Category Archives: Data Security

Cyber Insurance: Common Pitfalls of the Insured

As we have noted in a number of recent posts, tech companies need cyber insurance. The risk of not having it is simply not worth it.  But cyber insurance policies can be confusing to understand because the policies vary depending on your type of business, business needs, and how your customers are serviced. Some companies might need a combination of cyber policies in order to have complete cyber insurance coverage. It is very important to do your due diligence, think critically about the cyber insurance needs of your company, and find a policy that covers all of your company’s cyber …

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Revisiting Cyber Insurance: Are You Covered?

Increasingly, companies are looking to insurance to help manage their cybersecurity risks and defray losses sustained from data breaches.  Losses can range from reputational damage, business interruption, and professional fees for computer forensic services and attorneys to handle regulatory inquiries or lawsuits.  In the event of a data breach or other cyber incident, recent rulings suggest that traditional insurance policies, like a company’s Commercial General Liability Policy (CGL), may provide coverage, or, at the very least, a defense to lawsuits spawned by cyber events. How do you know if you are covered under traditional policies?  First, carefully review the language …

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Will Privacy Enforcement Actions Impact “Reasonable” Security Measures Needed to Protect Trade Secrets?

In widely-publicized, contested privacy cases last year, the FTC advocated in favor of a high baseline for information security measures.  Among the security practices attacked by the FTC as critical mistakes by companies suffering data breaches: Storing sensitive data in readable text; Any system that permits the use of easily-guessed passwords; Failure to use firewalls between internal systems, the corporate network and the Internet; Lack of adequate administrative security policies and procedures; Failure to adequately restrict third-party vendors from network and corporate servers; Failure to employ reasonable measures to detect and prevent unauthorized access; and, Failure to follow proper incident …

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Erin Andrews Jury Sends Hoteliers a $55 Million Dollar Reality Check

“Privacy law” continues to evolve in the face of ever-advancing technology. Legislative bodies, administrative agencies, courts, tech companies, and a host of other interests are working to innovate, keep pace with, or catch up. Even the First Amendment, which has been interpreted by courts, lawyers, and scholars for hundreds of years, and, which stands as a counter-balance to the right of privacy, is being tested in new ways. But the recent trial involving Erin Andrews highlights that, sometimes, privacy issues are simple, and businesses need to implement common sense policies or face potentially costly outcomes. A Nashville jury recently handed …

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Cyber Insurance: Make Sure You Understand Your Coverage

Today, businesses are increasingly purchasing cyber-specific insurance in an effort to mitigate the financial impact of a breach or other cybercrime.  In terms of what might be covered in a cyber insurance policy, there are basically two types of coverage – “first party” coverage and “third-party” coverage.  First party coverage covers the types of losses that your company might suffer directly in the event of a data incident.  That may include losses, some of which may be covered and some not, such as data destruction, denial of service attacks, incident response, crisis management, public relations, forensic investigation, remediation, breach notifications, …

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The Internet of Things and the FTC – Don’t Be the Test Case

Kevin Ashton, an expert on digital innovation, stated 15 years ago that, “If we had computers that knew everything there was to know about things—using data they gathered without any help from us—we would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.”  We are a lot closer to that reality now than when Mr. Ashton first wrote those words. As most people know by now, the Internet of Things is the ever-more-present future in which everyday objects …

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Apple’s DOJ Battle Scratches the Surface of Encryption Debate

By now you are likely aware of Apple’s ongoing battle with the Justice Department over the scope of the All Writs Act and its resistance of a federal court’s order compelling Apple to create special software that would unlock the iPhone used by Syed Rizwan Farook, one of the assailants in a mass shooting in San Bernardino, California. If you haven’t kept up with the story, an excellent walk through of where things stand may be found here. Apple’s case is generating a great deal of public debate over the amount of privacy a person may come to expect when …

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Responsibility Shifting for Cyber Attacks?

When a company’s protected data is compromised, potential litigants generally look to the company itself as the target for damages claims. The list of recent cases filed against the company suffering the data breach is long and, by now, familiar. In addition to potential damages claims, the breached company also must sustain the cost of remediation and attorneys’ fees, both in regard to its “first party” costs and with regard to third party claims. In very large breaches, it’s not uncommon for the company’s cost to far outstrip its insurance coverage, even if it has very good coverage. Historically, the …

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Clearing Up Confusion Over the Modified HIPAA Privacy Rule

The Department of Health and Human Services issued a final rule under the Health Insurance Portability and Accountability Act of 1996, which will go into effect on February 5, 2016. HHS published the final rule in tandem with President Obama’s recently announced executive actions to reduce gun violence. The final rule expressly permits certain covered entities under HIPAA to disclose limited demographic and other information to the National Instant Criminal Background Check System (NICS), or to an entity that is designated by the State to report to the NICS (or which collects information for this reporting). The covered entities are …

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Privacy vs. Data Security: Why Plaintiffs in Consumer Data Breach Cases Still Have a Long Way to Go

The year 2005 really marked the beginning of the “era of data breaches,” and with it, the “era of data breach lawsuits.” The ChoicePoint data breach in late 2004, which first became newsworthy in early 2005, was the catalyst. That breach involved approximately 163,000 records, which by 2005 standards was a “major” data breach, and ChoicePoint was the first organization to notify the data subjects of the breach under the first (and only) data breach notification law in the country – the California law known back then by privacy experts simply as SB 1386. The media floodgates that opened in …

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