China’s Cyber Security Law, which will take effect from 1 June, 2017 was adopted on 7 November. The third draft of the law adopted by the Standing Committee of the National People’s Congress, China’s highest legislative authority, contained few changes from the second draft put forward for comment in July, 2016. The net result is continued controversy coupled with a dose of uncertainty (never a good combination), with multi-national businesses in particular questioning the intent of the law and criticising its vagueness. The final draft contains a number of broadly-framed defined terms that are critical to its interpretation which continue to leave much to be resolved through detailed measures that may or may not follow, as a lack of clarity leaves room for interpretation. All in all, the direction of travel is towards a much more heavily regulated Chinese internet and technology sector, with an open question as to whether China’s cyber space will be integrated with the rest of the world in the coming years or will plough its own virtual furrow.
In September, we proudly launched our online client cybersecurity resource portal: Ready, Set, Respond. The portal was designed by our cross-practice team of global practitioners to provide in-house counsel with the tools they need to not only prepare for the inevitable cybersecurity incident, but quickly and easily stay up to date on the evolving state of cybersecurity regulation around the world. Today, we’re taking a closer look at the Asia region with our partner Mark Parsons. Visit Ready, Set, Respond for more information or to take advantage of the tools and data available there.
On October 13, the Federal Trade Commission held a workshop on drone privacy and cybersecurity as part of its Fall Technology Series. Close watchers of the drone privacy debate would recognize the arguments presented at the FTC workshop as reminiscent of the comprehensive and productive debate over drone privacy played out before the National Telecommunications and Information Administration earlier this year. The NTIA process concluded with the release of Best Practices for drone privacy supported by a diverse group of industry members and civil society representatives. Although the FTC’s workshop was in many ways a reprise of the NTIA multi-stakeholder debate, the workshop was notable insofar as the public gained new insights into FTC staff views on drone privacy and cybersecurity.
Some of the largest cyber attacks in recent memory have employed an army of connected home devices to achieve their goals. This co-opting of connected home devices owned by consumers around the world occurs without those consumers’ knowledge or consent. For example, in mid-September, several thousand devices—home routers, Internet-connected video cameras, and digital video recorders—were used to create a “botnet” that collectively pounded the security researcher Brian Krebs’ website with 620 gigabits of data per second. At the time, the attack was thought to be the largest in history. An even larger army was assembled a few days later for an attack on the French hosting provider OVH that peaked at over one terabit of traffic per second. These distributed denial-of-service attacks were successful because they exploited basic security vulnerabilities in connected home devices, such as default passwords used to access administrator settings.
This week, the Online Trust Alliance turned its attention from manufacturers to consumers by releasing a checklist of basic steps that consumers can take to improve the privacy and security “hygiene” of their connected home and wearable devices. Just as smoke detectors require periodic battery changes, the OTA warns that IoT devices also benefit from regular checkups.
Cybersecurity risk continues to evolve at an astonishingly rapid rate, prompting companies to review and adjust their plans to deal with the fast-moving threats posed by an increasingly connected world. At the same time, cybersecurity law and regulation around the world are coming of age. In this complex and uncertain environment, it is not surprising that lawyers are increasingly being asked to guide on governance, counsel on compliance and risk allocation, and lead in the event of a cyber incident.
Drawing on our work with clients across the globe, Hogan Lovells’ cross-practice team of cybersecurity lawyers has launched Ready, Set, Respond, a new set of online cybersecurity resources.
On September 12, New York Governor Andrew Cuomo broke new ground in proposing a state-level regulation that would require banks, insurance companies, and other financial services entities regulated by the New York Department of Financial Services to establish formal cybersecurity programs.
The Federal Trade Commission recently presented an analysis of how its approach to data security over the past two decades compares with the Framework for Improving Critical Infrastructure Cybersecurity issued in 2014 by the National Institute of Standards and Technology and strongly endorsed by the White House. The FTC first explains how this question has a faulty premise, as the Framework is not designed to be a compliance checklist. Instead, in this new blog post, the FTC outlines how the FTC’s enforcement actions comport with the Framework’s five Core functions—Identify, Protect, Detect, Respond, and Recover—and emphasizes how both the Framework and the FTC’s approach highlight risk assessment and management, along with implementation of reasonable security measures, as the touchstones of any data security compliance program.
The Department of Health and Human Services Office for Civil Rights is taking an aggressive stand on HIPAA enforcement and targeting violations related to security risk assessments and business associate agreements. Three resolution agreements posted in the last month make clear that the agency expects entities subject to HIPAA to take appropriate steps to secure their data, regardless of the size or type of the entity.
The Department of Health and Human Services released guidance on July 11, 2016, intended to help the healthcare industry prepare for and respond to ransomware attacks. Specifically, this guidance clarifies: (1) that a ransomware attack is considered a “security incident” under HIPAA, and (2) that a ransomware attack will typically be considered a “breach” by HHS unless entities are able to demonstrate that there is a “low probability of compromise.” The guidance also clarifies that covered entities must implement the same risk assessment processes as they would with other types of cyber threats, including malware. At a time when ransomware attacks are on the rise, this guidance heightens the potential regulatory enforcement consequences of these events.
While many of the recent most highly publicized data breaches have involved high-profile consumer brands, the life sciences sector is an increasingly attractive target for a cyber attack. Criminal attackers are targeting the health sector as part of industrial espionage programs and to obtain patient information that can fetch premium prices on the black market. In developing a cybersecurity strategy to combat potential threats, life sciences companies should employ a comprehensive strategy involving an assessment and analysis of likely risks, and active and continuing planning, training, and updating of cybersecurity strategies. Regulators have already signaled that cybersecurity risk assessments are foundational to meeting legal requirements and can define the baseline for what constitutes reasonable security measures within an organization.
Last week, the Department of Health and Human Services Office for Civil Rights launched the long-awaited Phase 2 HIPAA Audit Program. Earlier this month, the agency posted two resolution agreements that continue the trend toward big dollar settlement amounts and a focus on security risk assessments and business associate agreements. With Phase 2 HIPAA Audits underway and more full-scale compliance reviews triggered by data breach reports, it is more important than ever to appropriately protect health information.
The US government has been increasingly active in cybersecurity legislation and enforcement. Congress recently passed the Cybersecurity Act of 2015, which has spurred renewed attention to cybersecurity requirements and cyber threat information sharing. The US government continues to draw attention to how organizations can align their cybersecurity programs with the NIST Cybersecurity Framework. Moreover, a number of federal agencies including the Consumer Financial Protection Bureau, Federal Trade Commission, and Federal Communications Commission have all issued settlements relating to cybersecurity enforcement actions in recent months. In the health sector, the US Department of Health and Human Services has been increasingly focused on cybersecurity, primarily through its HIPAA enforcement activities. Against that backdrop, three recent developments demonstrate the ways in which HHS and the health sector are expanding their cybersecurity focus beyond HIPAA Security Rule compliance.
On March 2, 2016, the Consumer Financial Protection Bureau announced its first data security enforcement action in the form of a Consent Order with online payment platform Dwolla, Inc. The 5 year Consent Order is based on CFPB allegations that Dwolla engaged in deceptive acts and practices by misrepresenting to consumers that it had “reasonable and appropriate data security practices.” Dwolla neither admitted nor denied that it engaged in data security misrepresentations. The CFPB fined Dwolla $100,000, enjoined it from making further misrepresentations, and is requiring that it develop a written, comprehensive data security program, designate a person responsible for the program, provide employee training, conduct risk assessments, and undergo independent third party audits annually, among other things. The CFPB also places primary responsibility for compliance with the Consent Order on Dwolla’s board of directors.
A growing number of state and federal laws require organizations to implement reasonable security safeguards to protect personal information. But what constitutes reasonable data security? This question has vexed organizations and spurred a considerable amount of litigation. On February 16, 2016, the California Attorney General’s Office released its 2016 Data Breach Report, which for the first time provides a listing of safeguards that the Attorney General views as constituting reasonable information security practices. Despite being focused on California, the Report’s recommendations are likely to have an impact far beyond the borders of the Golden State.
The FTC wants companies to listen. More precisely, the FTC wants companies to pay attention to and promptly to respond to reports of security vulnerabilities. That’s a key takeaway from the Commission’s recent settlement with ASUSTek. In its complaint against the Taiwanese router manufacturer, the FTC alleged that ASUS misrepresented its security practices and failed to reasonably secure its router software, citing the company’s alleged failure to address vulnerability reports as one of the Commission’s primary concerns. The settlement reiterates the warnings contained in the FTC’s recent Start with Security Guide and prior settlements with HTC America and Fandango: the FTC expects companies to implement adequate processes for receiving and addressing security vulnerability reports within a reasonable time.
On January 31, 2016, the Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado hosted its annual Digital Broadband Migration Symposium. The theme of this year’s conference was “The Evolving Industry Structure of the Digital Broadband Landscape.” The two-day conference brought together an array of leaders from government, academia, and industry to examine the role of regulatory oversight, antitrust law, and intellectual property policy in regulating industry structure and to discuss what policy reforms may be appropriate for the constantly changing digital broadband environment. As outlined below, a recurring topic throughout this year’s conference was the relationship between privacy, security, and the evolving digital landscape.
Energy-sector cybersecurity and privacy is generating significant attention of late. Last month, the Federal Energy Regulatory Commission issued a final rule creating new standards for the cybersecurity of the electric grid. FERC followed this issuance with a report on electrical grid recovery and restoration planning that makes a number of recommendations for improved cyber-incident response and recovery plans.
In parallel, the U.S. Congress is working on a variety of measures to combat perceived cybersecurity and privacy threats related to the powergrid. The failure of the powergrid in Ukraine due to security breaches; reports of ISIS and other foreign threats attempting to hack the U.S. grid; and news reports about the sensitivity of data on home energy usage have added a sense of urgency to this work.
Earlier this month, the Federal Deposit Insurance Corporation’s Division of Risk Management Supervision released “A Framework for Cybersecurity” in its Winter 2015 issue of Supervisory Insights. The FDIC article outlines the current and evolving cyber threat landscape and identifies the challenges presented by these threats as “critical” to financial institutions. The article describes regulatory steps the FDIC has taken and also how banks should incorporate cybersecurity into their overall risk management framework. The article is helpful for understanding the FDIC’s cybersecurity focus and the issues upon which it expects banks subject to its supervision to focus.
The Cybersecurity Information Sharing Act of 2015 provides limited liability protection and information disclosure protections for private-to-private and private-to-government cybersecurity information sharing. On February 16, 2016, two key U.S. agencies released a set of documents describing how CISA’s provisions are expected to work in practice.
The passage of the Cybersecurity Information Sharing Act of 2015 is proving to be just the beginning of a national focus and call for a “bold reassessment of the way we approach security in the digital age” in order to not only combat evolving cyber threats but also to cultivate an environment for a continually evolving digital age with boundless opportunities for the American economy. On February 9, 2016, the President directed his Administration to implement a Cybersecurity National Action Plan designed to do just that.
Anyone reading this blog already knows that cybersecurity is a team sport. No longer does the IT security department bear sole responsibility for protecting a company’s data and systems. Today companies are setting up enterprise-wide councils to oversee cybersecurity that include lawyers, risk managers, technical professionals, and other leaders. And if a breach occurs, that […]
On January 21, 2016, the Federal Energy Regulatory Commission issued a final rule adopting seven revised critical infrastructure protection Reliability Standards addressing cybersecurity of the electric grid, as initially proposed in July 2015.
Last month, tucked into a 2,000-page spending bill, the Cybersecurity Information Sharing Act of 2015 (CISA) was enacted into law. Years in the making, CISA is intended to incentivize organizations to share cyber threat indicators with the federal government and to promote the dissemination of this information to organizations facing similar threats. The spending bill included a number of other cybersecurity provisions covering topics ranging from federal preparedness to foreign policy strategy. Most notably, the bill directs the Department of Health and Human Services to develop cybersecurity best practices for organizations in the healthcare industry. The bill also directs federal agencies to create new plans to fortify federal information systems and identify cyber-related gaps in the federal workforce.
One of the most common devices in the emerging Internet of Things (IoT) was reportedly discovered to have a bug. According to the research firm Fortinet, a popular fitness tracker was vulnerable to wireless attacks through its unsecured Bluetooth port. A savvy attacker could install malware wirelessly within ten seconds—simply by coming within a few feet of the tracker. When the device’s owner returned home to sync daily activity with a computer, the malware could, in principle, infect the computer as well.