The Supreme Court is poised to finally answer the question that’s been plaguing federal courts across the country: must U.S. tech companies comply with warrants issued under the Stored Communications Act (“SCA”) that demand information from customer accounts that is stored on servers in a foreign country?
The federal Computer Fraud and Abuse Act of 1986 (“CFAA”) has generated controversy and disagreement among courts and commentators regarding the scope of its application. The statute, 18 U.S.C. § 1030, which provides for both criminal and civil penalties, prohibits accessing a computer or protected computer “without authorization” or in a manner “exceeding authorized access.” Courts are divided as to the meaning of these phrases, yet the U.S. Supreme Court recently declined the opportunity to resolve the circuit split that has developed, leaving the exact scope of this important statute in question.
A data breach of the National Football League Players Association’s (“NFLPA”) website has exposed the personal information of nearly 1,200 players and agents.
The ongoing dispute between the government and Google concerning the company’s refusal to hand over customer data stored on foreign servers has taken an odd twist. Now, the Justice Department is demanding that Google be sanctioned for not abiding by the court’s most recent decision—ordering it to produce data associated with 22 email accounts—and calling Google’s conduct “a willful and contemptuous disregard of various court orders.” The case is In the Matter of the Search of Content that Is Stored at Premises Controlled by Google, No. 16-mc-80263 (N.D. Cal.).
Richard F. Smith – who presided over Equifax Inc. as CEO during one of the largest data breaches in a generation – will testify before two congressional committees next week.
Equifax Inc.’s interim CEO, Paulino do Rego Barros Jr., issued the company’s second public apology this morning for the massive data breach that has affected as many as 143 million U.S. consumers.
In a Wall Street Journal op-ed, Barros acknowledged the company’s ball drop in handling the breach and promised to “act quickly and forcefully to correct our mistakes.” He said the company will introduce a new service that would permit consumers to control access to their personal credit data.
Cyber Briefing: Second "Envelope" Lawsuit Against Aetna, Yahoo to Answer for 1.5 Billion Hacked Accounts and Eighth Circuit Weighs In, Again, on Standing
As we head into the new week, here’s a quick summary of major data security developments from around the country.
Judge Sides with Government over Google in the Latest Battle Rematch over the Territorial Reach of the SCA
Another federal judge has rejected the U.S. Court of Appeals for the Second Circuit’s interpretation of the Stored Communications Act (SCA), and has ordered Google to hand over customer email traffic—wherever located—to U.S. law enforcement. More than a year ago, the Second Circuit held that Microsoft Corp. was not required to produce customer emails stored on foreign servers in response to an SCA warrant. Since then, the Second Circuit’s ruling has been rejected by three different federal courts around the country.
A federal appeals court earlier this week dealt a blow to healthcare insurer CareFirst, Inc., concluding that a group of customers have the right to pursue a class action data breach lawsuit based on a 2014 cyberattack.
Over the past several years, we have witnessed a fundamental shift in orchestrated cyber-attacks from hacking credit card data and healthcare information to targeting businesses, their operations and bottom lines.
Another Rematch Between Tech Companies and the Government over the Territorial Reach of the Stored Communications Act
Lawyers for the tech community are gearing up for argument next month in the U.S. District Court in San Francisco, seeking to overturn another magistrate’s order that requires digital information stored outside of the U.S. to be turned over in response to a U.S. search warrant.
The Federal Trade Commission (FTC) – often criticized for not providing clear guidance as to what the agency considers reasonable data security – announced on Friday that it would publish a weekly blog discussing “lessons learned” from data security investigations that were closed without a formal enforcement action.
In the aftermath of two powerful global ransomware attacks, a Michigan-based medical equipment provider has disclosed that hackers “encrypted our data files” and accessed more than 500,000 patient records in what is believed to be the largest reported ransomware attack on health care information.
In a consequential test of the Federal Trade Commission’s authority as a data security regulator, the U.S. Court of Appeals for the Eleventh Circuit will hear argument tomorrow in a case that will determine whether the agency must show a concrete consumer injury as an element of an enforcement action, just as private plaintiffs have been required to do for years.
Justice Shirley Kornreich recently issued one of the few New York state court decisions that address the Computer Fraud and Abuse Act (“CFAA”). Spec Simple, Inc. v. Designer Pages Online LLC, No. 651860/2015, 2017 BL 160865 (N.Y. Sup. Ct. May 10, 2017). The CFAA criminalizes both accessing a computer without authorization and exceeding authorized access and thereby obtaining information from any protected computer. Id. at *3 (citing 18 U.S.C. § 1030(a)(2)(C)). The CFAA also provides a civil cause of action to any person who suffers damage or loss because of a violation of the CFAA. Id. at *4 (citing 18 U.S.C. § 1030(g)). As discussed below, the decision provides a helpful look into the interpretation of CFAA claims in the future.
We previously posted about a case before the New York Court of Appeals that concerned whether Facebook has the legal standing to challenge search warrants seeking its users’ data. In April, the court sided with the Manhattan District Attorney’s office and rejected Facebook’s challenge. The three opinions by the judges—particularly the concurrence by Judge Jenny Rivera—provide insight into this evolving area of law.
The Federal Trade Commission’s (FTC) sprawling and contentious legal battle with now-defunct medical testing company LabMD recently turned especially personal when a federal court allowed LabMD (and its former CEO) to proceed with claims against two of the three FTC attorneys who handled the FTC’s investigation and prosecution of LabMD.
Digital Divide Deepens: Tech Community Backs Second Circuit in Clash with Magistrates over Reach of U.S. Warrants
The technology community took aim at a recent federal magistrate’s ruling that ordered Google Inc. to comply with search warrants seeking customer emails stored on servers abroad, calling the decision “an impermissible extraterritorial application of U.S. law.” In rejecting a recent federal appeals court decision in a similar case in favor of Microsoft Corp., U.S. Magistrate Thomas J. Reuter in Philadelphia ruled that transferring emails from a foreign server to the U.S. was not tantamount to a seizure beyond American borders. The technology companies urged the court to reject the “fiction that such a foreign search and seizure is a domestic act….”
Does Facebook Have the Right to Challenge Search Warrants Seeking Facebook Users’ Data? New York’s Highest Court Hears Argument
Facebook is the latest social media giant to push back on law enforcement efforts to seek user information. On Tuesday, the New York Court of Appeals heard oral argument in a case focusing on whether Facebook has the right—or legal standing—to challenge bulk search warrants issued by the Manhattan District Attorney’s office for its users' data. The case is In re 381 Search Warrants Directed to Facebook, Inc. and Dated July 23, 2013.
On January 23, 2017, President Donald Trump named Ajit Pai as Chairman of the Federal Communications Commission (FCC). In his previous role as the senior Republican on the FCC under President Barack Obama, Mr. Pai was an outspoken critic of the agency’s decision to assert jurisdiction over Internet Service Providers (“ISPs”) and its rules governing broadband privacy. Pai’s appointment suggests that significant changes may be on the horizon.
Back in December 2013, a U.S. magistrate issued a seemingly routine warrant in a narcotics case demanding that Microsoft turn over messages from a customer’s email account that resided on a server in Ireland. That warrant, which issued under a 1986 law called the Stored Communications Act (“SCA”), 18 U.S.C. § 2703, is still being debated today.
The U.S. Securities and Exchange Commission is reportedly looking into whether two data breaches at Yahoo!, Inc. should have been disclosed earlier. In a front page article today, the Wall Street Journal reported that “people familiar with the matter” say the SEC is investigating whether Yahoo!’s disclosures complied with the securities laws.
On Wednesday, Yahoo! disclosed that more than 1 billion of its users’ personal information was exposed in a newly discovered cyber-attack, making it the largest data breach reported to date. The breach apparently took place in August of 2013.
The transition of power from President Barack Obama to President-Elect Donald Trump is underway. Although President-Elect Trump did not lay out specific policy prescriptions about data privacy or consumer protection during his candidacy, his recent choice of Dr. Joshua D. Wright to lead transition efforts at the Federal Trade Commission provides some hints as to the direction the agency may take under a Trump administration.
The Electronic Frontier Foundation (“EFF”) and the American Civil Liberties Union (“ACLU”) have weighed in on Facebook’s high-profile dispute with a social media aggregation company over whether it had unlawfully accessed Facebook’s computers. The EFF and ACLU warned the Ninth Circuit that the panel’s ruling for Facebook risks chilling important investigations and makes “potential criminals out of millions of ordinary Americans on the basis of innocuous online behavior.” The case is Facebook, Inc. v. Power Ventures, Inc., No. 13-17102.
We’re writing this week to highlight some of the ways in which President Obama’s evolving views on cybersecurity can help guide corporate governance on this increasingly important subject. In an interview with Wired Magazine, the President admitted that he is rethinking his own view on cybercrime: comparing it to a “pandemic” no longer addressed by traditional means such as the latest and greatest defensive technologies
The aftermath of Yahoo’s data breach has raised a number of questions from customers, law enforcement, and most recently six U.S. Senators.
In the midst of its acquisition by Verizon Communications Inc., Yahoo Inc. disclosed what looks like one of the largest reported thefts of user information in U.S. history.
As New York public schools increase the use of technology in day-to-day operations and in the classroom, they increasingly face data management and data security threats similar to those faced by businesses and non-profit institutions.
When Is Using a Computer a Crime? Rehearing Sought on Ninth Circuit’s “Distressingly Unclear” Answer
Facebook recently won a landmark victory in the Ninth Circuit against a company that accessed Facebook’s computers to help users manage their social network accounts. Now the company, Power Ventures, Inc., says that the Ninth Circuit’s decision risks creating “widespread confusion” about when it is a crime to use a computer to access a website.
There’s no denying it: Pokémon GO is a phenomenon.
The smartphone game, in which players use their mobile device camera and GPS to capture, battle, and train virtual creatures, was released in the United States on July 6th. In a month, it has shot to the top of the App Store charts to become the biggest mobile game in U.S. history. Within just days of its release, Pokémon GO already had surpassed app giants like Twitter and Tinder in number of downloads and active users, with more than 25 million users playing each day.
FTC Slaps Down ALJ’s Data Security Ruling in LabMD, Sets Broad Mandate for Protection of “Sensitive” Consumer Data
In a sweeping statement of its data security expectations for organizations that maintain consumer information, the Federal Trade Commission on Friday found that LabMD, the defunct medical testing lab, failed to employ adequate data security safeguards in violation of Section 5 of the FTC Act, even though there was no indication that any information had been misused or compromised.
In a ruling issued this morning, the Federal Trade Commission found that LabMD, the defunct Atlanta-based cancer detection lab, failed to protect patient information and is liable for unfair data security practices. The Commission’s ruling reverses an Initial Decision by an administrative law judge (ALJ) that had dismissed the FTC charges against LabMD.
Last week, the U.S. Department of Homeland Security (“DHS”) and the U.S. Department of Justice (“DOJ”) provided guidance on an open question in the Cybersecurity Information Sharing Act (“CISA”): What type of information may companies share under CISA?
Microsoft’s blockbuster acquisition of LinkedIn earlier this month—a deal where concerns for privacy and data security loomed large—provides a glimpse into the growing trend of including separate privacy and data security representations in merger and acquisition agreements. Because the trend is so recent, there is no consensus or standard practice at this point for drafting these representations. The LinkedIn privacy and data security representation is a good example of the evolving nature of these representations.
The U.S. International Trade Commission (“ITC”) last week launched an investigation into United States Steel Corporation’s (“U.S. Steel”) complaint that Chinese hackers stole trade secret information—including proprietary methods for making lightweight steel—on behalf of Chinese steel producers.
We have previously written about the ongoing debate regarding the proposed EU-U.S. Privacy Shield. The European Parliament has now added its voice to those who say that the current proposal is inadequate.
With European regulators continuing to debate the current proposal for the EU-U.S. Privacy Shield, the fate of the new trans-Atlantic data framework is becoming murkier by the day. Rapprochement may still be a possibility, but over the past week, we have seen parties on both sides preparing for an extended fight. The Privacy Shield is one of the most significant issues in global cybersecurity today.
A contentious legal battle over data security between the Federal Trade Commission and LabMD, a small medical testing lab, is chronicled in the latest edition of Bloomberg Businessweek. Dune Lawrence’s report raises lingering questions about the FTC’s prosecution of a now-defunct company, tampered evidence and regulatory overreach.
For months, the technology and business communities have been waiting anxiously for a Federal appeals court ruling on whether American companies can be forced to turn over customer information to U.S. law enforcement when that information is stored on servers abroad. It’s the result of a legal appeal filed last year by Microsoft Corporation that was argued before the U.S. Court of Appeals for the Second Circuit more than seven months ago.
In the latest twist in the ongoing saga of the EU-U.S. Privacy Shield data transfer agreement, EU data protection authorities (commonly known as the Article 29 Working Party) stated on Wednesday that it would not affirm the adequacy of the Privacy Shield deal.
A U.S. appeals court yesterday held that a traditional corporate general liability policy triggered an insurer’s duty to defend a class action lawsuit alleging that a medical records company failed to properly secure patient records on its server.
When it comes to buying cyber insurance, businesses might be right in taking comfort that they have mitigated the financial risks that come with a data breach. Just not all of them.
By now, you’ve probably heard about the massive cyber attack that hit Bangladesh’s central bank last month, resulting in the loss of $81 million through fraudulent transfers to accounts in the Philippines. Although the size and scale of this cyber heist was unprecedented, cybercrime targeting ACH (Automated Clearing House) financial transactions is nothing new. Financially motivated hackers regularly target ACH systems.
Recent surveys tell us that cybersecurity is the top risk faced by corporate America. The Bank Director’s 2016 Risk Practices survey – out yesterday – disclosed that three quarters of bank executives and board members believe cybersecurity is their top concern. And their general counsel agree. In another recent study, general counsel said that cybersecurity was their top area of organizational risk as well.
Faced with the prospect of overturning a decision by one of its own administrative law judges, the Federal Trade Commission on Tuesday explored ways in which to render a narrow decision. The argument was the most recent chapter in the long running data security enforcement action against LabMD, the now defunct medical testing laboratory.
U.S. v. Microsoft - What you need to know about one of the most important privacy cases of the decade
The U.S. Court of Appeals for the Second Circuit has in its hands one of the most closely-watched privacy cases in recent memory. U.S. v. Microsoft addresses an issue of critical importance to U.S. businesses — whether companies must comply with orders from the U.S. government to turn over electronic data, even when that data is stored on a server outside of the U.S. A ruling is expected any day.
U.S. and European Commission officials announced on Tuesday that they have reached an agreement in principle on a new EU-U.S. Privacy Shield to permit the flow of data between Europe and the United States. The new deal follows on the heels of reports Monday evening that U.S. and European officials were continuing to negotiate a replacement for the now-defunct Safe Harbor Framework, after officials failed to reach an agreement by the January 31st deadline.
American and European officials failed to meet the January 31st deadline for a new agreement on the transfer of data between the United States and Europe, disappointing hopes that the two sides would broker a deal to replace the now-invalidated U.S.-EU Safe Harbor Framework.
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