EU-U.S. Adequacy Once Again
On July 10, 2023, the European Commission issued its Final Implementing Decision granting the U.S. adequacy (“Adequacy Decision”) with respect to companies that subscribe to the EU-U.S. Data Privacy Framework (“DPF”).
The Finalization of the EU-U.S. Data Privacy Framework
On July 10, 2023, the European Commission published its final Adequacy Decision for EU-U.S. data transfers. The draft decision reflects the multi-year coordination between the EU and U.S. to identify and implement a lasting solution to facilitate international data transfers following the Court of Justice of the European Union’s judgment in Schrems II. The EU’s adequacy decision determines that the U.S., through the newly created EU-U.S. Data Privacy Framework, provides comparable safeguards to those of the EU and ensures an adequate level of protection for personal data transferred from the EU to certified organizations in the U.S.
Hong Kong New PCPD Guidance on Handling Data Breaches
On June 30, 2023, Hong Kong’s data protection authority (the Office of the Privacy Commissioner for Personal Data, or PCPD) issued an updated version of its Guidance on Data Breach Handling and Data Breach Notifications (the Guidance, accessible here), which aims to guide companies on how they respond to data breaches. In particular, the Guidance contains a new recommendation for companies to adopt written data breach response plans.
SEC Delays Enactment of Cyber Rules Related to Investment Adviser and Public Companies to October 2023, Updates Timeline to April 2024 for Recently Proposed Cybersecurity Rules
On June 13, 2023, the Office of Management and Budget released its Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions, which includes updates on Securities and Exchange Commission (“SEC”) proposed rules. The SEC pushed back its estimate for the final action date to October 2023 for its proposed cybersecurity rules related to public companies, as well as for its investment advisers and funds proposal. Notably, the SEC’s timelines are typically estimates for implementation, and the proposed rules could be introduced sooner or later than these dates. However, the updated timeline indicates that the SEC is prioritizing finalizing its cybersecurity rules related to public companies and investment advisers and funds.
European Parliament Adopts AI Act Compromise Text Covering Foundation and Generative AI
On 14 June 2023, the European Parliament adopted – by a large majority – its compromise text for the EU’s Artificial Intelligence Act (“AI Act”), paving the way for the three key EU Institutions (the European Council, Commission and Parliament) to start the ‘trilogue negotiations’. This is the last substantive step in the legislative process and it is now expected that the AI Act will be adopted and become law on or around December 2023 / January 2024. The AI Act will be a first-of-its-kind AI legislation with extraterritorial reach.
UK Sets Out It’s “Pro-Innovation” Approach To AI Regulation
On 29 March 2023, the UK’s Department for Science Innovation and Technology (“DSIT”) published its long awaited White Paper on its “pro-innovation approach to AI regulation” (the “White Paper”), along with a corresponding impact assessment. The White Paper builds on the “proportionate, light touch and forward-looking” approach to AI regulation set out in the policy paper published in July 2022. Importantly, the UK has decided to take a different approach to regulating AI compared to the EU, opting for a decentralised sector-specific approach, with no new legislation expected at this time. Instead, the UK will regulate AI primarily through sector-specific, principles based guidance and existing laws, with an emphasis on an agile and innovation-friendly approach. This is in significant contrast to the EU’s proposed AI Act which is a standalone piece of horizontal legislation regulating all AI systems, irrespective of industry.
EU Moving Closer to an AI Act – Key Areas of Impact for Life Sciences/MedTech Companies
The European Union is moving closer to adopting the first major legislation to horizontally regulate artificial intelligence. Today, the European Parliament (Parliament) reached a provisional agreement on its internal position on the draft Artificial Intelligence Regulation (AI Act). The text will be adopted by Parliament committees in the coming weeks and by the Parliament plenary in June. The plenary adoption will trigger the next legislative step of trilogue negotiations with the European Council to agree on a final text. Once adopted, according to the text, the AI Act will become applicable 24 months after its entry into force (or 36 months according to the Council’s position), which is currently expected in the second half of 2025, at the earliest.
New EU Cyber Law for the Financial Services Industry with Significant Impact on ICT Service Providers
The new EU Regulation on Digital Operational Resilience for the Financial Sector (DORA) recently entered into force. DORA establishes cybersecurity requirements for information and communication technology (ICT) systems supporting the business processes of financial entities and represents a paradigm shift for the ICT sector. Critical ICT third-party service providers, who are providing services to regulated financial entities, will also be directly regulated under DORA and subject to regulatory supervision by a regulator to be established under DORA (a so-called ‘Lead Overseer’).
U.S. Department of Commerce Seeks Input on AI Policy, Calls Trustworthy AI an Important Federal Objective
On April 13, 2023, the United States Department of Commerce National Telecommunication and Information Administration (“NTIA”) published a request for comment (“RFC”) seeking public input on Artificial Intelligence (“AI”) accountability. The RFC seeks to understand which measures—both self-regulatory and regulatory—have the capacity to ensure that AI systems are “legal, effective, ethical, safe, and otherwise trustworthy.” The RFC adopts a broad definition of “AI systems,” noting that they include all automated or algorithmic systems that generate predictions, recommendations, or decisions.
Washington State Enacts My Health My Data Act, Broadly Regulating Health-Related Data With a Private Right of Action
On April 27, 2023, Washington Gov. Jay Inslee, a Democrat, signed into law the state’s My Health My Data Act (the Act), which will become effective on March 31, 2024 (June 30, 2024, for small businesses). Despite its name, this is a comprehensive privacy bill that will affect many entities, including those outside of the traditional “health” context. The rights and obligations may apply to individuals other than Washington residents, as the law defines consumers as including persons whose data is merely collected or otherwise processed in the state.
