It was recently reported that an insurance carrier (Colorado Casualty Insurance Co.) denied coverage (and filed a lawsuit) for the $3.3 million in costs the University of Utah incurred to provide notice of a security breach involving the records of 1.7 million patients from the University's hospitals. You can find a copy of Colorado Casualty's declaratory judgment action complaint here. The University also filed its own counter claim, cross-claim and third party claim. As discussed further below, the University's cross-claim is against Perpetual Storage (the service provider that allegedly lost the data) and its third party claim is against Perpetual Storage's insurance broker (the broker that placed the insurance coverage with Colorado Casualty).
A new set of EU standard contract clauses ("SCCs" or "model contracts") for processing European personal data abroad came into effect on May 15, 2010. Taken together with a recent opinion by the official EU "Article 29" working group on the concepts of "controller" and "processor" under the EU Data Protection Directive, this development suggests that it is time to review arrangements for business process outsourcing, software as a service (SaaS), cloud computing, and even interaffiliate support services, when they involve storing or processing personal data from Europe in the United States, India, and other common outsourcing locations.
We are very pleased to announce that David K. Isom and Richard L. Santalesa have joined the firm as Senior Counsel. David, an e-discovery authority and 30-year trial lawyer, was formerly co-chair of Greenberg Traurig's Electronic Discovery Practice Group. Rich, based in New York City and Fairfield, Connecticut, has had a career of representing clients in electronic commerce and Internet and privacy issues and other commercial arrangements involving intellectual property and technology-savvy companies.
As previously reported, in early May Reps. Rick Boucher (D-Va.) and Cliff Stearns (R-Fla.) introduced a discussion draft of proposed federal privacy and data security legislation. Reps. Boucher and Stearns sought comments on the discussion draft, setting a deadline of last Friday, June 4, 2010. Numerous organizations have submitted comments. This multi-part post will describe and summarize, at a high level, some (but not all) of the issues identified by the commenters.
Does "segregation" of records from another organization's records in a cloud that prevents "intermingling" preserve an organization's reasonable expectation of privacy vis-a-vis the government under the Fourth Amendment? One recent case, although not about a cloud of any shape or form, suggests that it might. In In re SK Foods Inc., No. 2:09-cv-02938, the United States District Court for the Eastern District of California stayed the Bankruptcy Court's order that would have allowed the Trustee to continue to possess and review information relating to third party non-debtors pending appeal. Why? There was evidence suggesting that, despite residing on shared computer servers, the data of the third parties had not been "intermingled" with the debtor's data, the servers belonged to a third party, the debtor could not access the third party records without authorization, and the third parties demanded return of their records once the Trustee intervened. Read on for a detailed review of the District Court's order and consideration of its implications for the cloud.
Social networking entails some risks and responsibilities. It may implicate privacy and labor law, confidentiality and nondisclosure agreements, advertising regulations, defamation, and other legal regimes, across borders in a global medium. Users, and their employers, need to be aware of these risks and responsibilities in deciding how to make best use of social media.
In the last hour, the news broke that the FTC has again extended the compliance deadline for the FACTA Red Flags Rule, this time to December 31, 2010, "[a]t the request of several Members of Congress." The FTC's press release of this morning is here. This is the fifth time the FTC has extended the enforcement deadline. As usual, the FTC's extension does not affect "other federal agencies' enforcement of the original November 1, 2008 deadline for institutions subject to their oversight."
It often makes sense to refer to an information security management framework or standard in an outsourcing contract, but this is usually not very meaningful unless the customer also understands what particular security measures the vendor will apply to protect the customer's data.
As previously reported here, the Federal Trade Commission (FTC) is currently scheduled to commence enforcement of the FACTA Red Flags Rule (72 Fed. Reg. 63,718) on June 1, 2010. On Friday, only 10 days before the deadline, the American Medical Association, the American Osteopathic Association, and the Medical Society for the District of Columbia filed suit against the FTC in the United States District Court for the District of Columbia (AMA v. FTC, D.D.C., No. 1:10-cv-00843), following in the footsteps of similar lawsuits filed in the past year by the American Bar Association (ABA) and the American Institute of Certified Public Accountants (AICPA). The ABA, in a lawsuit filed last August (ABA v. FTC, No. 1:09-cv-01636-RBW), succeeded in obtaining an order (now on appeal) barring the FTC from enforcing the Red Flags Rule against lawyers. (There has been no ruling on the AICPA complaint filed last November.) Following is a discussion of the definitions ("creditor" and "credit") at the heart of the dispute, a summary of the positions taken by the FTC and the AMA with respect to application of the Red Flags Rule to physicians, and a brief review of the court's decision in ABA v. FTC.
Nearly every day, businesses are entering into arrangements to save the enterprise what appear tobe significant sums on information technology infrastructure by placing corporate data ''in the cloud.'' Win-win, right? Not so fast. If it seems too good to be true, it probably is. Many of these deals are negotiated quickly, or not negotiated at all, due to the perceived cost savings. Indeed, many are closed not in a conference room with signature blocks, ceremony, and champagne, but in a basement office with the click of a mouse. Unfortunately, with that single click, organizations may be putting the security of their sensitive data (personal information, trade secrets, intellectual property, and more) at risk, and may be overlooking critical compliance requirements of privacy and data security law (not to mention additional regulations). My article "Contracting for Cloud Computing Services: Privacy and Data Security Considerations," published this week in BNA's Privacy & Security Law Report, explores a number of contractual provisions that organizations should consider in purchasing cloud services. You can read the full article here, reprinted with the permission of BNA.
In early May, Reps. Rick Boucher (D-Va.) and Cliff Stearns (R-Fla.) introduced a long anticipated "discussion draft" of a bill "[t]o require notice to and consent of an individual prior to the collection and disclosure of certain personal information relating to that individual." You have probably heard that industry and consumer groups alike are not happy with the discussion draft. What exactly is the Boucher Bill and what would it mean for almost every company engaged in the collection, use or disclosure of personal information (not just companies engaged in online behavioral advertising)? Following is a FAQ. Comments on the draft legislation are due June 4 (mark your calendars).
Security governance is often well established in large organizations, but privacy governance typically lags. It is time for a broader approach to "information governance" that focusses on the kinds of sensitive data handled by the enterprise and establishes policies to assure compliance and effective risk management, as well as better customer, employee, government, and business relations.
I will be speaking on various aspects of cloud computing at two upcoming webinars in May:* Cloud Computing: Emerging E-Discovery Trends, Strafford webinar, May 4, 2010 (1:00 pm Eastern) * Negotiating and Preparing Cloud Contracts, IAPP web conference, May 13, 2010 (1:00 pm Eastern)
As some of you know, I tweeted my notes from the IAPP Global Privacy Summit 2010 yesterday and today (@Forsheit for those of you on Twitter). Since many of our readers are not on Twitter, I thought I would provide you with those notes here (minus the usual Twitter hashtags and abbreviations). Please note that there were multiple sessions, and this reflects only those I was able to attend, and only the information I could quickly record, putting virtual pen to paper. These are not direct quotes, unless specifically designated as such. Overall, I think it was a great conference, a wonderful opportunity to reconnect with other lawyers and privacy professionals, and to meet students, lawyers, and others looking to learn more about this constantly evolving legal and compliance space. For me, the conference highlight was Viktor Mayer-Schonberger's keynote this morning on The Virtue of Forgetting in the Digital Age. Without further ado, here are my notes. Would love to hear your thoughts/reactions.