy and data protection rights through surveillance of transferred data does not “go beyond what is necessary and proportionate in a democratic society.” These two documents outline the risk assessment that companies must make on a case-by-case basis (as required by Schrems II) in order to allow transfers of data out of the EEA, while the first also discusses examples of the supplementary measures that companies can employ, together with standard contractual clauses, binding corporate rules or other legal transfer tools recognized by the EU General Data Protection Regulation (GDPR), to ensure that European data subjects receive an essentially equivalent level of privacy and data protection when their data is transferred out of the EEA.
On June 24, the eve of the July 1 enforcement date for the California Consumer Privacy Act (CCPA), the California Secretary of State certified the California Privacy Rights Act (CPRA), the latest brainchild of privacy activist (and CCPA spiritual father) Alastair Mactaggart, to appear on the November 2020 ballot after it gained the requisite number of signatures. Mactaggart’s organization Californians for Consumer Privacy, along with other prominent consumer privacy advocates, had repeatedly expressed frustration with the California legislature’s efforts to amend the CCPA in 2019 at the behest of the business community, and they responded with an even more robust comprehensive privacy law that will align California closely with the European Union’s General Data Protection Regulation (GDPR). Pre-pandemic polling has shown the CPRA to be overwhelmingly popular (with support ranging as high as 90 percent), and it is heavily favored to be approved by the voters this fall.
A new federal COVID-19 data privacy bill with bipartisan
support, the Exposure Notification Privacy Act, would have a substantially narrower
scope of application than two previous partisan draft COVID-19 privacy laws. The bipartisan bill specifically regulates “automated
exposure notification services,” defined as any website or other online or
mobile system “specifically to be used for . . . the purpose of digitally
notifying, in an automated manner, an individual who may have become exposed to
an infectious disease[.]” This
definition of an “automated exposure notification service” is clearly meant to
encompass the rapidly proliferating universe of COVID-19 contact tracing and
notification systems which are increasingly being used to send alerts to
individuals who have come into close physical proximity with someone later
confirmed as COVID-19 positive (although it bears noting that the bill would
regulate any contact tracing system for any infectious disease, not just
COVID-19). Accordingly, this new
bipartisan bill markedly diverges from the approaches of two previous “dueling”
partisan COVID-19 data privacy bills, both of which would have protected
individuals’ COVID-19-related health information in a variety of circumstances,
not only in the context of automated contact tracing. For our comparison of the previously
introduced Democrat- and Republican-sponsored bills, please click
Responding to widespread calls for uniform rules and
restrictions regarding the collection and use of individuals’ COVID-19-related
health information, Congressional Republicans and Democrats have each recently introduced
their own versions of federal COVID-19 data privacy bills. Although both parties’ bills share the same
big-picture goal of protecting individuals’ COVID-19 information, the Democrats
and Republicans have each taken slightly different approaches, resulting in
some crucial distinctions between the dueling bills.
On May 4, 2020, the European Data Protection Board
adopted updated guidelines on what does and does not constitute consent under
the General Data Protection Regulation (GDPR) in certain situations. Consent is one of the lawful bases to process
personal information under GDPR. To be
valid, consent must be freely given, specific, informed, and unambiguous. Consent is freely given only where a data
subject has a genuine choice.
First, the Board made is clear that consent cannot be
freely given where the choice for the data subject is between using the
services of one controller and using the services of a different controller. Therefore, if a controller gives data
subjects the choice of “consent or don’t use my services,” it cannot point to
choice in the marketplace generally as a means to prove that data subjects
using its service have provided valid consent.
Such an argument, according to the Board, would require that controllers
monitor developments in the market to ensure such choice still existed among
its competitors. It would also
constantly raise the question of whether the competitors’ services were
genuinely equivalent to controller’s services.
In the new digital world, individuals and businesses are almost entirely dependent on computer technology and electronic communications to function on a daily basis. Although the power of modern technology is a source of opportunity and inspiration—it also poses huge challenges, from protecting privacy and securing proprietary data to adhering to fast-changing statutory and regulatory requirements. The Cyber Law Monitor blog covers privacy, data security, technology, and cyber space. It tracks major legal and policy developments and provides analysis of current events.
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