10 Privacy Issues to Watch in 2014

by Goodwin
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In 2013, privacy issues became top of mind for policy-makers, businesses and the public alike.  The Edward Snowden disclosures about NSA data-gathering propelled a host of privacy questions to the forefront of public debate.  The year also saw an increase in privacy-related litigation, as well as numerous legislative proposals and regulatory enforcement efforts.

Notably, few of the privacy issues raised over the past year were resolved.  The following is a list of privacy issues that are likely to receive significant attention in 2014:

  1. Legal challenges to NSA data collection will continue.  The issue of NSA bulk collection of metadata continues to promise headlines and further legal action.  During the past few months, two federal district courts – in the Klayman and ACLU cases – have reached diametrically opposite results over the legality of the NSA’s practices.  News stories have suggested that further revelations about government surveillance efforts are yet to come.  Last month a presidential review panel offered additional recommendations about reforms of data collection for national security purposes.  Caught in the middle are private telecom providers and other tech companies, which the presidential review panel proposed should hold consumer metadata until required to disclose it by court order.  Expect the NSA story to continue to percolate throughout 2014.
  2. EU data protection measures will raise challenges for U.S. businesses.  U.S. businesses will need to carefully monitor EU privacy developments in the coming year, because those developments may well impact businesses that provide services to EU citizens.  In recent years, Safe Harbor protections have provided U.S. businesses with a reliable means of privacy clearance for handling European personal data.  The Safe Harbor procedures are now under sharp scrutiny, and there is serious concern that the Safe Harbor will be substantially narrowed.  European privacy regulators have also stepped up enforcement against U.S. businesses operating in Europe.
  3. FTC’s authority over privacy issues will be addressed.  The Wyndham and LabMD cases raise a fundamental challenge to the FTC’s authority to establish data security standards under Section 5 of the FTC Act.  The Wyndham case is pending in a New Jersey federal district court, where Wyndham’s position is backed by several notable amici, including the National Chamber Litigation Center; the LabMD case is an administrative action currently before the FTC.  With the FTC showing heightened attention to privacy issues (including planned seminars on mobile device tracking, consumer-generated health information and predictive behavioral “scoring”), the results of these cases will be closely watched.  Relatedly, FTC Chairwoman Edith Ramirez recently stated that she favored additional federal legislation requiring companies to notify consumers of data breaches, and providing the authority to impose civil penalties.
  4. Commercial applications of geolocation, biometrics, and the Internet of Things will raise further privacy issues.  Technology that enables geolocation tracking, and the use of facial recognition or other biometrics continues to emerge, with new uses increasingly appearing in stores and mobile apps.  The FTC also appears to be keenly interested in the privacy implications of the interconnectivity of personal devices (also known as the Internet of Things), such as wearable health and fitness devices, home appliances and the like.  Expect these issues to receive increased attention from federal and state legislators, regulators and the plaintiff’s bar. 
  5. Is there privacy in social media?  Businesses, educational institutions and others will continue to be challenged by the privacy implications of social media.  When, for example, should an employer be forbidden from scrutinizing its employees’ use of social media?  On the other hand, when should an employer be held liable for potentially tortious conduct that is manifested in some way by an employee’s use of social media (for example, an employee stalking or harassing a fellow employee or customer)?  Similar questions of balancing privacy and security face educational institutions, which may seek to screen applicants and current students for a variety of reasons, including character checks and campus safety. 
  6. Will drones be cleared for takeoff?  Privacy issues relating to the use of drones gained increased attention with Jeffrey Bezos’ revelation on 60 Minutes that commercial package delivery might be accomplished via drones.  While this particular use of drones remains experimental, the story showed how drone technology has become increasingly accessible, as it is currently used for research, environmental monitoring, aerial photography and the like.  In November, the Federal Aviation Administration released a “road map” for the use of domestic drones.  This road map, however, did not impose specific privacy protections, leaving those issues for site operators and legislators to resolve.  Several members of Congress, as well as state legislators, have already shown an intent to more rigorously address privacy issues relating to the use of commercial drones in the coming year.
  7. State AGs are not expected to go away soon.  It is clear that state attorneys general have become active players in policing privacy issues, particularly those involving data collection and use by businesses.  Because of the national scope of services offered by many businesses, it is increasingly common for a business to find its activities subject to a patchwork of privacy requirements imposed by numerous states, particularly California.  Expect this trend to continue in 2014.
  8. Big Data poses big questions in public and private sectors alike.  What, exactly, is being done with all the data gathered by government and commercial entities, is the question many have asked over the past year.  The extent of the data collected, the responsible and ethical use of the data, and the security of the data, are issues that lie at the core of the public debate over privacy regulation.  In 2014, watch for more questions to be raised regarding the use of data gathered by non-profits, particularly political parties. 
  9. Cybersecurity regulation still in the starting blocks, for now.  In 2013, negotiations over federal legislation to establish formal cybersecurity standards failed to result in an agreement, largely due to disputes over liability protections for businesses compliant with proposed standards, and the proper balance between security and privacy.  Although Congress is expected to continue to consider this issue, it is more likely that voluntary cybersecurity guidelines will emerge through the work of the National Institute of Standards and Technology.  While these voluntary standards will receive considerable attention, expect them to be given time to work before Congress is able to reach agreement on mandatory standards.
  10. Data breach litigation will continue to influence best practices in cloud computing and data security.  The privacy class action bar continues to aggressively pursue data breach cases, often facilitated by a changing landscape of state law.  Of particular interest as businesses move to cloud technology will be questions regarding the parties’ respective duties when personal data is stored and shared through the cloud.  Standing and damages issues are also likely to be prominent in data breach litigation.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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