Worldwide: Privacy And Data Protection

FOCUS ON THE US

The new Federal Communications Commission (FCC) privacy rules for internet service providers (ISP) and telecommunications companies (telcos) will face an uphill battle

In a controversial ruling by the FCC on October 27, 2016, the Commission approved new privacy rules applicable to broadband and other telecommunications service providers that establish a new framework for the collection, use, and protection of customer information.  The new rules afford special protection to sensitive "customer proprietary information" (or "customer PI") which includes data elements such as precise geo-location, health, financial and children's information; Social Security numbers; content; call history; and web browsing and application usage histories and their functional equivalents. Such sensitive customer PI now requires "express informed consent" (e.g., opt-in approval) from customers if the provider intends to share or use this information. The FCC has called the Order "sensitivity-based" because all other customer PI is considered non-sensitive and subject to customer opt-outs.  The Order also expands the scope of providers' reporting obligations for data breaches, now requiring providers to notify affected customers of any breach "without unreasonable delay and no later than 30 calendar days after it reasonably determines that a breach has occurred, subject to law enforcement needs."

Several industry groups have filed petitions for reconsideration of these new rules, including NCTA-The Internet & Television Association, the American Cable Association, and CTIA-The Wireless Association, arguing, inter alia, that the FCC erroneously relied on its authority pursuit to Section 222 of the Communications Act in establishing these new rules, as Section 222 governs telephony services only. With an incoming GOP administration, the fate of the FCC's Order is tenuous at best, with some experts reasoning that the GOP could use the pending petitions as a basis to reverse course and repeal the new rules. Added to the opposition of numerous industry groups, members of the new administration have also voiced widespread opposition to the Order, further jeopardizing the future of the new privacy rules.

FOCUS ON EUROPE

Legislative reform picks up steam

The European General Data Protection Regulation (GDPR) comes into effect in EU Member States on May 25, 2018. The UK Government has confirmed that the GDPR will apply in the UK on commencement, as Brexit will not yet have taken place. The UK Government has also confirmed that primary and secondary legislation will be brought in to implement the GDPR (e.g., for interaction with the existing Data Protection Act 1998 (DPA) and to cover Member State discretion, such as children's consent).

It remains unclear as to how the GDPR will apply after Brexit. From a practical perspective, aligning UK law with the GDPR seems sensible, as the UK will need to ensure compliance if it wants to continue trade with the European Economic Area. The UK Information Commissioner's Office (ICO) has released the following guidance on the GDPR: overview of the GDPR, privacy notices and 12 steps to take now.

The European Network and Information Security Directive (NISD) came into force in 2016 and must be implemented by EU Member States into national law by May 2018. The NISD imposes new cybersecurity obligations in respect of critical national infrastructure. The NISD also introduces breach reporting obligations for "operators of essential services" (organizations operating in the electricity, oil, gas, air transport, rail, water transport, road and bank sectors) and "digital service providers" (online marketplaces, online search engines and cloud computing services).

Again, it is not clear as to how Brexit will affect NISD. However, the ICO has previously interpreted security requirements under the DPA to apply to cyberspace, and the UK Government has also confirmed that cybersecurity "must be part of" data protection. Accordingly, it is likely that NISD will in any event be implemented into national law.

Proposed e-Privacy EU Regulation – more red tape or the necessary alignment with the new EU data protection rules?

The e-Privacy EU Directive (2002/58/EC, further amended in 2009) applies to processing electronic communications data carried over public networks (largely to telecommunications providers and ISPs but also includes provisions on cookies, electronic marketing and notification of data breaches). It aims to ensure the free flow of data in the EU, and the protection of privacy and confidentiality in electronic communications. Along with the Personal Data Protection Directive (95/46/EC), it constitutes the data protection framework in the EU.

With the Personal Data Protection Directive being replaced by the EU General Data Protection Regulation (GDPR), effective as of May 2018, the European Commission decided that the e-Privacy legislation must be adopted to align it with the new rules, and as a result, on January 10, the EC proposed a new E-Privacy Regulation. This regulation is to replace the e-Privacy Directive and will become one set of rules applicable directly across the EU member states at the same day as the GDPR, i.e., on May 25, 2018. The aim of the new rules is to ensure consistency in data protection and to align and complement the general rules laid down in the GDPR. The key proposed changes include:

  • As with the GDPR, broadening the territorial scope and application to data processed in servers outside the EU to end-users inside the EU;
  • Expansion to the over-the-top services providers (OTT) which offer online communication services and are not currently subject to the provisions of the e-Privacy Directive (e.g. WhatsApp, Facebook Messenger, Skype);
  • Covering machine-to-machine communication, if the information exchanged is classified as personal;
  • Expanding coverage to include metadata which, due to technological developments, has a strong privacy component (e.g., time and location of communication), including the need to have end-user consent to process such data (unless needed for billing) and the conditions to receive consent are the same as in the GDPR;
  • More user friendly rules on cookies, including using the appropriate technical setting to express consent and the need to periodically (i.e., every six months) send reminders on the right to withdraw consent; 
  • Revised spam regulations, including the obligation to display the phone number or specific prefix identifying the unsolicited marketing communication; and
  • High financial sanctions of up to €20 million or four percent of the total worldwide annual turnover.

As in the case of the GDPR, industry lobbying against the proposal is fierce with repeated calls to simply repeal the e-Privacy Directive and to rely on the GDPR without the need to adopt any specific rules for the industry. The reasoning is that the stronger rules would jeopardize the harmonization ensured by the GDPR and would adversely affect data-driven revenue of online media. Unsurprisingly, social advocacy organizations praise the proposal and warn that the lack of rules in the e-communications sector would negatively impact the privacy of users, expose them to abusive tracking and intrusive behavioral advertising.

Germany

The path to GDPR implementation is not straightforward

In August 2016, the German Federal Ministry of the Interior (FMI) had submitted a draft bill for an implementation law which takes advantage of the regulatory scope given by the EU-General Data Protection Regulation (GDPR). The bill was met with criticism from several parties, including from the Federal Data Protection Office and the Federal Ministry of Justice and Consumer Protection. Due to the criticisms, a newly revised bill was drafted and published in November 2016.

The newly redrafted Federal Protection Data Act (BDSG-E) deals in particular with the following key elements:

  1. Restrictions on information duties
  2. The BDSG-E intends to restrict the information rights given in Article 13 (information that must be provided when collecting personal data from the data subject) and Article 14 (information that must be provided when collecting from a third party) of the GDPR. According to the FMI's draft, the company's obligations within the meaning of Article 13 of the GDPR are to be abolished.

  3. Data protection officers
  4. Section 36 of the BDSG-E places a general obligation on companies to appoint a data protection officer, should the company permanently employ at least 10 persons to process personal data.

  5. Administrative fines for infringements
  6. BDSG-E intends to introduce a threshold for fines of up to €300,000 in regards to any natural person (e.g. employee) who breaches the provisions of the GDPR whilst exercising his/her duties on behalf of the controller/processor.

The proposed bill by the FMI is complex and does not seem to be wholly in line with the GDPR. Although the FMI had attempted to strengthen the economy by providing numerous exceptions to companies' information obligations, given that many of the provisions potentially contradict the GDPR, its aim may not have been achieved.

Regarding the implementation of new data protection processes, German companies now have to decide whether to follow the provisions laid out in the GDPR or the BDSG-E.

The revised bill has now been forwarded and will be discussed in cabinet this January 2017.

FOCUS ON CHINA

Rapid changes as China moves on cybersecurity and data protection

On November 7, 2016, the Cybersecurity Law of the People's Republic of China (Cybersecurity Law) was adopted by vote at the 24th Session of the Standing Committee of the Twelfth National People's Congress (24th SC of the NPC). The Cybersecurity Law will come into force on June 1, 2017.

The Cybersecurity Law is a fundamental national law containing comprehensive provisions regarding the protection of personal information. Consistent with international standards, Article 41(1) provides that, "when collecting or using personal information, internet operators shall comply with the principles of legality, justification and necessity, make public the rules for the collection and use, clearly indicate the purposes, methods and scope of the information collection and use, and obtain the consent from the data subjects." Article 44 provides that, "no individuals or organizations may steal or otherwise illegally obtain personal information, or illegally sell or provide personal information to others."

In addition, the Cybersecurity Law stipulates restrictions on cross-border transfer of Critical Infrastructure Information (CII) for the first time, which may present greater challenges for both domestic enterprises and multi-national companies operating in China and engaging in the cross-border transfer of data. The restriction only applies to operators of CII in China. Personal information and crucial data collected and generated in operations in China are not permitted to be stored or transferred overseas. If it is truly necessary for a business to transfer CII overseas, a security assessment must be conducted in accordance with measures to be further elaborated by relevant departments of the State Council. At present, the identification of CII operators, the definition of crucial data, the criteria for determining the business necessity for transfer of CII overseas as well as the security assessment procedures, among other things, remain to be interpreted or specified by relevant departments. Enterprises should focus closely on the evolving legislative developments of supporting regulations.

On December 27, 2016, the Third Draft of General Rules of the Civil Law (Third Draft of GRCL) was published on NPC's website for public comments. The legislative procedure of the GRCL is soon to be completed after three deliberative sessions of the SC of the NPC. The Third Draft of GRCL provides that "personal information of a natural person shall be protected by law. No organizations or individuals may illegally collect, use, process or transfer personal information, or illegally provide, make public or sell personal information". If enacted, the protection of personal information will be a basic right in the Civil Law for the first time.

On December 27, 2016, the Draft of Electronic Commerce Law (Draft ECL) was published for public comments on NPC's website for the first time. The law contains provisions on collection, processing, sharing, access and deletion of e-commerce data. Such provisions basically follow internationally recognized principles on data protection. Article 45 states that e-commerce users have the right to make independent decisions on their own personal information.

It is noteworthy that the Draft ECL provides that e-commerce operators must not compel users to agree to their collection, processing and employment of personal information by threatening to refuse to provide services to such users. In addition, prior consent must be obtained if e-commerce operators want to modify their privacy policies and remedies shall be provided if the users do not agree to such amendment. At present, the privacy policies of many e-commerce enterprises would not be compliant with this new law. It is advisable that e-commerce operators revise or develop their privacy policies in accordance with the new law since it is expected to be formally issued next year. The maximum fine to be levied for violation of such provisions is RMB500,000. Furthermore, a company's business license may be revoked.

On September 30, 2016, the Cyberspace Administration of China (CAC), which is in charge of guiding and supervising the relevant departments to strengthen the management of internet information content, investigating and punishing related violations, issued the Draft of Regulations on Protection of Child Internet Users (Draft Regulations). The first round of public comments was completed on October 31, 2016. The Draft Regulations provide that any collection or employment of children's personal information by internet must be marked with warning signs in a clearly visible position, indicating the source, content and purpose of the information collected, with the consent of the child or its guardian." In addition, a specific privacy policy for children must be developed, which proposes a higher standard for protecting children's personal information collected and used through the internet.

FOCUS ON CANADA

Eyes on Europe while preparing for mandatory breach reporting

2017 brings us closer to three legal developments that require accommodation for all businesses holding personal information: the coming into force of the Digital Privacy Act provisions on mandatory breach notification; the approaching date of May 25, 2018 when the sweeping changes of the General Data Protection Regulation (GDPR) will come into force in Europe and will also apply to non-European organizations that offer goods and services in Europe; and  the announced amendments to the Anti-terrorism Act.

With respect to Mandatory Breach Notification, regulations are being finalized based on wide ranging consultations and will specify modalities of application. Still, at this point, the adopted legal provisions which will amend the Personal Information Protection and Electronic Documents Act point to the following measures that should be undertaken now:

  • Organizations should have clear criteria to exercise their discretion to assess when a breach "creates a real risk of significant harm"  and therefore is subject to notification;
  • Organizations should also have a clear decision-tree to establish who will decide whether to notify.

With the GDPR, privacy requirements are more stringent, for example with respect to consent and privacy governance, or unprecedented, for example with  the "right to be forgotten" and the right to data "portability" – to name but a few, all  requiring corresponding changes to internal polices in Canadian organizations. The GDPR may also bring into question Canada's "adequacy status" to receive personal data from Europe. On that front, it is the Government of Canada that is on the hot seat on behalf of Canadian business to ensure Canadian law is amended, as needed, to correspond to the new level of requirements.

Amendments to the Anti-terrorism Act are viewed with trepidation, amidst an unresolved debate on the role of businesses in relation to law enforcement authorities:  what are their obligations to State and customer?

FOCUS ON MEXICO

As Mexico's legal framework continues to evolve to fight more effectively organized crime and corruption, concerns have been raised about the potential effects that such efforts will have on the protection of personal data privacy. Most notably, under the Federal Telecommunications and Broadcasting Law (the Telecom Law or Ley Federal de Telecomunicaciones y Rafiodifusión)—enacted with the recent package of structural reforms aimed at transforming Mexico's economic landscape—security surveillance regulations under the Federal Law have raised doubts about the protection of personal data privacy.

The Telecom Law includes a chapter that regulates the obligations of telecommunications companies, requires them to cooperate with governmental agencies entrusted with duties of national security and crime prevention. For instance, mobile phone carriers are required to produce and make available upon government request, detailed records on, among other items:

  • The real time geolocation of mobile phones and other devices served by them;
  • Communications rendered and received by those phones and other devices, at a level of detail that allows governmental agencies to identify accurately the user by name—or corporate name—and domicile, and the technical specs of the phone, including international fabrication codes; and
  • The type of communication (e.g. live voice, recorded voice, messaging or multimedia, supplementary services employed), as well as other specifics commonly known as surveillance metadata, including time, place, origin, destination, duration and location of the transmission.

Telecommunications carriers must respond to a government agency's request within 24 hours. Moreover, the statute allows government agencies to request the contents of the communications, provided they have obtained a judicial order to that effect.

Not surprisingly, the ability of the government to request this information has been questioned by data protection civil organizations, which argue that these requests contravene privacy and data protection principles embodied in the Mexican Constitution. In that regard, the Supreme Court of Justice set an important precedent last year by resolving an amparo action—a federal judicial remedy akin to a writ of mandamus or habeas corpus—challenging the constitutionality of the relevant legal provisions. The judgment was mostly favorable to surveillance authorities as it validated the carrier companies' obligation to maintain metadata records for two years (contrary to the decision rendered by the European Court of Justice in 2014), and to provide geolocation information without requiring a judicial order. However, the Supreme Court also stated that government requests for metadata are subject to judicial order (as are the contents of the communication), thereby clarifying an uncertainty in the law.

In this context, we expect that 2017 will, once again, establish new precedents on the relationship between surveillance and data privacy, as civil organizations have made public their intention to continue legal challenges before international courts. In addition, it is expected that the draft of the new General Law to Protect Personal Data Possessed by Agencies (Ley General de Protección de Datos Personales en Posesión Sujetos Obligados) that was approved by the Senate in 2016, will continue towards legislative enactment and thereby broaden the data privacy legal framework.

FOCUS ON COLOMBIA

Extended and expanded powers to regulate data processors

In Colombia, three specific regulations relating to privacy are significant: Bill No. 91 of 2016, Decree 1079 of 2017 and the Guidelines on declarations on conformity.

First, in August 2016, the Colombian Congress presented Bill No. 91, which seeks to extend the jurisdiction of the Colombian Privacy Law as well as the competence of the Colombian authorities. The authorities would be entitled to carry out investigations or any legal action, ex officio or upon request, against natural or legal persons located outside Colombian territory which process personal data. On October 26, 2016, the Bill was approved in first debate, by the first commission of the Senate.

Second, in October 2016, the Colombian data protection authority (Superintendence of Industry and Commerce) published a guide that establishes parameters for any natural and/or legal person seeking a declaration of conformity for the international transfer of personal data. Accordingly, those requesting a declaration must provide information such as: (i)The name and purpose of the personal databases that will be the subject of the international transfer, as well as a description of the processing; (ii) A copy of the contract, agreement or document explaining the conditions of the transfer and the security and confidentiality measures that will be implemented for the protection of the personal information; (iii) A copy of the regulations regarding the protection of personal data of the country to which the information will be transferred, among other information.

Finally, in November 8, 2016, the Ministry of Commerce, Industry and Tourism issued Decree 1759, which extended the registration deadline in the National Registry of Databases. Consequently, all private sector entities and semi-public entities registered in the chambers of commerce of the country, must register their databases before June 30, 2017. Moreover, natural persons, public sector entities and private entities that are not registered in the chambers of commerce, must register their databases no later than June 30, 2018.

We thank all our contributors involved in this article: Juanita Acosta Lina Cala, Todd Daubert, Jet Deng, Valeria Hoffman, Tatiana Kruse, Jorge Lopez Tanvi Mehta, Constantin Rehaag, and Peter Stockburger.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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