European Parliament votes on new EU Data Protection Regulation

The European Parliament’s Civil Liberties Committee (the “LIBE Committee”) has after several delays finally voted on the European Commission’s proposed EU Data Protection Regulation and adopted all amendments. The LIBE Committee also approved a mandate to start negotiations with the Council of Ministers (which represents EU Member States) and the Commission – the so called trilogue process. The Regulation was published by the European Commission in January 2012 and has been described as the most lobbied piece of European legislation in history receiving over 4,000 amendments in opinions from other Committees in the European Parliament as well as from numerous industries.

The Council of Ministers has also been very active and a compromise text containing amendments to the Proposed Regulation was published in June 2013. The LIBE Committee have during its vote urged the Council to finalize its position quickly. The race is now on to see if the European Commission, the European Parliament and Council of Ministers can agree the text of the proposed Regulation before the European Parliamentary elections in May of next year. The Proposed Regulation once adopted will have a significant impact on governments, businesses and individuals for the rest of this decade and beyond. Based on the latest amendments of the LIBE Committee the main elements of the proposed Regulation are summarized below.

Enforcement

In a surprise move the amount of the maximum fines for non compliance with the proposed Regulation has been dramatically increased, from the Commission’s proposed 2% of annual worldwide turnover, to 5% with an ability for individuals and any association, acting in the public interest, to bring claims for non compliance.

Scope of Regulation

The Regulation will apply to the processing of personal data in the context of the activities of a data controller or a processor in the EU and to a controller or processor not established in the EU, where the processing activities are related to (a) the offering of goods or services to EU citizens; or (b) the monitoring of such individuals. This means that most non EU companies that have EU customers will need to comply with the proposed Regulation once implemented.

One Stop Shop

The latest amendments provide for a new regulatory “one stop shop” so where a company operates in several EU countries the DPA where it is established will be the lead DPA which must consult with other DPAs before taking action which can be decided upon by the European Data Protection Board in the case of a dispute between DPAs.

Profiling

Significantly for online companies under the Regulation, every individual will now have a general right to object to profiling. In addition, the Regulation imposes a new requirement to inform individuals about the right to object to profiling in a “highly visible manner”. Profiling which does significantly affect the interests of an individual can only be carried out under limited circumstances such as with the individual’s consent and should not be automated but involve human assessment. These provisions if adopted could have a major impact on how online companies market their products and services.

Explicit Consent

Consent for processing personal data should be explicit with affirmative action required under the proposed Regulation. So the mere use of a service will not amount to consent. According to the proposal it should also be as easy to withdraw consent as to give it with consent being invalid where given for unspecified data processing. Processing data on children under 13 also requires the consent of the parent or legal guardian. The LIBE Committee also clarified that companies cannot make the execution of a contract or a provision of a service conditional upon the receipt of consent from users to process their data.

Standardized Information Policies

The proposed Regulation requires that certain standardized information should be provided to individuals in the form of symbols or icons similar to those used in the food industry. Individuals should also be informed about how their personal data will be processed and their rights of access to data, rectification and erasure of data and of the right to object to profiling as well as to lodge a complaint with a Data Protection Authority (“DPA”) and to bring legal proceedings.

Right of Erasure

In the latest amendments the “Right to be Forgotten” has been replaced by a “Right of Erasure” giving individuals a right to have their personal data erased where the data is no longer necessary or where they withdraw consent although certain exemptions also apply, such as where data is required for scientific research or for compliance with a legal obligation of EU law.

Accountability

Controllers will be required to adopt all reasonable steps to implement compliance procedures and policies that respect the choices of individuals which should be reviewed every 2 years. Importantly, controllers will need to implement privacy by design throughout the lifecycle of processing from collection of the data to its deletion. In addition, businesses will need to keep detailed documentation of the data being processed and carry out a privacy impact assessment where the processing presents specific risks such as use of health data or where the data involves more than 5,000 individuals with the assessment being reviewed every two years.

Data Protection Officers

Businesses with data on more than 5,000 people in any 12 month period or that process sensitive data, such as health data, will also need to appoint a data protection officer who should have extensive knowledge of data protection and who does not necessarily need to be an employee.

Security and Security Breaches

The controller and the processor will need to implement appropriate technical and organizational security measures. The proposal also requires that security policies contain a number of elements including, for example, a process for regularly testing, assessing and evaluating the effectiveness of security policies, procedures and plans put in place to ensure ongoing effectiveness. In addition, security breaches will need to be notified to DPAs without undue delay.

Data Transfers

In addition to Binding Corporate Rules and other data transfer solutions a new method allowing for international data transfers of personal data from the EU includes use of a “European Data Protection Seal” awarded by European DPAs for businesses and recipients that are audited for compliance with the Regulation. The latest amendments also re-introduce an important provision requiring that any requests for access to personal data by foreign authorities or courts outside the EU must be authorized by a DPA.

Health Data

The Regulation also has important provisions relating to use of health data including that processing of personal data for scientific research is only permitted with consent subject to exceptions by Member States where the scientific research serves a high public interest with the data either anonymized or pseudonymized under the highest technical standards with measures to prevent re-identification of individuals.

The proposed Regulation reflects the growing concern that governments, regulators and society has to data protection and privacy issues and should continue to be closely monitored as it moves closer to adoption which could take place over the next few months.

 


 

Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.

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The UK Data Protection Authority issues a Code of practice on anonymization

In November 2012, the UK Information Commissioner’s Office (ICO) published a Code of Practice on managing data protection risks related to anonymization. This Code provides a framework for organisations considering using anonymization and explains what it expects from organisations using such processors.

One of the benefits of anonymization is that the onerous data protection obligations under EU data protection laws, including the UK’s Data Protection Act 1998, will not apply to data rendered anonymous such that individuals are no longer identifiable.

As the Code notes, anonymization can allow organisations to make information derived from personal data available in a form that is rich and usable whilst protecting individuals.

The main good practices and recommendations provided in the Code are summarised below:

  • Personal data, anonymization and identification: the Code highlights that the concept of “identify” and therefore “anonymized” is not straightforward because individuals can be identified in numerous ways and re-identification by a third party can also take place. It is therefore crucial for businesses to assess the risk of identification when they decide to disclose anonymized data.
  • Ensuring effectiveness of anonymization: the ICO recommends the use of the “motivated intruder” test to assess the risk of re-identification. This test involves determining whether a “motivated intruder”, who is a person who starts without any prior knowledge but wishes to identify the individual from whose personal data the anonymized data has been derived, would be successful. It can be done by (i) carrying out a web search to verify if date of birth and postcode can lead to the identification of a specific individual; or (ii) using social networks to establish if anonymized data can lead to an individual’s profile.
  • Consent: importantly, the Code provides that consent is generally not needed to legitimize an anonymization process as it could be logistically onerous or even be impossible to obtain such consent.
  • Governance: organisations using anonymization should have in place an effective and comprehensive governance structure that should include (i) a Senior Information Risk Owner (SIRO) with the technical and legal understanding to manage the process, (ii) staff trained to have a clear understanding of anonymization techniques, the risks involved and the means to mitigate them, (iii) procedures for identifying cases where anonymization may be problematic or difficult to achieve in practice, (iv) knowledge management regarding any new guidance or case law that clarifies the legal framework surrounding anonymization, (v) a joint approach with other organisations in their sector or those doing similar work, (vi) use of a privacy impact assessment, (vii) clear information on the organization’s approach on anonymization including how personal data is anonymized and the purpose of the anonymization, the techniques used and whether or not the individual has a choice over the anonymization of its personal data, (viii) review of the consequences of the anonymization programme, and (ix) a disaster recovery procedure should re-identification take place and the individual privacy is compromised.
  • Trusted Third Party: a Trusted Third Party is an organisation which can be used to convert personal data into anonymized data. The Code highlights the value of using a Trusted Third Party arrangement especially where a number of organisations each want to anonymize personal data they hold for use as part of a collaborative project. Use of Trusted Third Party arrangements can facilitate large scale research using data collected by a number of organisations without the organisations involved ever having to access each others’ personal data. It also allows researchers to use anonymized data when the use of personal data is not necessary or appropriate, and can be used to link datasets from separate organisations to create anonymized records for researchers.

The Code also clarifies when the research exemption under the UK Data Protection Act can be relied upon to process personal data for research purposes and concludes with explanations of key anonymization techniques and various case studies such as one on the use of anonymization in clinical studies.

The Code which also sets out other good practices and recommendations is welcome having been published at a time when anonymization techniques and the status of anonymized data are key issues for many industries including digital media, financial services and life sciences. Anonymization and the ability to use data will also remain key issues with the current discussions on the proposed EU Data Protection Regulation and clarity on these issues at an EU level would also be welcome.

For further details on anonymization of personal data please contact William Long (wlong@sidley.com) or John Casanova (jcasanova@sidley.com).


 

Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.

Attorney Advertising – For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.

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Business Concern over Amendments to Proposed EU Data Protection Regulation

The European Parliament’s Civil Liberties Committee has published its draft report on the proposed EU Data Protection Regulation that is causing concern for many corporations. http://www.europarl.europa.eu/meetdocs/2009_2014/documents/libe/pr/922/922387/922387en.pdf.

The report sets out amendments to the draft EU data protection regulation published by the European Commission last January (the “Regulation”)
http://ec.europa.eu/justice/data-protection/document/review2012/com_2012_11_en.pdf.

Despite being one of the most lobbied pieces of European legislation, many will be disappointed that as amended the draft Regulation still imposes very significant burdens on businesses that are in the EU, or which are outside the EU but offer goods or services to EU customers, with fines of up to 2% of annual worldwide turnover.

Although there has been considerable debate on the proposed Regulation, there is still time for those concerned to make their views known to the European legislature. A summary of the main elements of the proposed regulation as amended by the Committee are set out below.

Scope of Regulation and Enforcement

  • The Regulation will apply expansively to all global businesses, including any Internet company with more than 500 European customers. To be specific, it would apply to “data controllers” established in the EU or operating from outside the EU where the processing activities are aimed at the offering of goods or services to individuals in the EU irrespective of whether payment is required. A data controller outside the EU will need to appoint a representative in the EU if it processes personal data of 500 or more individuals a year, irrespective of whether payment is required for the goods or services.
  • For the first time, the regime will directly affect software and hardware development. So called “producers” (i.e. hardware and software developers) that produce systems to process personal data must take measures to ensure data protection compliance when designing systems.
  • Provisions for fines of up to 2% of annual worldwide turnover for violations of the Regulation remain, although additional criteria are proposed that would be taken into account by Data Protection Authorities (DPA) when determining the administrative sanction.
  • There are a number of amendments to strengthen the position on collective redress: Bodies or associations acting in the public interest would be able to go to court on behalf of data subjects to seek damages and damages will now also be permitted for non-pecuniary loss such as distress.

International Data Transfers

  • Transfers of personal data from the EU to countries that are not deemed to provide an adequate level of protection (such as the United States) should be on the basis of binding legal instruments (such as Binding Corporate Rules and the EU’s standard contractual clauses). The ability of the European Commission to decide that a particular industry sector provides an adequate level of protection (such as the U.S. healthcare industry) has also been rejected.
  • The U.S.-EU Safe Harbor and other previous adequacy decisions as well as decisions relating to standard contractual clauses will remain in force for only two years after the Regulation takes effect. This may lead to companies needing to assess whether their prior compliance efforts remain valid.
  • International investigations will become significantly more complicated. An important new provision will require that a controller’s representative must notify the DPA and obtain an authorization for transfer pursuant to the requests or orders of a court, tribunal or authority of any country outside the EU.

Consent, Legitimate Interest and Data Protection Notices

  • Compliance will also become more complex given that consent may not be available in the employment context. Although the report emphasizes the importance of consent, it adds the condition that consent should not be valid if there is a significant imbalance between the position of the data controller and the data subject (i.e. the individual) remaining in the Regulation. However, incentives are also included for data controllers to use pseudonymous data (e.g. key coded) for which lighter consent obligations will apply.
  • More detail is also provided on when it is possible for a data controller to rely on the legitimate interest ground to process personal data with the controller required to publish why it believes its interests override those of the data subject. The legitimate interests of the data controller include enforcement of legal claims.
  • Data protection policies are to be communicated using multi-layered formats and icons with full information available on request. Data subjects also have a right to be informed about the disclosure of their personal data to a public authority.

Right to be Forgotten, Data Portability and Profiling

  • The Right to be Forgotten (i.e. to have personal data erased) remains in the Regulation but has been amended so data controllers would no longer have to take reasonable steps to contact third parties to request them to erase copies of the data if the personal data has been transferred or made public based on legal grounds (such as legitimate interest).
  • The Right to Data Portability (i.e. to obtain a copy of the data being processed and to move the data to another platform) has been merged with the Right of Subject Access (i.e. the right for confirmation whether personal data is being processed). The Right of Subject Access has also been amended so data subjects now have a right to be informed if their personal data has been disclosed to public authorities.
  • Targeted Internet advertising could also face significant impacts. Profiling will only be permitted with the data subject’s consent or based on an express statutory provision.

Documentation, Impact Assessments, Security and DPOs

  • The requirement in the proposed Regulation for data controllers and processors to retain detailed documentation on the processing has been merged with the requirement to provide information to individuals about how their personal data are processed. The exemption on small businesses employing less than 250 persons from having to retain such documentation has been removed.
  • In the case of a security breach the period to notify the DPA is extended from 24 to 72 hours while the obligation to notify data subjects has also been extended to require that information be included regarding the rights of the data subject including redress.
  • The obligation to appoint a Data Protection Officer (DPO) has been amended so a DPO is required where a legal entity processes personal data on more than 500 persons. The DPO must be a direct report to the head of management, such as the CEO, and the minimum appointment of the DPO is also extended from 2 years to 4 years. The DPO will also have an obligation to report suspected breaches to the DPA.
  • The requirement to carry out data protection impact assessments where data involves specific risks (such as health data and data on children) remains as does the obligation to seek the views of data subjects. However, instead of having to consult with a DPA it is now proposed that a data controller can consult with their DPO.

Life Sciences and Scientific Research

  • Importantly the report provides a comment that processing of sensitive data (e.g. health data) for the purposes of historical, statistical and scientific research are “not considered as urgent or compelling as public health or social protection.” This is of particular concern for the life sciences industry and other industries carrying out research including academic research.
  • The provisions in the Regulation on processing of sensitive data (including health data) for the purposes of historical, statistical and scientific research are also amended to provide that such processing shall only be permitted with the consent of the data subject, but Member States may legislate for exceptions to the requirement of consent for research that serves an exceptionally high public interest, if that research cannot possibly be carried out otherwise. The amendments go on to provide that “The data in question shall be anonymized, or if that is not possible for the research purposes, pseudonymized under the highest technical standards, and all necessary measures shall be taken to prevent re-identification of the data subjects.” The possibility of EU Member States determining when scientific research is permitted, where consent has not been obtained, will also be of concern to the life sciences industry.

New One Stop Shop, Codes of Conduct and Certification Schemes

  • A modified ‘one stop shop’ approach to regulation is proposed under which a DPA is competent to supervise processing operations within its territory or affecting data subjects resident in its territory. Where the processing activities of a controller or processor are established in more than one EU Member State or affecting data subjects in several Member States, the authority of the Member State of the main establishment of the data controller will be the lead authority acting as a single contact point for the controller or processor.
  • Some of the powers of the European Commission to adopt delegated acts (i.e. to provide more detailed requirements) for certain provisions have been removed.
  • Industry Codes of Conduct and data protection certification schemes are encouraged with a formal procedure required to be set down for the issue and withdrawal of a data protection seal or mark and to ensure the independence of the issuing organization.

The next steps in the EU legislative timetable include: (i) February 27, 2013: deadline for tabling amendments by MEPs on the Civil Liberties Committee; (ii) end of April 2013: vote by the Civil Liberties Committee; and (iii) from May 2013 on: (depending on progress in the EU’s Council of Ministers) negotiations between European Parliament, the Council and the Commission (the so called “Trilogue”).

For further details on the proposed EU Data Protection Regulation, please contact William Long (wlong@sidley.com) or John Casanova (jcasanova@sidley.com). Edward McNicholas (emcnicholas@sidley.com) in Washington, D.C. is also available to assist U.S. companies in addressing the potential conflicts between U.S. and EU requirements.

This Sidley update has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

Attorney Advertising – For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300 and One South Dearborn, Chicago, IL 60603, 312.853.7000.

Prior results do not guarantee a similar outcome.

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EU Data Protection Authorities approve use of Binding Corporate Rules for Processors

The European data protection authorities (DPAs), represented by the Article 29 Working Party, have launched a Binding Corporate Rules (BCRs) regime for processors. Processors can implement these BCRs from 1 January 2013. BCRs are internal codes of conduct that are legally enforceable for data protection and security and, once approved by DPAs, provide a legal basis for transfer of personal data from the EU.

BCRs had previously been restricted to use by businesses when acting as data controllers (i.e. determine the purpose for which and manner in which personal data are processed) such as a company transferring its own employee data internationally. Although welcomed by many in respect of data controller initiated transfers, the DPAs were criticised for not making BCRs available to data processors that process personal data on behalf of data controllers. The new BCRs for processors should now prove popular for a wide range of international service providers, that act as data processors, such as cloud providers, outsourcing providers, payment processors, data and document storage companies, alertline providers, and many other companies in different industries. The BCRs will be enforceable against the data processor by individuals who suffer damage as a result of a breach of the BCRs and by the data controller.

Data controllers are increasingly requiring their vendors and service providers to provide evidence of data protection compliance, and adoption of BCRs by processors will provide comfort to controllers. Similarly, data processors will be able to use processor BCRs as a way of demonstrating to their customers strong commitment to data protection and so can form part of their customer value proposition. Processor BCRs may also be seen as having advantages over other existing international data transfer solutions, such as use of the EU’s standard form data transfer agreements, known as Model Contracts, which can require data processors to have hundreds of Model Contracts with their customers.

The application procedure for BCRs for processors will be based on the same process as for BCRs for data controllers. The process involves submitting an application form to a lead national DPA in the EU. Once approved by the lead DPA the BCRs will be automatically recognised by many other DPAs due to a system of mutual recognition. In a Working Document (WP195) published in June 2012 the Article 29 Working Party provided a checklist that offers guidance as to which issues should be dealt with in BCRs and what to present to DPAs in the application form including:

  • a description of the data transfers and scope of the BCRs;
  • be binding through reference to BCRs in the service agreement;
  • grant third party beneficiary rights to individuals in the event that the data controller goes out of business or becomes insolvent;
  • provide that the EU data processor accepts responsibility for the acts of other members of the group or breaches by external sub-processors outside the EU;
  • give details of the existence of a suitable training programme, complaint handling process and creation of a network of privacy officers;
  • provide for data protection audits on a regular basis with DPAs having a right of access to the results of the audit together with a duty to co-operate with DPAs; and
  • set out a process for updating the BCRs.

According to the EU’s Article 29 Working Party, BCRs for processors will bring benefits to both data processors and data controllers “Once a BCR for processors is approved it can be used by the controller and processor, thereby ensuring compliance with EU data protection rules without having to negotiate the safeguards and conditions each and every time when a contract is entered into.” BCRs for processors will also increase confidence among customers of data processors while providing a way for customers and data processors to overcome international data-transfer limitations under EU data protection laws.

For further details on BCRs for processors please contact William Long (wlong@sidley.com) or John Casanova (jcasanova@sidley.com).

 

Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.

Attorney Advertising – For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.

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EU Website Cookie Consent Requirements Now Being Enforced

The deadline of 26 May 2012 for businesses to comply with new EU website cookie consent requirements in the UK has now passed. Under the EU’s amended e-Privacy Directive 2002/58/EC new rules were introduced last year for businesses to obtain the consent of website users to place cookies on a user’s computer. Although EU Member States were required to implement the consent requirements by 25 May 2011, the UK’s Information Commissioner’s Office (“ICO”) gave businesses a 12 month grace period to become compliant with the new law which ended on 26 May 2012. Many other EU Member States have still to implement the cookie consent requirements with only 20 of the 27 Member States having so far implemented the requirements into their national laws.1

The new EU cookie consent requirements contain an exception where the website is using a cookie “that is strictly necessary” to provide the service explicitly requested by the user. The ICO considers this exception should be narrowly interpreted and cannot, for example, be used to exclude cookies used for analytical purposes, such as counting the number of visits to a website, from the new consent requirements. Failure to comply with the EU cookie consent requirements can lead to enforcement action including fines from national data protection authorities.

UK Guidance

The cookie consent requirements under the amended ePrivacy Directive were implemented in the UK through “The Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011” (the “UK Regulations”). The ICO has published helpful guidance on implementing the UK Regulations entitled “Guidance on the rules on use of cookies and similar technologies” (the “UK Guidance”).

Regarding the scope of the UK Regulations, the UK Guidance states that websites based outside of the EU, designed for the European market or providing products or services to customers in the EU, should consider that their users in the UK and the EU will clearly expect that information about cookies will be provided to them and their consent to set cookies obtained.

Providing clear and comprehensive information to the user

In addition to obtaining consent, the requirements under the ePrivacy Directive include that the user is provided with “clear and comprehensive information” about the purposes for which the information, such as that collected through cookies, is used.

The ICO suggests that wherever possible, the placing of cookies on a user’s terminal equipment should be delayed until the user has had the opportunity to understand what the cookies are being used for and so they can make their choice to accept the cookies or not. However, the ICO acknowledges that obtaining prior consent might be difficult as many websites set cookies as soon as a user accesses a website. The ICO therefore states that at present websites should be able to demonstrate that they are doing as much as possible to reduce the amount of time before the user receives information about cookies and is provided with the option to accept the use of cookies.

Responsibility for compliance

Although the UK Regulations do not define who should be responsible for complying with the new requirements, the ICO clearly states in the UK Guidance that “where a person operates an online service and any use of cookies will be for their purposes, it is clear that that person will be responsible for complying with this Regulation”. The ICO also makes it clear that where third party cookies are used through a website, the person operating the website and the third party should be responsible for complying with the UK Regulations. However, the ICO acknowledges that it could be challenging in practice for third parties to comply, and therefore proposes that a third party using cookies on a website should consider putting a contractual obligation into agreements with the website provider “to satisfy themselves that appropriate steps will be taken to provide information about the third party cookies and obtain consent.”

Potential solutions to gain the consent of the user:

The UK Guidance refers to a number of potential solutions to obtain consent for use of cookies including:

Use of pop ups and similar techniques, such as header or footer bar on the home page – while using a pop up to directly ask a user if they agree to the use of cookies will amount to consent if they click yes, as the ICO acknowledges this could spoil the user experience if the website uses several cookies. Moreover, the ICO comments that some users might not click on the options available and go straight to another part of the website. In these circumstances it may be possible to infer consent from the fact that the user has seen a clear notice and actively indicated that they are comfortable with cookies by clicking through and using the site.

Terms and conditions – when users open an online account or sign in to use the services, they could consent through terms and conditions to the use of cookies. The ICO specifies that changing the terms of use alone to include consent for cookies is not sufficient even if the user had previously consented to the global terms. To satisfy the new rules on cookies, the website operator must make users aware of the changes and specifically that the changes refer to the use of cookies. The website operators will then need to gain a positive indication that users understand and agree to the changes. The positive indication is commonly obtained by asking users to tick a box.

Settings-led consent – some cookies are set up when a user confirms what he/she wants to do or how he/she wants the site to work, for example, when selecting a feature such as the language of the website. The website should, during that process, explain to the user that by allowing the website to remember the user and the way he/she wants to use the website, the user gives the website consent to use cookies.

Feature-led consent – some information is stored in the user’s computer when the user decides to use a particular feature of a website such a watching a video or when the website remembers what the user did on a previous visit in order to personalise the content of the website. In these cases the website can ask for the consent to set a cookie at this point.

Browser settings – the view of the ICO is that most browser settings are not currently sophisticated enough to allow a website provider to assume that the user has given his consent. The UK Guidance confirms that the ICO and the UK Government are currently working with the major browser manufacturers to establish a new browser solution.

Steps to take now

Many businesses have been considering the best ways to obtain consent to the use of cookies for some time. For those businesses that have not yet implemented a cookie consent solution for their websites it is important that they do so now, particularly as the UK deadline has now passed. According to the UK Guidance the first steps should be:

Cookie Audit – businesses should check what cookies they are using on their websites, confirm the purposes, what data each cookie holds and the type of cookie (i.e. session or persistent and first or third party cookie). This could involve carrying out a comprehensive audit of the websites. The cookies used should also be analysed to determine which, if any, are “strictly necessary” and therefore might not need consent.

Cookie Assessment of Intrusiveness – the more intrusive a cookie the more priority should be given to getting meaningful consent. Some analytical cookies may have a limited privacy impact while cookies involved in creating detailed profiles of an individual’s browsing activity can have a significant privacy impact. An assessment of the intrusiveness of the cookies used should also be undertaken.

Cookie Consent Solution – in addition to deciding on the most appropriate of the cookie consent options, which are referred to above, it is also necessary to consider the information on cookies that should be provided to users. According to the ICO, for most users it may be helpful to provide a broad explanation of the way cookies operate and the categories of cookies that are used on the website.

If you have any questions regarding this update, please contact:

John Casanova, Partner
jcasanova@sidley.com
+44 20 7360 3739

William Long, Counsel
wlong@sidley.com
+44 20 7360 2061


1 Austria, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia, Spain, Sweden The Netherlands and the UK.


 

This Sidley update has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

Attorney Advertising – For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300 and One South Dearborn, Chicago, IL 60603, 312.853.7000. Prior results do not guarantee a similar outcome.   

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The New EU Data Protection Regulation: What will the Impact be on the Life Sciences Industry?

Scrip Regulatory Affairs

The EU Data Protection Regulation proposed by the European Commission in January will – if adopted in its current form – require pharmaceutical and medical device companies to adopt a new approach to data processing and data protection.

This article was published in the March 2012 issue of Scrip Regulatory Affairs.

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New EU Data Protection Regulation Announced

The official proposal for an EU Regulation on Data Protection was released in Brussels on Wednesday 25 January 2012 (the “Regulation”). The Regulation, which will replace the existing EU data protection regime, will have a significant impact on almost every business either established in the EU or that has EU customers. The proposed Regulation will now be discussed in detail over the next few months as it goes through the European legislative process and is set to be adopted in 2014. The main implications of the proposed Regulation are summarised below.

  • Greater Enforcement – fines can be imposed of up to 2% of the annual worldwide turnover of a business for failure to comply with the proposed Regulation. In addition, supervisory authorities will be able to impose a temporary or definitive ban on processing personal data, enter premises and suspend data flows to a recipient in a third country or to an international organisation.
  • Class Actions – any organisation which aims to protect the data protection rights of individuals, such as consumer organisations, can make complaints to supervisory authorities and bring class actions on behalf of individuals for non-compliance, even without the consent of those affected.
  • Application to Non European Businesses – the proposed Regulation will apply to businesses established in the EU and importantly to non-European businesses that process personal data of individuals residing in the EU where the processing activities are related to offering goods or services to such individuals or the monitoring of their behaviour.
  • Accountability – businesses will be required to adopt policies and implement measures to demonstrate compliance with the requirements in the proposed Regulation. This will include keeping a detailed record of all forms of data processing and carrying out data protection impact assessments. This will lead to significant compliance costs for affected businesses. Privacy by design measures must also be implemented to ensure, for example, that data is not collected or retained beyond the minimum necessary.
  • Data Protection Impact Assessments – the proposed Regulation introduces a new requirement for impact assessments to be conducted where the processing is likely to present specific risks, such as the processing of health data. As part of the assessment the views of the individuals whose data are being processed need to be obtained.
  • Data Protection Notifications – while the requirement in some EU Member States for data controllers to notify their Data Protection Authority in respect of their data processing activities will be abolished, businesses will be required to consult the relevant supervisory authority prior to the processing of personal data where a data protection impact assessment is required. Where the supervisory authority considers that the assessment insufficiently identifies or mitigates risks it can prohibit the intended processing. Where a data controller or processor is established in more than one EU Member State then the competent authority is where the controller or processor has its main establishment.
  • Information Security – the proposed Regulation requires data controllers and processors to implement appropriate technical and organisational security measures after having carried out an evaluation of data privacy risks. Moreover, data security breaches will have to be notified to the relevant supervisory authority without undue delay and “where feasible” no later than 24 hours after having become aware of it. The proposed Regulation specifies that when the breach notification is not made within 24 hours a reasoned justification must be provided to the relevant supervisory authority. The breach will have to be communicated to the individual without undue delay when the breach is likely to adversely affect the protection of the personal data or the privacy of the individual.
  • Consent – the proposed Regulation places the legal burden on the data controller to prove that the individual has given consent and gives an individual a right to withdraw their consent at any time. The Regulation also significantly restricts reliance on consent “where there is a significant imbalance between the position of the data subject and the controller.”
  • Data Protection Officers – businesses with over 250 employees will be required to appoint a data protection officer who will have to have “expert knowledge” of data protection law and practices. The appointment which must be for a term of at least two years should be notified to the relevant supervisory authority and the public. The proposed Regulation also provides that businesses may appoint a single data protection officer for a corporate group.
  • Increased Rights of Individuals – businesses must have transparent and easily accessible data protection policies and provide information using clear and plain language. An individual also has a right to correct his or her personal data and, importantly for social media, a right to data portability (i.e. to transfer his or her personal data to another provider) and will have a right to be forgotten (i.e. to have his or her personal data erased) which will be complex to apply in practice.
  • Transfer of Personal Data from the EU – the proposed Regulation maintains the restriction under the current Data Protection Directive of transferring personal data to countries outside the EU that are not considered to provide an adequate level of protection including the United States. The Regulation provides that one of the main solutions to permit such international transfers is the adoption of Binding Corporate Rules, which are a set of data protection rules adopted by an international corporate group that meet EU requirements and must be approved by a lead supervisory authority. Significantly, the proposal confirms that that specific sectors of a country could be deemed adequate – perhaps paving the way for recognition of the United States health, communications and financial sectors.

The proposed Regulation will certainly be subject to lengthy discussion and revision by the Council of Ministers and the European Parliament before it is finally adopted and becomes law. However, it is clear that whatever the final form of the Regulation it will have a significant impact on businesses worldwide, increase compliance costs and enforcement actions and will therefore require a new approach to data protection.

If you have any questions regarding this update, please contact:

London

John Casanova
jcasanova@sidley.com
+44 20 7360 3739

William Long
wlong@sidley.com
+44 20 7360 2061

Washington, D.C.

Ed McNicholas
emcnicholas@sidley.com
+1 (202) 736 8010

Alan Raul
araul@sidley.com
+1 (202) 736 8477


 

This Sidley update has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

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