The draft National E-Commerce Policy (“Draft Policy”) released by the Government of India on February 23, 2019 for stakeholder comments, has left the e-commerce sector in jitters. For global market players, the protectionist construct of the Draft Policy seems to suggest a shift of India’s focus from ‘Ease of Doing Business in India’ to ‘Make in India’. If the Draft Policy is implemented in its present form, it may have a serious impact demanding drastic change in internal strategies, policies and cost allocations for foreign companies having e-commercial presence in India. The Draft Policy is open for stakeholder comments up to March 9, 2019.

The Draft Policy focuses on: (i) restriction on cross-border flow of data; (ii) local presence and taxability of foreign entities having significant economic presence in India; (iii) creating a robust digital infrastructure for e-commerce, from online custom clearance to online resolution of consumer complaints; (iv) promoting exports from India with a boost to start-ups and small firms; and (v) regulatory changes to augment economic growth in e-commerce.

The key highlights of the Draft Policy are as follows:  Continue Reading Doing Business in India? Keep an Eye on This….

The Federal Trade Commission has filed a lawsuit in federal court claiming that a networking equipment manufacturer engaged in unfair and deceptive acts, exposing thousands of consumers to the risk of cyberattack from vulnerable wireless routers and internet cameras.

The complaint against Taiwan-based networking equipment manufacturer D-Link Corporation and its U.S. subsidiary D-Link Systems alleges that the companies failed to take reasonable steps to protect the internet routers and IP cameras from “widely known and reasonable foreseeable” vulnerabilities. According to the complaint, these risks were not purely theoretical: D-Link equipment has been compromised by attackers, including being made part of “botnets,” which are large-scale networks of computers infected by malicious software.

In particular, the complaint alleges that the company failed to take steps to address well-known and easily preventable security flaws, such as:

  • “hard-coded” login credentials integrated into D-Link camera software — such as the username “guest” and the password “guest” — that could allow unauthorized access to the cameras’ live feed;
  • a software flaw known as “command injection” that could enable remote attackers to take control of consumers’ routers by sending them unauthorized commands over the Internet;
  • the mishandling of a private key code used to sign into D-Link software, such that it was openly available on a public website for six months; and
  • leaving users’ login credentials for D-Link’s mobile app unsecured in clear, readable text on their mobile devices, even though there is free software available to secure the information.

Count I of the complaint alleges that D-Link’s failure to take reasonable measures to secure the products from these vulnerabilities was unfair under Section 5 of the FTC act.  It alleges that D-Link’s practices caused, or are likely to cause, substantial injury to consumers that is not outweighed by countervailing benefits to consumers or competition and is not reasonably avoidable by consumers.

But the FTC is not only concerned with the potential vulnerabilities of the D-Link products; in Counts II through VI, the FTC alleges that D-Link violated Section 5(a) of the FTC Act by making deceptive statements about the products’ security.  These allegedly deceptive statements include the following:

Count II:  D-Link advertised a Security Event Response Policy, implying that D-Link had taken reasonable measures to secure the products from unauthorized access;

Count III:  In promotional materials, D-Link claimed that its routers were “EASY TO SECURE” and had “ADVANCED NETWORK SECURITY,” among other claims, implying that the routers were secure from unauthorized access and control;

Count IV: In promotional materials, D-Link advertised that its cameras provided a “secure connection,” among other claims, implying that the cameras were secure from unauthorized access and control;

Count V: To begin using the routers, a graphical user interface provided security-related prompts such as “To secure your new networking device, please set and verify a password below,” implying that the routers were secure from unauthorized access and control; and

Count VI: To begin using the cameras, a graphical user interface provided security-related prompts such as “Set up an Admin ID and Password” or “enter a password” in order “to secure your camera” and featured a lock logo, implying that the cameras were secure from unauthorized access and control.

In a press release announcing the lawsuit, FTC Bureau of Consumer Protection Director Jessica Rich commented, “When manufacturers tell consumers that their equipment is secure, it’s critical that they take the necessary steps to make sure that’s true.”

The Commission vote authorizing the staff to file the complaint was 2-1, with Commissioner Maureen K. Ohlhausen voting against the complaint. The complaint was filed in the U.S. District Court for the Northern District of California.

The complaint is just the most recent action in the FTC’s efforts to crack down on potential vulnerabilities in the Internet of Things (IoT). The FTC has also brought enforcement actions against ASUS over allegedly insecure routers and cloud services and against TRENDnet over its allegedly insecure cameras.  This case serves as yet another reminder that the FTC remains focused on cyber security, especially for IoT devices, and that it is important for all businesses that handle or have access to customer information to ensure that they have implemented reasonable security practices, and confirmed the accuracy of all related marketing claims and public representations (including in public-facing policies and product dashboards) about the security of their products.

iStock_000019536561Large-300x225At the Federal Communications Commission’s (“FCC”) Open Meeting on October 27, the Commission voted along party lines (3-2) to impose more stringent rules on broadband Internet service providers (“ISPs”). Chairman Tom Wheeler, along with Commissioners Rosenworcel and Clyburn voted in favor of the item, while Commissioners Pai and O’Rielly voted against it.

The new rules clarify the privacy requirements applicable to broadband ISPs pursuant to Section 222 of the Communications Act. The new rules also apply to voice services and treat call-detail records as “sensitive” in the context of voice services.

According to an FCC press release issued immediately after the meeting, these rules “establish a framework of customer consent required for ISPs to use and share their customers’ personal information that is calibrated to the sensitivity of the information.” The Commission further asserts that this approach is consistent with the existing privacy framework of the Federal Trade Commission (“FTC”). Continue Reading FCC Votes to Impose Aggressive New Privacy Rules on Broadband Providers

On July 12, 2016, the European Commission (“Commission”) formally adopted and released the Privacy Shield Adequacy decision, which will allow certified U.S. companies to transfer EU personal data to the United States.  The EU-U.S. Privacy Shield (“Privacy Shield”) replaces the U.S.-EU Safe Harbor framework (“Safe Harbor”), which was invalidated in October 2015 by the European Court of Justice (“ECJ”) in Maximillian Schrems v Data Protection Commissioner. The decision will immediately go into effect upon notification to the EU Member States.

The more than 4,400 U.S. companies that previously relied on the Safe Harbor and have been waiting for an alternative mechanism for data transfers can choose to self-certify to the Department of Commerce (“Commerce”) under the new Privacy Shield framework. Commerce will begin accepting Privacy Shield applications on August 1, 2016. This client advisory provides an overview of Privacy Shield, highlights key differences between Privacy Shield and Safe Harbor, and offers some key considerations given the forthcoming Global Data Protection Regulation and other data privacy developments.

Continue Reading What You Need to Know About Privacy Shield: An Overview of the New Transatlantic Framework

Special counsel Richard Cohen was interviewed by Metropolitan Corporate Counsel in the law article “Weighing Public vs. Private Interests in the Big Data Economy: Innovations in technology continue to bring more questions about privacy.”  Mr. Cohen discusses the current startup environment, big data, and venture capital accelerators based on his extensive experience working with technology companies on transactions, outsourcing agreements, strategic alliances, software licensing and development, cloud services, and other commercial and corporate matters.  He says, “[for many organizations] a growing area of interest is the need to balance the use of big data for public good while respecting privacy and individual rights.”

To read the full article, please click here.