Privacy & Information Security Law Blog

The Obama Administration is in the process of finalizing its review of a statutory electronic surveillance proposal initially developed by the FBI, and is expected to support the introduction of a modified version as legislation. The proposal addresses concerns raised by law enforcement and national security agencies regarding the widening gap between their legal authority to intercept real-time electronic communications pursuant to a court order, and the practical difficulties associated with actually intercepting those communications. According to the government, this gap increasingly prevents the agencies from collecting Internet-based phone calls, emails, chats, text messages and other communications of terrorists, spies, organized crime groups, child pornography distributors and other dangerous actors. The FBI refers to this as the “going dark” problem.

On May 10, 2013, CBS News interviewed two cybersecurity authorities to discuss the growing debate of privacy online. In the feature, entitled “Should there be a ‘right to be forgotten’ online?,” Lisa J. Sotto, partner and head of the Privacy and Data Security practice at Hunton & Williams LLP, talked about the problem of individuals’ rights to delete their online activity. She pointed out that the U.S. has no comprehensive online privacy law, and instead has a framework “comprised of a patchwork quilt of laws.” ...

On May 7, 2013, the hacker group Anonymous announced that it, in concert with Middle East- and North Africa-based criminal hackers and cyber actors, will conduct a coordinated online attack labeled “OpUSA” against banking and government websites today. Anonymous stated that OpUSA will be a distributed denial of service (“DDoS”) in which websites may be defaced and legitimate users may be unable to access websites.

The FBI Director’s Senior Cybersecurity Adviser Paul M. Tiao has joined Hunton & Williams LLP as a partner in the Privacy and Data Security practice group. Tiao served as Senior Counselor to FBI Director Robert S. Mueller III on cybersecurity, electronic surveillance, intellectual property crimes, digital forensics, and other national security and criminal issues. He formulated cybersecurity policy positions, drafted legislative language, coordinated strategy on these issues; and represented the FBI in discussions within the Executive Branch, with Congress, and with industry leaders. Tiao will be based in the firm’s Washington office.

On April 17, 2013, the Federal Trade Commission issued a press release seeking public input on “The Internet of Things” – the ability of numerous “everyday devices to communicate with each other and with people.” The FTC will accept comments through June 1, 2013, in advance of a public workshop to be held in Washington, D.C. on November 21, 2013.

On April 16, 2013, the Office of the President issued a Statement of Administration Policy that includes a threat to veto the U.S. House of Representatives’ Cyber Intelligence Sharing and Protection Act (“CISPA” or H.R. 624) if further changes are not made to the bill’s privacy protections. Specifically, the Obama Administration recommends that the bill require private entities to remove personal information when sharing cybersecurity information with the government or other private entities.

On March 28, 2013, the Department of Commerce’s Notice of Inquiry into “Incentives to Adopt Improved Cybersecurity Practices” was published in the Federal Register (78 Fed. Reg. 18954). This Notice, which includes a series of broad questions for owners of the nation’s critical infrastructure, follows up on earlier Commerce inquiries focused on incentives for noncritical infrastructure. The Notice states that Commerce will use the responses it receives to evaluate a set of incentives designed to encourage owners of critical infrastructure to participate in a voluntary cybersecurity program. The Notice also indicates that Commerce will use the responses to inform its evaluation of whether the incentives would require legislation or could be implemented pursuant to existing law and authorities. In addition, the Notice provides that Commerce may use the responses to develop a broader set of recommendations that would apply to U.S. industry as a whole.

Hunton & Williams LLP is pleased to announce that Lisa J. Sotto, partner and head of the firm’s Global Privacy and Data Security practice, has been named to The National Law Journal’s “The 100 Most Influential Lawyers in America” list. Last published in 2006, this is only the eighth time this list of legal luminaries has been compiled since it was first established in 1985 as “Profiles in Power.”

On March 27, 2013, the UK Government announced the Cyber Security Information Sharing Partnership (“CISP”), a partnership between government and industry to share intelligence on cybersecurity threats.

Introduction of the CISP follows a successful pilot program across key UK sectors and is part of the UK’s Cyber Security Strategy to facilitate information-sharing on cyber threats. It introduces a secure web portal where government and industry partners can exchange real-time information regarding threats and vulnerabilities they have identified. It also sets up a team of expert analysts, the Fusion Cell, to draw together a single intelligence picture of cyber threats across the UK. It is understood that the Fusion Cell will be staffed by analysts drawn from industry, as well as the law enforcement and intelligence communities.

On March 5, 2013, the German Federal Ministry of the Interior published proposed amendments (in German) to the German Federal Office for Information Security Law. These proposed amendments are significant because they establish a new duty to notify the German Federal Office for Information Security in the event of a cybersecurity breach.

As reported in The Washington Post, large financial institutions are increasingly disclosing cyber attacks, and potential vulnerability to cyber threats, in their annual reports filed with the Securities and Exchange Commission. Numerous banks disclosed such attacks in their 2012 reports, even in cases where the ongoing threat of the attacks did not result in any material harm to the institution. For example:

On February 26, 2013, the National Institute of Standards and Technology (“NIST”) issued a Request for Information (“RFI”) to gather comments regarding the development of a framework to reduce cybersecurity risks to critical infrastructure. As we previously reported, the Obama Administration’s executive order, Improving Critical Infrastructure Cybersecurity (the “Executive Order”), released on February 12, 2013, directs NIST to coordinate development of this framework. Under the Executive Order, NIST is charged with collaborating with industry partners and identifying existing international standards and practices that have proven effective.

On February 20, 2013, Hunton & Williams LLP hosted a webinar on cybersecurity risks and the Obama Administration’s recently-issued Executive Order on cybersecurity issues related to critical infrastructure. The webinar, entitled “The Cybersecurity Executive Order: Understanding Its Impact on Your Business,” covered issues such as the current threat landscape, U.S. and EU regulatory initiatives related to cybersecurity, and guidelines to help businesses prevent and manage cyber events.

The Executive Order, “Improving Critical Infrastructure Cybersecurity,” and the Presidential Policy Directive (“PPD”), “Critical Infrastructure Security and Resilience,” signed by President Obama on February 12, 2013, raise the stakes in the national debate over cybersecurity requirements and seem likely, if not designed, to provoke a legislative response. Industry has good reason to pay attention.

On February 12, 2013, the Obama Administration released its highly-anticipated Executive Order on cybersecurity. Evolving cyber threats and increased government attention to these issues will affect companies in every industry, and businesses must consider a proactive approach to protecting against risks to critical business systems, company personal data, intellectual property and other proprietary information.

On February 12, 2013, in conjunction with the release of an executive order on Improving Critical Infrastructure Cybersecurity (the “Executive Order”), President Obama signed a Presidential Policy Directive on Critical Infrastructure Security and Resilience (“PPD-21” or “PPD”). The PPD revokes the 2003 Homeland Security Presidential Directive-7 (issued by President George W. Bush as an initiative under the former Office of Homeland Security and the Homeland Security Council) to adjust to the new risk environment and make the nation’s critical infrastructure more resilient. The PPD expands upon the work that has been accomplished to date for the physical security of critical infrastructure and lays a foundation for the implementation of the Executive Order to protect critical infrastructure cybersecurity.

Today, the Obama Administration released an executive order, Improving Critical Infrastructure Cybersecurity (the “Executive Order”), which is focused primarily on government actions to support critical infrastructure owners and operators in protecting their systems and networks from cyber threats. The Executive Order requires administrative agencies with cybersecurity responsibilities to (1) share information in the near-term with the private sector within the scope of their current authority and to develop processes to address cyber risks; and (2) review and report to the President on the sufficiency of their current cyber authorities. The requirements to review and report to the President likely will serve to pressure Congress to pass more comprehensive legislation that should, inter alia, address issues that an executive order cannot, such as the provision of liability protection, incentives for compliance, and regulatory authority to compel compliance.

On February 7, 2013, the European Commission, together with the High Representative of the Union for Foreign Affairs and Security Policy, launched their cybersecurity strategy for the European Union (“Strategy”). As part of this Strategy, the European Commission also proposed a draft directive on measures to ensure a common level of network and information security (“NIS”) across the EU (the “Directive”).

Recently, the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (“LIBE”) released a study titled Fighting cyber crime and protecting privacy in the cloud (the “Study”). The Study originally was prepared in October 2012 at the request of the LIBE Committee by the European Parliament’s Policy Department of Citizens’ Rights and Constitutional Affairs, with the help of the Centre for European Policy Studies and the Centre d’Etudes sur les Conflits.

On December 10, 2012, Tom Field of HealthcareInfoSecurity interviewed Lisa J. Sotto, partner and head of the Global Privacy and Data Security practice at Hunton & Williams LLP. Discussing the top legal issues in 2012, Lisa said that data breaches remain at the top of the list, with an increase in malicious cyberattacks. She also addressed the need to combat cybercrime.

In partnership with SC Magazine, we are pleased to announce that on November 22-23, 2012, SC Magazine will host its 2012 Virtual Summit “Tackling the Big 3: Clouds, Consumerisation, Cybercrime,” featuring Hunton & Williams partner Bridget Treacy. Following a year of sharp increases in data breaches and regulatory fines, the SC Summit will explore and focus on cybercrime, mobile devices and cloud security – three key priorities for 2013. Bridget Treacy and Paul Swarbrick, Chief Information Security Officer and Head of Cybersecurity for National Air Traffic Services, will open the Summit with their keynote presentation, “Where’s the Danger? From Cybercrime to Consumerisation to the Cloud, Today’s Most Potent Threats Unmasked.” Paul will discuss the data security issues that keep him awake at night and Bridget will offer vital, current perspective on the ever-changing legal landscape.

The absence of congressional action on cybersecurity legislation has spurred efforts by various entities to exert influence over cybersecurity policy. This client alert focuses on some of those efforts, including the Federal Energy Regulatory Commission’s (“FERC’s”) creation of a new cybersecurity office, North American Electric Reliability Corporation (“NERC”) action on cybersecurity Critical Infrastructure Protection (“CIP”) standards, continuing legislative developments concerning cybersecurity and anticipated White House executive orders on cybersecurity.

On September 27, 2012, the European Commission presented its new strategy on cloud computing, entitled “Unleashing the Potential of Cloud Computing in Europe.” The Commission’s strategy is outlined on a new webpage that includes a communication document and a more detailed staff working paper.

On April 26, 2012, the U.S. House of Representatives approved the Cyber Intelligence Sharing and Protection Act (“CISPA” or H.R. 3523), which is aimed at facilitating the exchange of cyber threat intelligence information between the government and certain private entities. In addition, the House approved the Federal Information Security Amendments Act of 2012 (H.R. 4257), which modifies the Federal Information Security Management Act of 2002 to provide for automated and continuous monitoring of the security of government information systems.

On February 14, 2012, a joint U.S. congressional committee, including Senators Joseph Lieberman (I-CT), Susan Collins (R-ME), Jay Rockefeller (D-WV) and Dianne Feinstein (D-CA), introduced the Cybersecurity Act of 2012 (the “Act”). Although the legislation appears to have strong bipartisan support, during a February 15 hearing before the Homeland Security and Governmental Affairs Committee, Senator John McCain (R-AZ) indicated that he and six Republican colleagues would propose their own cybersecurity legislation in March.

On December 12, 2011, the United States Court of Appeals for the Third Circuit affirmed a decision that employees of Ceridian Corporation's (“Ceridian's") customers did not have standing to sue Ceridian after the payroll processing firm suffered a data breach.

On October 24, 2011, Israel’s Data Protection Authority, the Israeli Law, Information and Technology Authority in the Israeli Ministry of Justice (“ILITA”), announced significant developments in an information theft case affecting more than nine million Israeli citizens. In 2006, a contract worker hired by Israel’s Ministry of Welfare and Social Services downloaded a copy of Israel’s population registry to his home computer. The registry later fell into the hands of a software developer and a hacker before being disseminated on the Internet along with a program that allowed users to run searches and queries on the data. The stolen personal information included full names, identification numbers, addresses, dates of birth, dates of immigration to Israel, family status, names of siblings and other information.

On October 13, 2011, the Securities and Exchange Commission Division of Corporation Finance issued disclosure guidance (“Guidance”) regarding cybersecurity matters and cyber incidents. While the Guidance does not change existing disclosure requirements, it does add specificity to existing requirements. In some respects, that specificity is helpful, but the Guidance fails to take into account the uncertainty that inevitably accompanies efforts to assess and disclose cybersecurity matters and incidents.

Read a detailed summary of the Guidance and analysis regarding ...

On June 9, 2011, Lisa J. Sotto, partner and head of Hunton & Williams LLP’s Privacy and Data Security practice, spoke during the regulatory session on state and federal laws at NetDiligence’s Cyber Risk & Privacy Liability Forum in Philadelphia.  Sotto discussed recent changes to the legal landscape, emphasizing regulatory authorities’ growing interest in policy and enforcement issues and increased legislative activity on the state and federal levels.

View an excerpt from Sotto’s remarks as part of the panel discussion.

As reported in BNA’s Privacy Law Watch, on July 19, 2011, President Obama announced his intention to nominate Maureen K. Ohlhausen to the Federal Trade Commission. Obama sent his official nomination to the Senate on July 21, 2011. If approved, Ohlhausen will serve a seven-year term beginning on September 26, 2011, replacing Commissioner William E. Kovacic.

On June 16, 2011, the German Federal Ministry of the Interior officially opened a National Cyber Defense Center as part of the comprehensive cybersecurity strategy that was adopted by the German federal government on February 23, 2011.  The Cyber Defense Center is intended to serve as a common platform for rapid information exchange and better coordination of protective and defensive measures against information technology security incidents.

On June 13, 2011, Representative Mary Bono Mack (R-CA) released a discussion draft of the Secure and Fortify Data Act (the “SAFE Data Act”), which is designed to “protect consumers by requiring reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a security breach.”  Representative Bono Mack is Chairman of the House Subcommittee on Commerce, Manufacturing and Trade.  In a press release, Representative Bono Mack remarked that “E-commerce is a vital and growing part of our economy.  We should take steps to embrace and protect it – and that starts with robust cyber security.”  She added that “consumers have a right to know when their personal information has been compromised, and companies and other organizations have an overriding responsibility to promptly alert them.”

On June 8, 2011, the Department of Commerce’s Internet Policy Task Force released a report entitled “Cybersecurity, Innovation and the Internet Economy.”  The report contains four broad policy recommendations: (1) the creation of a nationally recognized approach to minimize vulnerabilities for the Internet and networking services industry, (2) the development of incentives to combat cybersecurity threats, (3) increased cybersecurity education and research, and (4) the promotion of international cooperation to enable sharing of cybersecurity best practices.

On June 7, 2011, Senator Patrick Leahy (D-VT) introduced the “Personal Data Privacy and Security Act of 2011” (the “Act”), co-sponsored by Senators Charles Schumer (D-NY) and Ben Cardin (D-MD).  This marks the fourth time Senator Leahy has introduced ambitious privacy legislation; in 2005, 2007 and 2009, similar bills failed to advance in the Senate.  In his press release, Senator Leahy stated that “many recent and troubling data breaches in the private sector and in our government are clear evidence that developing a comprehensive national strategy to protect data privacy and security is one of the most challenging and important issues facing our country.”

As we reported last week, on May 12, 2011, the Obama administration announced a comprehensive cybersecurity legislative proposal in a letter to Congress.  The proposal, which is the culmination of two years of work by an interagency team made up of representatives from multiple departments and agencies, aims to improve the nation’s cybersecurity and protect critical infrastructure.  If enacted, this legislation will affect many government and private-sector owners and operators of cyber systems, including all critical infrastructure, such as energy, financial systems, manufacturing, communications and transportation.  In addition, the proposal includes a wide-reaching data breach notification law that is intended generally to preempt the existing state breach laws in 46 states plus Washington, D.C., Puerto Rico and the U.S. Virgin Islands.

On May 12, 2011, the White House released the long-expected cybersecurity legislative proposal in response to the need to protect Americans from cyber threats.  The proposal is the culmination of several years of work following the White House’s release of the Cyberspace Policy Review in 2009 and includes the following sections:

On May 2, 2011, Sony Computer Entertainment America (“Sony”) disclosed that hackers had gained access to the personal information of 24.6 million customers who played games on the Sony Online Entertainment (“SOE”) network.  Sony stated that hackers may have accessed names, addresses and birth dates of SOE gaming customers, as well as credit card data of about 12,700 non-U.S. accounts and 10,700 bank account numbers from “an outdated database from 2007.”  Sony clarified that the SOE breach was not the result of a second attack, but rather occurred as part of the broad incursion against the company that affected 77 million PlayStation accounts, as the company previously disclosed on April 26.

On January 14, 2011, the European Network and Information Security Agency (“ENISA”), which was created to enhance information security within the European Union, published a report entitled “Data breach notifications in the EU” (the “Report”).

Currently, there is wide debate throughout the EU regarding data breach notification requirements.  The debate stems from recent high-profile data breach incidents and the introduction of mandatory data breach notification requirements for telecommunication service providers imposed by EU Directive 2009/136/EC (amending EU Directive 2002/58/EC, the “e-Privacy Directive”), which must be integrated into EU Member States’ national laws by May 25, 2011.  The goal of the Report is to assist Member States, regulatory authorities and private organizations with their implementation of data breach notification policies.

The United States Congress is currently considering several bills addressing cybersecurity issues.  Below are brief summaries of four such bills.

The Grid Reliability and Infrastructure Defense (“GRID”) Act

The GRID Act was passed by the House of Representatives on June 9, 2010. This bill would amend the Federal Power Act to grant the Federal Energy Regulatory Commission (“FERC”) authority to issue emergency orders requiring critical infrastructure facility operators to take actions necessary to protect the bulk power system. Prior to FERC issuing such an order, the President would have to issue a written directive to FERC identifying an imminent threat to the nation’s electric grid.  FERC would be required to consult with federal agencies or facility operators before issuing an emergency order only “to the extent practicable” in light of the nature of the threat. The GRID Act is being considered by the Senate Committee on Energy and Natural Resources at this time.

According to BNA’s Privacy Law Watch, on March 8, 2010, Senator Patrick Leahy asked President Obama to nominate members for the dormant Privacy and Civil Liberties Oversight Board.  The Board, which was created in 2004 upon the recommendation of the 9/11 Commission, focuses on ensuring that privacy and civil liberties concerns are incorporated into anti-terrorism laws and regulations.  Although President Obama had pledged in May 2009 to reconstitute the board, which has had no members since January 2008, privacy advocates say that his focus on cybersecurity issues has delayed ...

A lawsuit that will soon commence in Arizona has the potential to alter the data breach liability landscape by making data security auditors liable for data breaches experienced by the companies they audit.  The case, Merrick Bank Corp. v. Savvis Inc., has its origins in events that began in 2003, when Merrick Bank (“Merrick”) offered to hire CardSystems Solutions (“CardSystems”) to process credit card transactions for its merchant customers.  The offer was contingent upon CardSystems achieving certification under VISA’s Cardholder Information Security Program (“CISP”), which is the predecessor to the Payment Card Industry Data Security Standard (“PCI DSS”).  Savvis audited CardSystems in 2004 and found that it had “implemented sufficient security solutions” and followed “industry best practices.”  VISA certified CardSystems shortly after receiving Savvis’ audit report.  In 2005, CardSystems revealed that it had experienced an information security breach that compromised forty million payment cards.

The White House today released the report from the 60-day cybersecurity review the President ordered in February. Speaking to a packed audience in the East Room, President Obama outlined the broad range of threats facing the digital infrastructure, focusing not only on national security and organized crime attacks, but also on identity theft and incursions into individual privacy.

He promised a “new comprehensive approach to securing our nation’s infrastructure,” including appointment of a White House cybersecurity coordinator reporting to both the National Security Council and the National Economic Council. The coordinator would have broad responsibilities, but little direct authority, although the President did promise that the coordinator would have access to him.

News last week that Chinese and Russian hackers had infiltrated the U.S. electrical power grid gave practical significance to already high-profile issues in Washington -- how better to secure the nation’s cyber-infrastructure.  Late in 2008, the Center for Strategic and International Studies Commission on Cyber Security for the 44th Presidency (the Commission) released a report citing the U.S.’s failure to protect cyberspace as “one of the most urgent national security problems” facing the Obama administration.  The failure threatens the safety and well-being of the United States and its allies and raises immediate risks for the economy.  In a global economy, where economic strength and technological leadership are as important to national power as military force, failing to secure cyberspace puts the U.S. at a disadvantage.  When Chinese and Russian intruders apparently left software on networks supporting the U.S. power grid that could be used to compromise electric and water systems, the warnings of the Commission proved true in a real-world way.

Former Silicon Valley entrepreneur Rod Beckstrom has tendered his resignation from the post of Director of United States National Cybersecurity Center, effective March 13, 2009.  In his resignation letter to Secretary of Homeland Security Janet Napolitano, Mr. Beckstrom complained of inadequate funding and criticized the National Security Agency’s dominant role in “most national cyber efforts.”  He characterized this arrangement as “bad strategy” because “intelligence culture is very different than a network operations or security culture,” and he argued ...