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Bipartisan Bill Introduced in Senate that Seeks to Prevent Attacks on American Cyber-Networks

Written by on Friday, May 19th, 2017

Democratic Senator Brain Schatz of Hawaii and Republican Senator Ron Johnson of Wisconsin have introduced the “Protecting Our Ability to Counter Hacking Act of 2017,” also known as the “PATCH Act of 2017” in the U.S. Senate Homeland Security and Governmental Affairs Committee, following the recent “WannaCry” ransomware attack, with the intention of requiring government agencies to submit any security holes in software products they discover for independent review in order to determine any vulnerabilities that need to be secured, as reported by HealthCare IT News and Reuters.  According to HealthCare IT News, the PATCH Act of 2017 is supported by Republican Senator Senator Corey Gardner of Colorado, Democratic Representative Ted. Lieu of California, and Republican Blake Farenthold of Texas, as well as McAfee, Mozilla, The Information Technology and Innovation Foundation, and New America’s Open Technology Institute.

The text of the PATCH Act of 2017 is available for viewing here.

The bill would require the establishment of a Vulnerability Equities Review Board comprised of permanent members, ad hoc members, and National Security Council members who are neither of the above, if approved by the President and requested by the Board.  The permanent members would include the following:

  • Secretary of Homeland Security or the designee of the Secretary, who shall be chair of the Board;
  • Director of the Federal Bureau of Investigation or the designee of the Director;
  • Director of National Intelligence or the designee of the Director;
  • Director of the Central Intelligence Agency or the designee of the Director; and
  • Secretary of Commerce or the designee of the Secretary.

The Ad Hoc Members would include:

  • Secretary of State, or the designee of the Secretary, if the Board considers the matter under the jurisdiction of the Secretary;
  • Secretary of the Treasury, or the designee of the Secretary, if the Board considers the matter under the jurisdiction of the Secretary;
  • Secretary of Energy, or the designee of the Secretary, if the Board considers the matter under the jurisdiction of the Secretary; and
  • Federal Trade Commission (“FTC”), or the designee of the Commission, if the Board considers the matter as relating the the FTC.

The purpose of the Board would be to establish policies relating to “whether, when, how, to whom, and to what degree information about a vulnerability that is not publicly known should be shared or released” by government to a non-government entity and the process by which such information should be shared or released to a non-governmental entity. In other words, as Reuters reported, the bill is intended an attempt to put the process “into civilian control” and remove such decisions from the purview of the National Security Agency (“NSA”).

According to reporting by ThreatPost, this bill codifies the process that the White House has long claimed to have in place to evaluate information on security vulnerabilities, but in fact rarely actually has utilized.  According to Threat Post, in the particular case of the WannaCry attack, the NSA did in fact tip off Microsoft of the security issue, which allowed Microsoft to make the patch available to customers in advance of the attack.

While the WannaCry attack was initially reported only to have hit Windows machines, according to reports by ThreatPost, it is now known that medical devices and industrial control systems have also been hit by the attack, including equipment used in medical radiology facilities.

Reuters is reporting today that, for victims who have not paid the ransom and/or recovered their files, French Researchers have developed a last resort workaround, which will successfully unlock the encryption key for files hit by the attack in certain conditions.  According to Reuters, Europol has stated on Twitter that its European Cybercrime Centre has tested this tool and confirmed it will successfully recover data in some circumstances.  The technical details of this tool can be accessed through the Reuters article.

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New Senate Cybersecurity Bill May Expand Government Surveillance Pressures on Cloud Companies

Written by on Friday, March 20th, 2015

Privacy groups are raising alarms in response to the Senate Intelligence Committee’s Introduction of a new cybersecurity bill: the Cybersecurity Information Sharing Act of 2015 (“CISA”).  The text of the current bill has been made available for viewing at this link.

According to a National Journal report discussing the proposed legislation, the bill “is intended to help forestall cyberattacks like the one that crippled Sony Pictures last year.”  The two key features of the bill are data sharing with regard to cybersecurity and liability protections for companies that participate.

As you might expect, the opposition to this bill already being raised is that it imposes new surveillance pressures on companies and provides virtually no protection to the individual.  The Electronic Frontier Foundation (“EFF”) has already posted a scathing statement of opposition to this bill on its website, arguing that the bill grants to companies very broad powers to protect information systems with the sole restriction that no “substantial” harm arises from the action, and that it also authorizes companies to the broad powers to conduct monitoring on information systems which can broadly be used to conduct surveillance of individuals.  The EFF’s position is as follows:

This fatally flawed bill must be stopped.  It’s not cybersecurity, but a surveillance bill.

Wired reports that the concern of other privacy advocates is that the bill would permit the sharing of personal data that goes beyond just stopping cybersecurity threats, but to also allow sharing for the stated purpose of preventing terrorism, the imminent threat of death or serious bodily harm, and even the investigation of crimes having nothing to do with cybersecurity.

After reviewing the text of the proposed bill myself, I would agree with the vocal opposition on this bill that there is a reason that the Senate Intelligence Committee is proposing this type of legislation that has little to do with preventing cyber attacks:  to increase the surveillance powers of the federal government and to encourage broader corporate cooperation and participation in these surveillance activities.  I would also argue that this type of legislation, if enacted, has the potential to disproportionately affect cloud-based software and Internet companies, co-opting them into providing enhanced governmental surveillance of their customers.

I can understand why Silicon Valley’s tech community might be hesitant to take a position in opposition to a bill that California’s own Senator Diane Feinstein has been supporting, but I would argue that this is an issue that the software industry, and particularly, the cloud industry, should step up to the plate on and strongly oppose, given the fact that data collection is such an integral part of the online software business and revenue model.  This type of legislation, if passed, has the potential to put such companies in the undesirable position of conducting what amounts to surveillance activities on its customers on behalf of the government, which is not a position that most Silicon Valley companies would probably like to find themselves in.   It takes the surveillance gathering that has been going on since 9/11 to an entirely new level.

The Silicon Valley Software Law Blog will keep you posted on developments with this legislation as they arise.

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California Adopts Smartphone Kill Switch Law

Written by on Friday, September 12th, 2014

California has just enacted a smartphone kill switch law, which will require all smartphones sold in the state of California as of July, 2015, to have kill switch features enabled as the default settings on the smartphone.

SB 962 requires all smartphones:

manufactured on or after July 1, 2015, and sold in California after that date, include a technological solution at the time of sale, which may consist of software, hardware, or both software and hardware, that, once initiated and successfully communicated to the smartphone, can render inoperable the essential features, as defined, of the smartphone to an unauthorized user when the smartphone is not in the possession of an authorized user.

The bill requires that the technological solution utilized must be able to withstand a hard reset and must prevent reactivation on any wireless network except by an authorized user.  Resold phones will be exempt from this requirement,  as well as any model of smartphone on the market prior to January 1, 2015, which cannot reasonably be re-engineered to support the manufacturer or operating system provider’s technological solution.

The bill imposes a civil penalty of not less than $500 nor more than $2500 for each knowing violation of the bill’s requirements, and enables enforcement by the Attorney General, a district attorney, or any city attorney.

California’s move follows the adoption of similar legislation by Minnesota earlier in the year, as reported by Cnet.  According to Cnet, Minnesota’s law differs from the new California law, however, in that the kill switch feature is not required to be turned on as a default setting when the consumer first sets up the phone.

USA Today reported that the cell industry’s trade group, CTIA-The Wireless Association, has opposed the idea of kill switch legislation, and alleged that this was largely due to the group’s self-interest in perpetuating the lucrative market for cell phone insurance.

Overall, despite industry opposition to the bill, the reaction to this legislation has been positive.  Some media analysts have predicted that California’s move will cause all smartphone makers to adopt the kill switch as a default on all smartphones, given the size of the California market, and that this will all but eliminate smartphone theft in the country, since anyone who steals a smartphone will be left with a dead phone as soon as the owner realizes it is gone.

However, interestingly enough, the Boston Globe took a contrarian view on the legislation, arguing that it was unnecessary and could have “unintended consequences.”  In particular, they raised concerns about a provision in the law that allows governments to deactivate cell phones thereby “micromanaging the tech market.”

As someone who worries about government interference with private markets, I went back to the text of SB 962.   Based on my reading of the bill, the law only references preexisting California law in Section 7908 of the Public Utilities Code and does not actually provide any new government rights to the smartphone marketplace.  So, while the Boston Globe’s point is well-taken about the dangers of government encroachment into the private marketplace, I do not personally see from my reading of the legislation how that is really an issue in this particular case.  Certainly there is an argument that can be made that this law is unnecessary, as smartphone makers were already introducing these safety mechanisms on their own, but obviously the legislation now eliminates the option not to include the features as a default setting on smartphones and it is challenging to come up with an argument as to why this is bad for consumers or the marketplace generally.

All in all, I think California got it “right” this time and applaud the decision to pass the legislation.



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California Governor Signs Bill Prohibiting Nondisparagement Clauses in Consumer Contracts

Written by on Wednesday, September 10th, 2014

California has just added a new type of clause to the list of clauses that violate public policy in the state: the non-disparagement clause.

Governor Jerry Brown has just signed AB 2365, which prohibits companies from including nondisparagement clauses in consumer contracts, including online terms of service.

The bill–nicknamed the “Yelp” bill–prohibits now the inclusion of any clause for the sale or lease of consumer goods and services from which waives the consumer’s right to make a statement about the seller or lessor or its employees and agents, or concerning the goods or services.  The bill also makes it unlawful to “otherwise penalize a consumer for making any statement protected under the bill.”

AB 2365 imposes penalties of $2,500 for the initial violation and $5,000 for each subsequent violation, as well as an additional penalty of $10,000 if the violation was “willful, intentional, or reckless.”  The bill authorizes the affected consumer, the Attorney General, or the district or city attorney to file the claim. 

The San Francisco Business Times is reporting that that this bill was adopted in direct response to a Utah case of a couple who received a demand of $3500 from retailer that they had criticized online.

As you might expect, Yelp has already publicly responded by applauding the signing of the law bearing its nickname.

This law has widespread implications for virtually any company engaged in business on the Internet, and any business entering into contracts, where the consumer or lessee is based in California.  Thus, if you do business in the U.S., you now have a new constraint on what you can put in any contract or legal document, including Internet document, that your company adopts or signs.

While it goes without saying why Yelp would support the enactment of this kind of legislation, as an technology transactions attorney who drafts and negotiates contracts for a living, I find this level of government intrusion into private contracts absolutely appalling, as its application is going to go far beyond the narrow set of circumstances that the law was enacted to address.  Plus, the impact of the adoption of this bill is going to be very far-reaching and force companies in all 50 states–not just California–to modify their standard contracts, even their service contracts.

Perhaps it is time to take this issue to Congress–at which point we in the business world will then have the opportunity to see just how far the Yelp lobby’s influence actually extends.

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President Obama Unveils New Consumer Privacy Initiative: The Consumer Privacy Bill of Rights

Written by on Saturday, February 25th, 2012

President Obama yesterday unveiled his new consumer privacy initiative, as was announced on the White House website.  To view the full text of the initiative, click here.

The purpose of the initiative is to urge Congress to adopt a Consumer Privacy Bill of Rights, which codifies the following:

  1. Individual Control: Companies should give consumers control over the personal data that they share and how companies collect, use, or disclose that data.  They should be given clear and simple choices that enable them to make meaningful decisions about data collection, use and disclosure.  Companies should give consumers the opportunity to limit or withdraw consent that are as easy as the methods for granting initial consent.
  2. Transparency: Consumers have the right to easily understandable and accessible information about companies’ privacy and security practices.  Companies should provide clear descriptions of what data they collect, why they need the data, what they will do with the data, when they will delete or de-identify it from customers, and whether and for what purposes they may share the data with third parties.
  3. Respect for Context: Consumers have the right to expect that companies will collect, use, and disclose personal data in ways that are consistent with the context that consumers provide the data.  Important considerations for context are the age and sophistication of customers.  Children and teenages should have greater protections than adults.
  4. Security: Consumers have a right to secure and responsible handling of personal data.  Companies should maintain reasonable safeguards to control risks such as loss, unauthorized access, use, destruction, modification, and improper disclosure.
  5. Access and Accuracy:  Consumers have a right to access and correct personal data in usable formats in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data is inaccurate.
  6. Focused Collection: Consumers have a right to reasonable limits on the personal data that companies collect and retain.  Companies should collect only the personal data they need to accomplish purposes specified under the context, and they should dispose or de-identify personal data once they no longer need it.
  7. Accountability: Consumers have a right to have personal data handled by companies with appropriate measures in place to ensure they are adhering to the Consumer Privacy Bill of Rights.  Companies should be accountable to enforcement authorities and to consumers and companies should hold employees responsible for adhering to these principles.  Where appropriate, companies should conduct full audits.  If companies disclose data to third parties, they should ensure at a minimum that the recipients are under contractual obligations to adhere to these principles.

The initiative also asserts that the legislation should provide the FTC and State Attorneys General with the specific authority to enforce the Consumer Privacy Bill of Rights.

My initial reaction to the President’s announcement is mixed.  As a consumer of the Internet who spends 95% of my day online, I am sick and tired of getting tracked all over the Internet.  I find it very annoying to have advertisements pop up for somewhere I have shopped or thought about shopping online, and as soon as another advertisement pops up, I inevitably check all my computer settings and delete cookies and do what I can to stop being tracked.  However, it seems as though nothing works–or at least nothing works for long.  So, I agree that all this Internet tracking is overly intrusive and an annoyance.

At the same time, as an attorney in the Internet and Software space, I am strongly concerned by the fact that the President is proposing more government regulation over the Internet and more enforcement authority over the Internet.  I agree with many of my legal counterparts who believe that the intrusion of more government regulation over the Internet is a hornet’s nest: the Internet has no borders, so if the United States government is allowed to police the Internet to a greater extent than it is currently doing, why shouldn’t other governments be allowed to do the same?  And where do you draw the line?  Philosophically, I think there is a very good argument that the federal government should not be empowered with the ability to step up its regulatory and enforcement authority over the Internet.

Putting aside my general concern over the federal government increasing its regulatory and enforcement powers in the Internet space, my next concern is that we may be imposing a HIPAA like regime over all businesses and not just the ones that handle personal health information.  Is that really a good idea?  Moreover, my understanding is that as a result of The Affordable Care Act, the government is now trying to coerce companies to turn over HIPAA information to the Department of Health and Human Services.   If this is in fact happening, what is to stop the government from doing the same thing with other personal information once they have further regulatory authority?  It’s bad enough that I’m being tracked by businesses all over the Internet, but the idea that Uncle Sam might be doing it is even worse.

And, then there is the concern that this initiative would be duplicating existing laws.  We already have a law to protect children’s personal information on the Internet: the Children’s Online Privacy Protection Act (“COPPA”).  We also have state privacy legislation that presumably this law would supersede.

Finally, as a lawyer for software and Internet companies, you have to be concerned about how this new privacy initiative will impact their existing business models.  Many of my clients rely on the collection of this personal information to drive their revenues, as the websites rely on advertising and the sharing of data to make money.  Will this new initiative have the ultimate effect of putting some Internet and software companies out of business?

Of course, at the moment, these are just my initial reactions to the President’s announcement.  His initiative is merely a proposal to demonstrate to consumers who are likely voters that he is looking out for their well-being in an election year.  Indeed, the initiative does  not even rise to the level of a bill being introduced to Congress.  Moreover,  I would argue that the initiative contains largely “feel-good” language without any real teeth, so for now, my concerns about what happens next are simply speculation on my part about what Congress could do with the initiative, or alternatively,  what the Federal Trade Commission might do on its own accord without any legislation being  passed in Congress.

Still, as much as I personally dislike being tracked all over the Internet, I am troubled by the signals that the President is sending us through his announcement and concerned that expanding consumer privacy protection powers is just the first step to a further expansion of U.S. government regulatory powers over a global Internet.  While at a personal level I would like to draw the proverbial line in the sand on Internet tracking, I worry about what the impact of actually allowing the federal government to draw a line in the sand for us will be on the further development of the Internet.  For those of you who brush off this question, you should remember that the Internet does not have physical borders.  So, where exactly do we draw the line between the U.S. government’s regulation of the Internet and another government’s regulation of the Internet?  I think we need to stop to consider these questions very carefully before we start contemplating the further  expansion of federal powers over the Internet–even if those powers may be directed at reigning in a business practice that many of us find intrusive and annoying.

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Is the OPEN Act a More Viable Alternative to SOPA?

Written by on Wednesday, February 22nd, 2012

Now that SOPA and its companion bill PIPA have been tabled thanks in no small part to the statement made by the online community in organizing the SOPA blackout, the focus shifts to the Online Protection and Enforcement of the Digital Trade Act (the “OPEN Act”), H.R. 3782, which was introduced by Rep. Darrell Issa (R-California) on the same day as the SOPA blackout as an alternative to SOPA and PIPA. As PC World reported, supporters of the OPEN Act include Google, Facebook, LinkedIn, and Twitter, but as you might expect, the Motion Picture Association of America opposes the bill as being too easy on internet piracy.

What are the key provisions of the OPEN Act? Well, unlike in SOPA, the OPEN Act gives the International Trade Commission (“ITC”) enforcement action and focuses on foreign-based websites that willfully promote the violation of copyright law. If the ITC finds that a website is “primarily and willfully” promoting the violation of copyright law, the OPEN Act allows the ITC to issue a cease and desist order against the website and to render the infringing site unable to make a profit off of the infringing activities. Congressman Issa has set up an interactive website, where you can read the full text of the bill and comment on the provisions. Also, he has provided a summary and explanation of the bill, which you can read here.

Obviously, the OPEN Act provides a far less drachonian approach to dealing with infringing foreign websites than what was contemplated by SOPA, which would have allowed full websites to be completely “erased” from the Internet. Instead, the OPEN Act’s approach goes to the heart of the problem: cutting off the ability of infringers to make a profit off of their infringement. So, in that respect, the OPEN Act is definitely improvement over SOPA. Also, there is an argument that the ITC is a more appropriate body to hear these kinds of disputes, since the agency already has been tasked with the job of addressing unfair import disputes, where intellectual property violations are involved. Furthermore, this bill focuses on the problem of infringement by foreign websites, so it targets the real source of concern over infringement as opposed to usurping existing methods of dealing with domestic infringers.

On the other hand, you certainly can argue that the process of pursuing an ITC hearing may be too cumbersome for some U.S. businesses to pursue, where they are being infringed by a foreign website. And, of course, it fails to address the issue of how to deal with infringement by foreign websites where those websites are not openly profiting off the infringement. Furthermore, it’s not clear yet exactly how this new solution for dealing with infringement would interplay with the existing methods of dealing with infringers.

All in all, however, I think the OPEN Act is a much more palatable proposal for dealing with infringers, and that this bill is a far better working document than what we had on the table with SOPA and PIPA.  At the same time, I  think that the whole concept of adopting new legislation to deal with online infringers is still a work in progress  warranting further consideration before any new legislation is adopted.  I personally am still not overly happy with the Digital Millenium Copyright Act (“DMCA”) and would have liked to have seen more consideration given to that bill before it was adopted.  I would argue that we need to stop and give further consideration to the whole body of copyright infringement law before we start adopting new legislation to deal with the same problems that the prior legislation attempted to deal with.

My colleague Professor Eric Goldman of Santa Clara School of Law reviewed this proposed legislation back in December, and had some very interesting comments to add to the discussion, which were republished by Ars Technica.   His overall assessment was that the OPEN Act was an improvement over SOPA and PIPA and should be the working document for a new bill, but that it still required significant work before adoption.

I think it is safe to say that there is a general feeling out there that current copyright law does not provide enough protection against offshore infringers.  As a practitioner in this space, I regularly have to tell clients what their options are to deal with offshore infringement and inevitably they are less than satisfied with the options available to them to deal with this type of problem.  I think the question for us all is how best to fill in the gaps in existing law that make stopping offshore infringement out of reach for so many domestic copyright owners.  I would agree with Professor Goldman that we aren’t quite there in coming up with a workable solution to these issues.

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Websites Set to Observe SOPA Blackout Day

Written by on Tuesday, January 17th, 2012

A number of prominent websites have organized an anti-SOPA protest tomorrow, and are set to blackout for the day.  A blackout instructions website has been set up to advise Internet website owners on what to make your website go dark on the designated January 18th protest day.

The Los Angeles Times is confirming that Mozilla, Reddit, Word Press, Boing Boing and the English language version of Wikipedia have confirmed their participation in the organized blackout. Twitter has announced that it will not take part in the organized blackout.

In case you have not been following the SOPA controversy and were not up-to-speed on the fact that a blackout day was being organized, the Stop Online Privacy bill was introduced in late October, 2011 by the Republican Congressman Lamar Smith of Texas, which would allow the Attorney General of the United States to seek a court order against internet service providers to cause them to make a website disappear from the Internet. CNET
has published an excellent overview of the current controversy. The bill was designed to allow U.S. companies to shut down offshore infringers, and as you might expect is being championed by the Motion Picture Association of America and the Recording Industry Association of America, which of course, are highly invested in stopping the loss of profits to online privacy.

While few in the Internet world would disagree that online privacy is bad, the controversy over SOPA is over the concern that large companies are going to be able to censor or blacklist smaller Internet players and simply be able to “erase” their very existence from the Internet. Net has assembled a list of parties who oppose SOPA. The list includes companies, prominent individuals and educators, public interest gorups, industry associations, websites and online services, cybersecurity and engineering groups, and international human rights advocates.

The text and a summary of the bill is posted here.

Where do I come down on this issue?

Like most attorneys who represent clients in the Internet space, I have found myself on both sides of this issue. It is not unusual to have a client come to me with a complaint about a third party infringing my client’s copyright on the Internet, and to find myself in the frustrating position of having to advise my client of the limited options available for dealing with the infringement. It is particularly frustrating when I am talking to a client who has limited resources and cannot afford the investment of resources that is going to be required to really go after the infringer.

In fact, even I have run into situations where my copyrighted works were being infringed on the Internet and I had to make a decision about how to best deal with the infringement.

At the same time, however, I am very concerned by the fact that Congress wants to further legislate in this area. I agree with many of my fellow Internet law experts that we should oppose in general the encroachment of government regulation of the Internet, and this bill appears to be very serious encroachment. Moreover, I am concerned about how a bill like this would be used. It is almost certain that the small content publisher on the Internet would be at a serious disadvantage in defending itself against SOPA-based actions. Large companies with large teams of lawyers would be in a position to effectively censor smaller entities on the Internet, since the accused would not be financially able to defend themselves. It is highly likely that a bill like this which would allow parties to “erase” websites from the Internet would be misused for the economic benefit of one party over another.

Of course, there is another issue. Given the fact that the very nature of Cyberspace is borderless, should a U.S. attorney general really be able to police websites offshore? If so, shouldn’t the equivalent officials for other governments be able to do the same thing? What kind of standard are we setting for the rest of the world to follow? I’m not sure we want certain countries’ political leaders to start erasing American websites from the Internet.

The bottom line is that the implications of this bill go beyond the intent of just getting offshore infringers that cannot be shut down off the Internet. The effects of this bill could be very far-reaching, and take us a step closer to the day when virtually every activity on the Internet is subject to government oversight and regulation–not only by the U.S. but also other governments around the world.

So, as we approach the observation of SOPA Blackout Day, give some thought to what the Internet is going to be like if government officials have the power to “erase” a website from the Internet. Will such blackouts be an advancement of justice or an encroachment on our rights?

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