The EU-U.S. Privacy Shield Is Adopted and Available as of August 1, 2016

by Wilson Sonsini Goodrich & Rosati
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On July 12, 2016, the EU Commission and the U.S. Secretary of Commerce announced the adoption of the EU-U.S. Privacy Shield (Privacy Shield). This announcement follows today's adequacy decision1 by the College of EU Commissioners2 which recognizes that the Privacy Shield3 provides an adequate level of protection under EU data protection law. The adequacy decision represents formal approval of the Privacy Shield as a legal basis for data transfers from the EU to the U.S.

Privacy Shield certification will be available to companies as of August 1, 2016. Although the adoption of the Privacy Shield is a welcome development, it does not eliminate the recent legal uncertainty that has surrounded data transfers from the EU to the U.S., as the Privacy Shield is expected to face legal challenges before DPAs and courts.

Certification to the Privacy Shield is not a mere formality. Before certifying, companies should carefully review the Privacy Shield principles and the supplemental principles to assess whether it is a workable data transfer solution for their business. Noncompliance may expose companies to significant sanctions.

Background and Next Steps

The Privacy Shield replaces the EU-U.S. Safe Harbor Framework (Safe Harbor), which was invalidated by the EU Court of Justice in Schrems4 on October 6, 2015. Following preliminary discussions with the U.S. Department of Commerce (DOC), the European Commission issued an initial proposal at the end of February 2016. Today's adequacy decision is the result of many months of additional negotiation between the DOC and the EU Commission, following criticism of the initial proposal from various EU bodies, including the Article 29 Working Party, the European Parliament, and the European Data Protection Supervisor.

The DOC and EU Commission will now implement the Privacy Shield by updating the DOC website and providing guidance on how to certify. The DOC will begin processing Privacy Shield certifications as of August 1, 2016. The Article 29 Working Party announced that it will review the Privacy Shield on July 25, 2016, and may comment on some aspects of the final framework.5

The Privacy Shield

The Privacy Shield builds on the existing Safe Harbor principles and FAQs, but expands on some of the principles, provides for new recourse mechanisms, and contains commitments regarding U.S. public authorities' access to EU citizens' personal information. See the annexes to the adequacy decision for the full Privacy Shield principles.

Below are some of the key changes:

  • Additional notice requirements. The Privacy Shield requires providing additional information in privacy policies, such as information on recourse mechanisms, liability for onward transfers, and potential disclosures to public authorities, including for national security and law enforcement purposes.
  • Stricter opt-out right. Companies must allow individuals to opt out from disclosure to third parties or from any new use which is "materially different" from the purpose of the collection.
  • More restrictions on onward transfers. The Privacy Shield restricts onward transfers to third parties, and requires companies to include certain contractual provisions in their data-sharing agreements. The Privacy Shield certified company generally remains liable in case of onward transfers to an agent.
  • Higher security standard. Taking into account the risks of the processing and the nature of the personal information, companies must take reasonable and appropriate measures to protect information from loss, misuse, and unauthorized access, disclosure, alteration, and destruction.
  • Enhanced data integrity and purpose limitation. Companies must limit the purpose of the processing to the purposes for which information was collected and only retain personal information for as long as needed for the purpose of collection.
  • Stronger right of access. Individuals have an enhanced right to access, correct, amend, or delete their personal information, and a new right to receive information about a decision based on the automated processing of their personal information (e.g., creditworthiness).
  • Restrictions when leaving the Privacy Shield. A company leaving the Privacy Shield must delete the information collected under the Privacy Shield or certify with the DOC that it will continue to process the information in accordance with the Privacy Shield principles.
  • New redress mechanisms. The Privacy Shield creates new redress mechanisms. Individuals are encouraged to complain directly to companies, who will have 45 days to respond. Individuals may also directly file a complaint with EU data protection authorities (DPAs), which will cooperate with the DOC and the Federal Trade Commission (FTC). Furthermore, individuals have access to a free-of-charge alternative dispute resolution mechanism selected by the company. Finally, as a last resort and in limited situations, individuals may seek redress from the Privacy Shield Panel, a binding arbitration mechanism.

In addition, the Privacy Shield entails a series of commitments and limitations relating to U.S. government data access. The U.S. government committed to creating an ombudsperson within the Department of State to handle complaints related to data access by national intelligence authorities. The ombudsperson will be independent from national security agencies.

The Privacy Shield includes a transitional grace period as an incentive for U.S. companies to certify quickly. Companies that certify within two months of the adoption of the Privacy Shield will benefit from a nine-month leniency period to bring their contracts in line with new requirements for onward transfers.

Outlook and Conclusions

With today's adoption of the Privacy Shield, a new data transfer mechanism is available to companies to legitimize their data transfers from the EU to the U.S. However, while this is a welcome development for EU-U.S. data transfers, the Privacy Shield will likely face challenges before DPAs and courts. The validity of EU Model Contracts is already being challenged before Irish courts, with a likely referral to the Court of Justice of the EU. These court proceedings will have a significant impact on EU-U.S. data flows, including the Privacy Shield. As a result, the legal framework around EU-U.S. data transfers will remain in flux, and companies will continue to face a high level of legal uncertainty for the foreseeable future.

Certification to the Privacy Shield is not a mere formality and potentially exposes companies to significant sanctions. Businesses interested in certifying to the Privacy Shield should assess whether it is a workable solution for their data flows and consider conducting a gap analysis to assess the differences between the Privacy Shield and the Safe Harbor if they were Safe Harbor-certified, or between the Privacy Shield and any alternative data transfer mechanism they implemented in the interim (e.g., Model Contracts and Binding Corporate Rules). Companies that implemented an alternative data transfer mechanism should also consider conducting a cost/benefit analysis of certifying to the Privacy Shield as a new or additional data transfer mechanism. Ultimately, which mechanism(s) to select for transferring data outside of the EU depends on a company's size, corporate structure, industry sector, data flows, and whether it operates in the B2C or B2B context.


2 The EU Commission's decisions are adopted by the College of Commissioners, composed of representatives of each EU member state.
3See the EU Commission's communication at: http://europa.eu/rapid/press-release_STATEMENT-16-2443_en.htm.
4See the CJEU judgment, delivered on October 6, 2015, in Maximillian Schrems v. Data Protection Commissioner, Case C-362/14 (request for a preliminary ruling from the High Court (Ireland)), available at: http://curia.europa.eu/juris/document/document_print.jsf?doclang=EN&text=&pageIndex=1&part=1&mode=req&docid=169195&occ=first&dir=&cid=111628.
5See the French Data Protection Authority (CNIL) press release on the adoption of the Privacy Shield, at: https://www.cnil.fr/fr/adoption-de-la-decision-dadequation-du-privacy-shield-par-la-commission-europeenne (in French).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

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Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

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How is your information shared?

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How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

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Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

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You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

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For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

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How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

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There are different types of cookies and other technologies used our Website, notably:

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Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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