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The European Data Protection Board (“EDPB”)[1] adopted its highly anticipated guidelines on the territorial scope of the General Data Protection Regulation (“GDPR”) (the “Guidelines”), which are currently open for public consultation until January 18, 2019.

The extraterritorial application of the GDPR to entities located in non-EU countries marks a significant shift in the legal framework compared to the GDPR’s predecessor (Directive 95/46/EC).

The GDPR’s extraterritorial scope is based on two main criteria described in its Article 3:

  • the “establishment” criterion, according to which the GDPR applies where processing of personal data is undertaken by a person in the context of the activities of an establishment in the European Union regardless of whether the processing takes place in the European Union or not, and
  • the “targeting” criterion, according to which the GDPR applies where processing activities conducted by a person established outside the European Union relate to the offering of goods or services or the monitoring of behavior of data subjects in the European Union.

As a result of these two criteria, businesses which did not previously need to consider the applicability of EU data protection law to their processing activities may now be caught within the GDPR’s territorial scope. The Guidelines  are intended to bring clarity to non-EU businesses doing business with the EU, either directly or through “establishments”, which must undertake a careful assessment of their data processing activities in order to determine whether the GDPR applies. The full text of the Guidelines can be accessed here and their key features are summarized below. Continue Reading EDPB Publishes Draft Guidelines on the Territorial Scope of the GDPR

On November 21, 2018, in Dittman v. UPMC d/b/a The University of Pittsburgh Medical Center, the Supreme Court of Pennsylvania held that an employer has a legal duty to exercise reasonable care to safeguard its employees’ sensitive personal information stored on an internet-accessible computer.[1] Dittman is notable because it is the first time a state’s highest court has broadly held that a company owes a duty to its employees to protect their personal data that it collects and stores. Also, by rejecting the economic loss doctrine, the court opened the door to the potential recovery of pecuniary damages in data breach cases alleging a negligence theory. If the holding of Dittman is adopted by courts in other states, employers could face increased risk of financial liability following a data breach that compromises personal information of employees. Continue Reading Pennsylvania’s Highest Court Rules that Employers Have a Duty to Guard Their Employees’ Personal Data

On November 27, 2018, the Senate Commerce, Science, and Transportation Committee’s Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security held an oversight hearing of the U.S. Federal Trade Commission.  The hearing marked the first appearance before the Senate of the full slate of current FTC commissioners: Republicans Chairman Joe Simons, Noah Phillips, and Christine Wilson, and Democrats Rohit Chopra and Rebecca Slaughter.  In addition to confirming that the FTC will continue to prioritize data security and privacy enforcement under its consumer protection mandate, the commissioners were unanimous in their support for comprehensive federal data privacy legislation to be enforced by the FTC.  Each, however, offered slightly different views as to the right approach for potential legislation and future enforcement. Continue Reading FTC Chair, Commissioners Endorse Comprehensive Privacy Legislation at Senate Oversight Hearing

Knuddels GmbH & Co KG, a German social media app, has received the first administrative fine issued by a German supervisory authority under the General Data Protection Regulation (“GDPR”).

The fine of € 20,000 has been levied on Knuddels by the Commissioner for Data Protection and Freedom of Information in Baden-Württemberg (one of 16 regional data protection authorities in Germany) following a hack reported by Knuddels in September which resulted in the personal data of approximately 330,000 users being stolen and subsequently published. Such personal data included users’ emails addresses and passwords. Continue Reading First German Fine Issued Under the GDPR

On November 6-8, 2018, the U.S. Federal Trade Commission (“FTC”) hosted a public hearing on “Privacy, Big Data, and Competition.”  The event was part of a series of public hearings on Competition and Consumer Protection in the 21st Century, modeled after the agency’s 1995 “Pitofsky Hearings.”  The series solicits input from a wide variety of private and public sector stakeholders and academics to inform and guide the FTC’s regulatory and enforcement efforts in light of broad economic changes, evolving business practices, new technologies, and international developments. Continue Reading Consumer Protection and Antitrust Regulators, Experts Discuss Privacy, Big Data, and Competition at FTC Hearings

On November 1, 2018, the Canadian Digital Privacy Act came into effect.  The Act, passed on June 18, 2015, modified the data breach obligations for companies subject to the Personal Information Protection and Electronic Documents Act (“PIPEDA”) by introducing three new requirements in the event of certain data breaches:  reporting to the Canadian Office of the Privacy Commissioner (“OPC”), notification to the affected individuals, and recordkeeping obligations.  Below, we discuss these requirements and recent guidance provided by the OPC, and explore some implications for companies subject to PIPEDA. Continue Reading New Mandatory Data Breach Reporting Requirements Become Effective for Companies Doing Business in Canada

On October 4, 2018, the Financial Markets Law Committee (“FMLC”) published a paper on the subject of “Data Protection: Issues of Legal Uncertainty Arising from the UK Data Protection Act 2018.”  Cleary Gottlieb contributed to this paper as a participant in the FMLC’s data protection working group.

The FMLC’s paper focuses on issues of legal uncertainty potentially hindering the continuation of the lawful flow of personal data between the UK, the European Economic Area and/or Third Countries (i.e., countries that are not Member States of the European Union) following Brexit, as well as on the framework and mechanics for supervision and enforcement of the data protection regimes post-Brexit. The FMLC’s paper also proposes solutions and/or mitigants to these uncertainties.

The FMLC is an educational charity that was established at (but is independent from) the Bank of England. Its stated role is to identify issues of legal uncertainty or misunderstanding, present and future, in the framework of the wholesale financial markets which might give rise to material risks and to consider how such issues should be addressed.

On October 15, 2018, the U.S. Department of Health and Human Services, Office for Civil Rights (OCR) announced a $16 million settlement with Anthem, Inc. over alleged violations of federal privacy and security regulations under the Health Insurance Portability and Accountability Act (HIPAA).  The settlement resolves an investigation following a data breach that exposed protected health information of nearly 79 million people.  According to OCR, the incident is the largest health data breach to date in the United States and Anthem’s payment similarly represents the largest HIPAA settlement to date.  The settlement is consistent with OCR’s recent focus on enforcing regulatory requirements to conduct an accurate and thorough risk analysis and maintain appropriate mechanisms to monitor systems that contain protected health information and to control access to that information. It also highlights the agency’s distinct cybersecurity remediation approach. Continue Reading The U.S. Department of Health And Human Services Settles With Anthem for Record $16M Over Alleged HIPAA Violations

The UK Information Commissioner’s Office (ICO) has provided Facebook with a Notice of Intent to issue a monetary penalty against the social media platform for its lack of transparency and failure to maintain the security of its users’ personal data in relation to the Cambridge Analytica scandal. The ICO’s fine is the maximum possible under the Data Protection Act 1998 (the UK implementing legislation for the former EU data protection regime under the Data Protection Directive). Facebook will have the opportunity to make representations to the ICO before the ICO’s decision is finalised.

Continue Reading UK Data Protection Regulator Set to Levy Maximum Fine on Facebook in Cambridge Analytica Case

On the heels of the European Union’s implementation of the General Data Protection Regulation (“GDPR”) and public outcry over the Cambridge Analytica scandal, on June 28, 2018, California enacted the most comprehensive data privacy law to date in the United States. The California Consumer Privacy Act of 2018 (the “CCPA”) was hastily passed by the California legislature to secure the withdrawal of an even more far-reaching measure that had qualified for the November ballot. Legislative amendments to the law are expected before it goes into effect on January 1, 2020.

The CCPA requires covered businesses to comply with requirements that give California consumers broad rights to know what personal information has been collected about them, the sources for the information, the purpose of collecting it, and whether it is sold or otherwise disclosed to third parties. It also gives consumers the right to access personal information about them held by covered businesses, to require deletion of the information and/or to prevent its sale to third parties. Other key provisions limit the ability of a covered business to discriminate against consumers who exercise their rights under the statute by charging them higher prices or delivering lower quality products or services.  The rights provided under the CCPA are similar in many respects to those afforded EU residents under the GDPR, but there are distinctions in approach on some key issues.

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