Canada: Computers And The Emergence Of Privacy Breaches

Several recent high-profile privacy breaches have begun to focus the attention of corporate Canada on the important legal issues that result from the disclosure of personal information of customers or employees in an unauthorized manner through loss or theft. What is the liability of a company when data is inadvertently disclosed? Should the company inform the affected data subjects, and if so, when? What steps should be taken to minimize the damage to the company’s reputation? And how can future privacy breach incidents be better managed?

These are all good questions. But before turning to them, consider some of the broader trends that are behind our current vulnerability to privacy breaches. It’s no coincidence that the volume and severity of these incidents are increasing. To understand why, reflect for a moment on the history of computing and networking over the past 40 years, particularly from the perspective of the challenges posed to computer security and data privacy by the principal phases of computing technology over this period.

The Low-Risk Mainframe

During the first wave of computerization in the 1960s and 1970s, each organization’s IT system consisted of one (or more) centralized mainframe computer (aka the ‘big iron’), which was operated in the bowels of the company by a handful of people. The mainframe stood alone and wasn’t connected to other computers at the company, let alone to computers at other companies.

Computer security in such an environment was fairly straightforward. So long as the small team running the computer was honest, very little harm could come to the computer or the data residing on it. This computing environment did not raise many privacy-breach challenges, at least from a security perspective.

IT Diffusion

Ever since the appearance of the mainframe computer, engineers have been hard at work trying to replace it with smaller, more versatile computing machines. By the early 1980s, so-called mid-range computers had found favour in company IT strategies. These computers also had strings of dumb terminals (called ‘dumb’ because they did not do processing themselves but could at least access the mid-range computer that did the heavy lifting) attached to them. Lo and behold, these terminals found their way onto the desks of secretaries at the company. And so began the inexorable democratization of computing.

Mid-range computers and their concomitant dumb terminals showed companies the huge promise of distributed computing. Many new applications began to be used by the non-IT staff of the company (or other organizations, such as government departments) using these powerful new hardware machines. Of course, from a privacy and security perspective, this new computing configuration meant that more people in the organization had access to sensitive customer and employee data. One bad-apple employee now had the potential to access a myriad of company data.

From Office To Home

By the mid-1980s, computer democratization was picking up pace with the advent of the personal computer. Before long, there was a computer on every desk in an organization. And these weren’t merely dumb terminals; smaller and more powerful microchips allowed them to process data themselves, though they were also connected to hub computers called servers.

Moreover, the PC revolution wasn’t confined to the office. Soon, these powerful but fairly compact devices insinuated themselves into the home. Floppy disks containing large gobs of data began travelling between the PC at the office and the one at home. Not surprisingly, the first serious incidents of data loss were reported as floppies were inadvertently mislaid, or worse, stolen.

The Internet Changes All Things

In the mid-1990s, of course, everything changed with the coming of the Internet. Personal computers, servers and even mainframes could now all be networked, both within proprietary/closed systems or, increasingly, through non-proprietary open ones such as the Internet. For the first time, computers became data-communication devices as well as data-processing machines.

Computer crime has been with us since the beginning of the computer revolution. Canada’s Criminal Code, for example, was amended some 20 years ago to deal expressly with computer-related offences. Nevertheless, the Internet gave rise to a whole new type of computer criminal, the so-called hacker, and a whole new ease by which to penetrate remote computer systems. In a word, the Internet made information more vulnerable.

Wireless, Everywhere

In the last 10 years, computing devices have become smaller, more powerful and cheaper. The PC begat the laptop, which in turn (along with the cell phone) gave birth to the personal digital assistant, such as the BlackBerry.

The microprocessor, however, is no longer used only in standalone computers. Rather, together with digitally-based sensors, microprocessors are being implanted into huge numbers of machines and objects as diverse as bridges and — dare I say — even people. And what makes all this computer power even more compelling is that the sensors and chips can send their data to host computers through the ether without having to be tethered by wires. Consider a few of the state-of-the-art applications.

The Digital Mousetrap

In the UK, a building maintenance firm has rigged mousetraps with digital sensors and microchips. Thus, when a rodent is caught, the firm learns about it in real time. Also, as the different traps ‘report in,’ the firm can detect quickly if one of the buildings is perhaps experiencing an outbreak of the little critters (and can go investigate why). Even short of this important news, the information received from the traps simply teaches the firm where to put additional mousetraps, and when to check on them.

While the data security and privacy implications of the digital mousetrap may not be readily apparent (though the track record of each building in this regard may indeed be very sensitive business information, with commercial implications for the landlord), consider the following new wireless computing applications that bristle with privacy law implications.

On The Digital Highway

Again in the UK, a car insurance company has unveiled an insurance product that provides much more granular pricing based on very detailed, real-time car usage patterns, which are tracked and processed by computers. So, if you drive down a highway on a Sunday (which is quite safe, surprisingly), you pay a lot less insurance for that trip than you would for a drive downtown during a weekday rush hour.

This is a good example of what more and more miniature microprocessors can do: They can tell us, in real time, what is going on around them. Other current new applications include a school in Japan that is putting wireless homing devices on young children so that the school never loses track of them. Similarly, a North American uniform maker is putting chips into firefighters’ suits so that their position can be determined at all times while they are fighting a large blaze, such as in a large, multi-storey warehouse.

Under My Skin

A range of digitally driven, wireless-connected medical devices is also hitting the market. Small chips with long-lasting power devices are being implanted just under the skin of various patients to facilitate monitoring of various vital statistics or collect more nuanced data. Essentially, these are tiny radio frequency identification tags that let doctors monitor their patients from afar.

These digital implant technologies will not long be restricted to the health community. Indeed, one bar in Spain embeds such chips in patrons’ arms to assist with identity verification and payment. Previously the stuff of James Bond movies, these digital, wireless implant devices will grow into a huge business in a matter of years.

Security And Privacy Implications

These technology trends and the business models generated by them have profound implications for Canadian privacy law. In a nutshell, all the examples touched on above involve the collection of huge amounts of data, largely of the sensitive, personal variety. And this data is then transmitted hither and yon, over a variety of networks and by means of various technologies. While all of this activity brings significant benefits, there is of course one inevitable downside.

With so much data being collected, stored, processed and transmitted, it’s merely a question of time before some of your data leaks out, notwithstanding the implementation of ‘best practices’ procedures for security and privacy. And so the question can reasonably be asked: How does the current legal regime deal with privacy breaches? It is this topic that will be discussed in the next TLQ.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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