HL Chronicle of Data Protection : Privacy Lawyers & Attorneys : Hogan Lovells Law Firm : Data Security, E-Commerce & Technology

Who is in “control” of personal data and who merely processes personal data on behalf of a data “controller”? These are essential questions for purposes of compliance with EU data protection requirements, yet answering them can be quite problematic in practice. The EU Data Protection Directive defines the controller as the person or entity that determines, alone or jointly with others, the purposes and the means of the processing of personal data. The processor, on the other hand, is the person or entity that processes personal data on behalf of the controller. Applying these concepts to a practical case may have been straightforward in the early days of the Directive, but in today’s Web 3.0, RFID and cloud computing environments many are perceiving the controller and processor distinction as archaic and, most importantly, unworkable in practice. At the same time, under the current legal regime the distinction is crucial in order to determine who is responsible for compliance with EU data protection rules, what Member State laws apply, and which data protection authorities are competent to supervise data processing operations.  

Last November in Madrid, when the 31^st International Conference of Data Protection and Privacy Commissioners adopted the “International Standards on the Protection of Personal Data and Privacy”, there was a sparkle of hope that the controller and processors concepts would not survive the upcoming review of the EU data protection framework. The Standards use the more pragmatic concepts of “responsible person” (instead of “controller”) and “processing service provider” (as opposed to “processor”).

However, on 16 February 2010, the Article 29 Working Party (WP) adopted an opinion (Opinion 1/2010) on the concepts of “controller and “processor”, in which it takes the position that there is no reason to assume that the current distinction between controllers and processors would no longer be relevant and workable. The Article 29 WP acknowledges that applying these concepts to concrete situations can be complex, which is why it is providing specific guidance in its opinion to ensure a consistent and harmonized approach throughout the EU.                                                                   

The Article 29 WP’s opinion includes a comprehensive analysis of the controller and processor concepts as well as practical examples and rules of thumb on how to approach the concepts pragmatically. Without going into any level of detail, here are just a few of the Article 29 WP’s pearls of wisdom that can be found in the Opinion:

• In many cases the responsibility of data controller can be attributed on the basis of an assessment of the factual circumstances. Contractual terms can often clarify the issue, although they are not decisive under all circumstances. Even if a contract is silent on who is the controller, it can still contain sufficient elements to assign the responsibility of controller to the party that apparently exercises a dominant role in that regard.

• The data controller must determine the purposes and the means, i.e., the “why” and the “how” of certain processing activities. The crucial question, however, is to which level of detail somebody should determine purposes and means in order to be considered as a data controller. According to the Article 29 WP, whoever decides on the “purposes” of a data processing operation should be the controller. The data controller can delegate the determination of the “means” of the data processing, as far as technical or organizational measures are concerned. Substantial decisions that may affect the lawfulness of the data processing (e.g., how long will the data be stored) are reserved to the data controller.

• In some cases, there may be several persons or entities that determine the purposes and means of a particular data processing operation and that therefore qualify as “joint controllers”. Although contractual arrangements can be useful in assessing joint control, they should always be checked against the factual circumstances of the parties’ relationship. Parties acting jointly also have a certain degree of flexibility in sharing and allocating data protection obligations and responsibilities, as long as they are compliant.

• A data processor is a separate legal person or entity with respect to the data controller and processes personal data on the data controller’s behalf. The data processor is called on to implement the data controllers’ instructions at least with regard to the purposes and the essential means of the processing. The lawfulness of the processors’ data processing therefore depends on the specific mandate given by the controller. A data processor exceeding that mandate could be viewed as assuming the responsibilities of a (joint) controller.

The Article 29 WP’s opinion provides useful explanations and guidance in general, and its analytical approach is helpful. It is perhaps regrettable that the many examples in the opinion do not always include in-depth discussions of the specific issues raised (for instance, data processing by recruitment agencies or in the context of clinical trials).              

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As the 31st annual International Conference of Data Protection and Privacy Commissioners wraps up in Madrid, capped by the announcement that next year’s conference will occur in Jerusalem, to be hosted by the Israeli Information and Technology Authority, some reflections:

• Security vs. Privacy   There continues to be a tension between the need for security from terrorist and criminal attacks and the right to be free of excessive collection and retention of personal data by governments.  This was the focus of the remarks of the Spanish Minister of the Interior and the US Secretary of Homeland Security, and a panel of experts from around the world who concluded that there needs to be greater focus on the need for all of the information that is harvested from citizens.  The pre-conference session of The Public Voice organized by the Electronic Privacy Information Center resulted in a Madrid Declaration that warned that "privacy law and privacy institutions have failed to take full account of new surveillance practices."

• Corporate Accountability and New Privacy-Enhancing Technologies  Presentations by corporate representatives of Google, Microsoft, eBay, Yahoo!, Procter & Gamble, Accenture and others showed that corporate accountability for privacy (a concept advanced enthusiastically by our friend Marty Abrams of the Center for Information Policy Leadership) is guided not only by the need to be legally compliant but also by the recognition that in our information society, responsible data management will build consumer trust.  There was an impressive demonstration of various new technologies that provide greater transparency and more robust notice to individuals about the collection of data about them, and that give them greater control over the collection, use, transfer and retention of personal data.  For example, Google unveiled new privacy tools and Jules Polonetsky, my co-chair at the Future of Privacy Forum, illustrated the array of technologies available to protect the privacy of children.  The greater demonstration of such “self-regulation” through corporate accountability and the deployment of privacy-enhancing technology was recognized at the conference as an essential pillar of privacy protection. 

• US Law and Enforcement  In the panel on children’s privacy, John Avila of the Walt Disney Company, gave a compelling overview of the breadth and depth of US legal protections for privacy, which includes COPPA to protect kids, and which he pointed out focuses on the areas of greatest privacy concern (such as financial and health privacy).  There were also presentations on the robust enforcement of US privacy laws by the FTC and other authorities, and the innovations in regulation that include, for example, data security breach notification laws which serve as a model for new regulation in Europe.  My conversations with various EU Data Protection Commissioners indicated a growing respect for the US scheme of data protection, in stark contrast to the official EU position that the US lacks adequate protections for personal data which prohibit the cross-border transfer of data to the US absent special arrangements (such as Safe Harbor participation, model contracts or Binding Corporate Rules).

• Cloud Computing and the Smart Grid  There was a focus on the privacy issues implicated by new technologies such as the next generation of cloud computing and the Smart Grid.

• Cross-Border Harmonization of Regulation  Another important theme of the conference concerned cross-border harmonization of privacy regulation, even among countries in the EU that operate under the common principles of the EU Directive but whose laws often reflect differences in detail and application.  In that regard, the European Commission is in the process of soliciting views on the new challenges for personal data protection in order to maintain an effective and comprehensive legal framework to protect individual’s personal data within the EU. 

As with many such conferences, the value of the formal program was augmented by the opportunity of data protection regulators to meet informally with representatives of civil society, privacy advocates, privacy lawyers, and corporate privacy officials.  The interactions over lunch and dinner, and at the wonderful art galleries of Madrid (where tours were made part of the official agenda), allowed for the sharing of perspectives and ideas, and a recognition that no matter which sector is involved, those gathering in Madrid share the commitment to the protection of personal  privacy.

Next year in Jerusalem!
 

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Today at the 31st International Conference of Data Protection and Privacy in Madrid, US Secretary of Homeland Security spoke to those of us in attendance about her goal of a US-EU binding agreement on data sharing and privacy.  See this account from former Hogan & Hartson partner Mary Ellen Callahan, now Chief Privacy Officer at DHS, who accompanied Secretary Napolitano to Europe.

Following the ceremonial opening of the conference and addresses from senior government officials from Spain and the US, the delegates got down to work on granular issues of privacy and data protection.  Look for more reports as the meeting progresses.

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In advance of the global meeting of data protection authorities starting tomorrow in Madrid, the International Association of Privacy Professionals (IAPP) and the Electronic Privacy Information Center (EPIC) are hosting side events today at the conference hotel.

The biggest news so far, discussed at the IAPP event,  is that the European Commission is seriously considering  new  data security breach notification laws. Previously, the Commission and  the European Council had focused only on breaches at telecom companies and ISPs.

The Commission’s Information Society Commissioner, Viviane Reding,  now has said that new EU-wide legislation requiring all entities to notify individuals and authorities of breaches is seriously under consideration.

Thus, EU compliance officers are paying rapt attention to the discussion by the Americans here of how to comply with data security breach laws.

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Starting on Tuesday, November 3d, Hogan & Hartson will be live blogging from international privacy events in Madrid.  Chris Wolf from the firm's Washington Office and Wim Nauwelaerts from the Brussels Office, both senior lawyers in the Privacy and Data Security Practice, will provide timely reports from side events leading to the 31st International Conference of Data Protection and Privacy Commissioners

The civil society conference The Public Voice: Global Privacy Standards in a Global World to be presented by the Electronic Privacy Information Center;  and 

The Data Protection and  Privacy Workshop to be presented by the International Association of Privacy Professionals.    

Then, starting on Wednesday, November 4th, we will bring you reports from the "main event", which the host, the Spanish Data Protection Agency (AEPD), has described as "the largest forum dedicated to privacy in the world, which every year brings together the highest authorities and institutions guaranteeing data protection and privacy, as well as experts in the field from every continent. "

Watch for our daily reports.

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