TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Russia has amended its main laws governing the internet to allow the government to restrict access to the internet and to control internet traffic in emergency situations.

Federal Law No. 90-FZ of 1 May 2019 introduced a set of amendments to the Federal Law on Communications and the Federal Law on Information, Information Technologies and on Protection of Information (the Amendments). The Amendments are colloquially referred to as the “sovereign runet law” or the “law on the secured internet.”

The Federal Trade Commission (FTC) is requesting comments on proposed amendments to two rules addressing the privacy and security of customer information under the Gramm-Leach-Bliley Act. The FTC plans to publish the notices in the Federal Register in the near future.

Russia’s Central Bank, the financial markets regulator in Russia, might soon receive the right to block websites. On 24 January, the State Duma, the lower house of the Russian parliament, approved amendments in the first reading to the Federal Law "On Information, Information Technologies and Protection of Information" and the Civil Procedure Code (the Proposed Amendments).

The Proposed Amendments are designed to give the Central Bank the right to block websites violating financial market legislation or used to maintain fraudulent activities.

As we previously discussed, nobody is safe from cybersecurity threats, and as our colleagues last reported, the US Securities and Exchange Commission (SEC) has heightened its cybersecurity scrutiny, issuing an investigative report on cyber fraud against publicly traded companies and signaling it will pursue both bad actors as well as companies failing to implement controls to detect and prevent hacking. A victim of a data breach itself, the SEC is now demonstrating how it intends to pursue bad actors.

On January 15, the SEC filed a civil suit in US District Court in the District of New Jersey related to its own hacking against individuals and business entities in Ukraine, Hong Kong, California, Belize, Russia, and Korea. The SEC alleges in the suit that the defendants hacked into the agency’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system through a variety of means—including phishing emails and malware—and stole information (namely, publicly-traded companies’ earnings information). The suit further alleges the defendants then traded securities based on the stolen information before it became public. The SEC argues all defendants were necessary participants in the “fraudulent scheme” as some defendants were required to “obtain, through deception, material nonpublic information from the SEC’s EDGAR system” and others were required to “monetize the material nonpublic information by making profitable trades.” The SEC requests the district court to permanently enjoin the defendants from engaging in unlawful conduct[1], order the return of all profits and/or gains realized from the trading, and impose civil penalties[2] on the defendants.

Towards the end of 2018 we ran a series of Contract Corner blog posts on the GDPR and Data Processing Addendums. (See here and here.) December brought detailed guidance from the UK Information Commission’s Office (ICO) on contracts and GDPR compliance (the New Guidance), which replaces draft guidance previously issued as part of a consultation by the ICO in 2017 (the Draft Guidance).

As 2018 comes to a close, we have once again compiled all the links to our Contract Corner blog posts, a regular feature of Tech & Sourcing @ Morgan Lewis. In these posts, members of our global technology, outsourcing, and commercial transactions practice highlight particular contract provisions, review the issues, and propose negotiating and drafting tips. If you don’t see a topic you are interested in below, please let us know, and we may feature it in a future Contract Corner.

In Part 1 of this series, we looked at the prevalence of standalone data processing addendums (DPAs) as a means to comply with rules on engaging third-party outsourcers under the EU General Data Protection Regulation (GDPR). In particular, we focused on the risks associated with “one size fits all” precedence clauses. In this Part 2, we take a detailed look at some of the commercial issues arising from DPAs, the GDPR’s mandated contract requirements.

What’s the Issue?

Article 28 of the GDPR includes a set of mandated data processing clauses that are broader in scope than the contract requirements under previous EU data protection laws. In addition, despite the GDPR having been in force for more than six months now, it is still uncertain how regulators will interpret and enforce Article 28.

As a result, parties to outsourcing agreements can find themselves in protracted discussions around which party bears the cost of implementing Article 28. Below are some key areas of focus in the context of outsourcing agreements.

The United Kingdom government’s Cabinet Office (the central procurement department for central government) is requiring major government suppliers to draft “living wills.” These are intended to safeguard the provision of services to the public sector in the event of the collapse of a supplier.

This measure follows the insolvency of outsourcing provider, and major government supplier, Carillion in January 2018. The well-documented Carillion collapse led to significant debate about the role of outsourcing within the UK public sector, with pronouncements about the extent to which outsourcing for the public sector has “fallen out of fashion.”

During their webinar, Hot Topics in Data Privacy Regulation in Russia, Moscow partners Ksenia Andreeva, Anastasia Dergacheva, and Vasilisa Strizh will discuss trends in data privacy regulations in Russia for the upcoming year.

Topics include:

  • News from the Russian data protection regulator (Roskomnadzor)
  • New laws and legislative initiatives in the data privacy field
  • Obtaining data subjects’ consents: views of the regulator
  • Formalizing cross-border transfers from Russia and to Russia
  • Localization rules: view from Roskomnadzor

The webinar will be held on Tuesday, November 27 from 9:00 to 10:00 am eastern time. You can register here.

From time to time, data controllers are confronted with the question of whether data subjects can raise claims for specific security measures against the controller under Article 32 of the EU General Data Protection Regulation (GDPR). These measures can be costly and cumbersome for the controller.

The Austrian Data Protection Authority (DPA) has decided that there is no such claim. In the relevant case (AZ: DSB-D123.070 / 0005-DSB / 2018), the DPA ruled on a claim by a data subject to pseudonymize personal data. The complainant had filed two complaints with the DPA alleging a violation of the fundamental right to data protection (Section 1 of the Austrian Data Protection Act) for an alleged failure to delete data or pseudonymize personal data. The respondents were two Austrian public authorities: the Federal Ministry for Europe, Integration and Foreign Affairs and the Federal Chancellery.