Cybersecurity 2.0: European Parliament adopts new draft directive

During the autumn of 2021, the European Parliament adopted a draft cybersecurity directive, the revised ‘Directive on security of network and information systems’ (commonly referred to as ‘NIS2’). When it moved to the Council, additional changes were made; one was to extend the time for Member States to transpose it into national law from 18 months to two years.

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New guidelines on personal data breach notifications

Following a consultation in January 2021, the European Data Protection Board (EDPB) has published its finalised guidelines on examples of personal data breaches and whether they are notifiable. These guidelines supplement previous guidance on personal data breach notification: the Opinion on Personal Data Breach Notification (Opinion 03/2014) and the general Guidelines on Personal Data Breach Notification under the GDPR (WP 250), both issued by the EDPB’s predecessor, the Article 29 Working Party.

The new guidelines offer welcome clarification on when notifications are required given that some data protection authorities and commentators have acknowledged over-reporting.

In this article we recap on the key takeaways from the finalised guidelines, focussing on key changes made since the January 2021 consultation, and exploring the challenges of managing data breach notifications in multiple jurisdictions.

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South Korea granted adequacy decision

On 17 December 2021, the European Commission (the Commission) adopted an adequacy decision for South Korea. This means that free transfers of personal data from the European Economic Area (EEA) to private and public entities in South Korea will be permitted from that date onwards (including remote access from South Korea).

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German court prohibits U.S. data transfers in “Cookiebot” decision: Why this decision is special and should alert, but not upset your organization

On December 1, 2021, in a much-noted decision, the Administrative Court of Wiesbaden (AC Wiesbaden) handed down a preliminary injunction dealing with international data transfers (case 6 L 738/21.WI, available in German here). In the specific case, there was no data transfer mechanism in place and thus the court ordered the defendant to stop using a cookie consent management platform. Contrary to some reports, the court did not rule that U.S.-based consent management solutions or cookies cannot be used anymore. The injunction can still be appealed and could also be lifted in the main proceedings.

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GDPR: Is it a transfer? Is it not a transfer? It’s EDPB guidance on Chapter V

The European Data Protection Board (EDPB) recently adopted Guidelines 05/2021 (the Guidelines) on the interplay between what it means to be outside the European Economic Area (EEA) but directly applicable to the General Data Protection Regulation (GDPR) and what constitutes an international transfer under Chapter V of the GDPR.

The Guidelines set out a ‘cumulative’ definition providing a three-step assessment, and each step of the definition needs to be satisfied before a transfer is deemed to be a transfer of personal data. The guidance seeks to address the questions raised by the European Commission (EC) when it issued the standard contractual clauses (SCCs) earlier this year. The main question is whether personal data processed by a company outside the EEA but subject to the GDPR is a transfer or not.

The Guidelines seek to settle that question that such movements of personal data are not transfers. Instead, the Guidelines state the controllers or processors of such personal data, due to their being subject to the GDPR, must apply Chapter V to the personal data they transfer to a third country as if they were located in the EEA. What can be deemed a ‘geographic’ transfer rather than a legal one separately subject to Chapter V. The Guidelines, however, are open for a consultation period, so the question does not have a definitive answer yet.

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Prior notice required in New York to monitor employees’ electronic communications

Beginning in May 2022, employers in New York state will be required to make certain disclosures to their workers if they engage in electronic monitoring of employee communications. On November 8, a bill signed into law by Governor Kathy Hochul requires that all employers provide written notice to newly-hired employees if they intend to monitor or otherwise intercept employee emails, text messages, telephone conversations, Internet access, or usage of an electronic device or system. Read more about New York’s new notice requirement and civil penalty regime on our Employment Law Watch blog.

Lloyd v. Google: Supreme Court rejects compensation claim

In one of the most highly anticipated judgments in recent years, the UK Supreme Court has unanimously rejected a class-action style compensation claim under the Data Protection Act 1998. The Supreme Court decision was handed down as a result of a claim raised against Google LLC (Google) by Richard Lloyd on behalf of four million data subjects.

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FTC significantly amends GLBA Safeguards Rule

The Federal Trade Commission (FTC or Commission) has issued a final rule clarifying its data security requirements for certain covered financial institutions. The new rule, which amends the Safeguards Rule originally promulgated in 2002 under the Gramm-Leach-Bliley Act (GLBA), outlines specific criteria to be incorporated as part of GLBA-covered financial institutions’ information security programs. The primary changes include:

  • A requirement to designate a single qualified individual responsible for overseeing the information security program and periodically reporting to the board (or other governing body)
  • Identification of specific security risk assessment criteria and a requirement that such assessments be documented in writing
  • Specific required safeguards, including access controls, encryption, data disposal procedures, continuous monitoring, and penetration testing
  • Service provider selection criteria and a related requirement to periodically assess service providers based on perceived risk
  • Expansion of the definition of “financial institution” to clarify that it includes entities providing “finder” services incidental to financial activities

The updated rule takes effect 30 days after publication in the Federal Register, but some of the more significant new requirements will not take effect for another year.

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‘Trivial’ data breach claim dismissed by High Court

On 7 September 2021, the High Court granted a defendant’s application for summary judgment in a claim for compensation brought by three data subjects resulting from a data breach suffered by the defendant, on the basis that the breach was ‘trivial’ (here).

The case

The case related to a single email (with attachments) sent by the defendant, a firm of solicitors. The defendant, who represents a school to whom the claimants, a set of parents, owed outstanding school fees, had been instructed to write to the claimants with a demand for payment. The email consisted of a letter and a copy of the statement of account.

Due to one letter difference in one of the email addresses, the correspondence was sent to an unintended recipient. The unintended recipient responded promptly, indicating that they thought the email was not intended for them. The defendant then responded promptly, asking the unintended recipient to delete the email, which they agreed to do. The recipient was unknown to the claimants personally.

The email contained the claimants’ names, address and the amount of school fees owed, as well as reference to proposed legal action, but it did not contain any financial information in the form of bank or card details, or information about the income or financial position of the claimants.

The claim brought by the claimants was for, amongst other things, compensation for non-material damage (i.e., distress) under article 82 of the General Data Protection Regulation ((EU) 2016/679) (GDPR) and section 169 of the Data Protection Act 2018. This was based on (i) the claimants having suffered “lost sleep”, (ii) the breach having “made them feel ill” and (iii) extensive time having been spent by the claimants dealing with the issue.

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