CISA Gives Protection For Sharing Cybersecurity Attack Information

The US Chamber’s public letter on cybersecurity last month urged businesses to take full advantage of the Cybersecurity Information Sharing Act signed into law by President Obama in December 2015. It caused renewed interest in the law, and this post outlines how small and midsized businesses can be sheltered by it when they partner with others to deal with the most common cybersecurity threat, spear phising.

Used in even the most sophisticated cyber-attacks, spear phising is nothing more than getting employees to transfer money or information by emails pretending to be from another person authorized to make the requests.

Spear phishing works when bad actors steal enough information to know who to impersonate and who to give orders to.

The information is stolen in many ways. Tracking how thieves attacked your company is vital to secure your systems and prevent future attacks. Re-creating the crime often means sharing information with financial institutions, suppliers, customers, employees, law enforcement, and others.

The thieves won’t sue you for exposing their activity, but if personal information about people is exchanged in the tracking process, lawsuits and other legal damage can and does result.

The CISA protects companies sharing information about specific individuals in connection with “cyber threat indicators” and “defensive measures” for a cybersecurity purpose. If you follow its rules, among other things your company can’t be sued for sharing the information.

To make it easier to follow the rules, the Homeland Security and Justice Departments released a CISA owner’s manual, “Guidance to Assist Non-Federal Entities to Share Cyber Threat Indicators and Defensive Measures with Federal Entities Under the Cybersecurity Information Sharing Act of 2015.”

https://www.us-cert.gov/sites/default/files/ais_files/Non-Federal_Entity_Sharing_Guidance_%28Sec%20105%28a%29%29.pdf

Personal information is involved in the description of a spear phishing attack by definition. The Guidance recognizes this includes information about the bad actor, the subject line, the email message content, message ID, and X-Mailer. But the identity of the individual being impersonated and his or her email address are information you must scrub because it is “not directly related to” the threat.

Also needing to be removed are such things as protected health information, HR information, consumer purchasing history or preferences, and financial information.

Liability protection for sharing with the federal government requires you to go through the process set up by the Department of Homeland Security at the National Cybersecurity and Communications Integration Center. It is a 24/7 management center where incidents can be reported through the US-CERT Incident Reporting System. https://www.us-cert.gov/forms/report

Good features of the CISA assure you that sharing threats and defensive measures does not waive privileges like the lawyer/client privilege or protections for trade secrets. Sharing can’t violate the antitrust laws or make proprietary information public. And shared information can’t be used by federal, state or local regulators.

Additional requirements include restrictions imposed by other parties sharing information with you, and having a “security control” to guard threat indicators and defensive measures from unauthorized access.

Yes, there’s a cost for CISA’s protections. But it has many benefits and compliance has benefits beyond the ones built into the law, such as providing an excellent roadmap when managing a spear phising attack. Deciding whether to share threat information or defensive measures under the CISA should ideally be part of your overall cybersecurity strategy.

Smaller and mid-sized companies may not feel they can afford the luxury of developing a cybersecurity strategy at leisure, so their strategy may have to be the result of dealing with threats as they occur.

Being aware of CISA’s protections and requirements can still be valuable if you must make decisions while under attack.

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Encryption Choices and the Coming EU v US Privacy Showdown

Edward Snowden’s leaks from NSA and Five Eyes surveillance programs three years ago reverberate today in European Union demands for total privacy in daily communications. If they become privacy regulations which US companies doing business with Europeans must obey, compliance could violate US law. Keeping up with privacy developments on both sides of the Atlantic is challenging, but it’s the only way to make good decisions on encrypting company communications and records.

The European Data Protection Supervisor is the EU’s privacy czar for now. He issued a preliminary opinion last month on ePrivacy Directive regulations. There may not be a final opinion because the Directive will be replaced in May 2018 by the General Data Protection Regulation (GDPR). Since the privacy czar is a lame duck and the Directive will be gone before you know it, some see the preliminary opinion as lobbying out in the open for new GDPR regulations.

The privacy czar is not a lone EU voice. His encryption recommendations are supported by the Article 29 Working Party (WP29) made up of data protection representatives of every EU member state. The recommendations are rigid:

• End-to-end encryption
• No back-doors
• Encryption and communication service providers, and “all other organizations” prohibited from allowing or facilitating back-doors.
• Decryption, reverse engineering, and communication monitoring prohibited by law

End-to-end encryption allows only the communicating parties to read messages. Every other player in the communication process must be prevented from getting the keys to unlock the conversation. Encryption must be designed to be tamper-proof and surveillance-proof.

Here, courts have ordered Apple about a dozen times to unlock cryptographic protection of iPhones. The most famous case this year involved a San Bernardino terrorist’s phone. Total privacy advocates cheered when the court rebuked the government for a “far-reaching” request. But the ruling lost its purpose and the case ended a short time later when the FBI said it unlocked the phone with third party help.

The most successful US legislative proposal of the moment ignores the subject. The Email Privacy Act proposed in 2015 was approved by a House vote of 419 to 0. If it becomes law it will close a legal loophole allowing authorities to get data more than 180 days old without a court order.

The bill eliminates any question whether electronic communication devices are “effects” protected by the Fourth Amendment’s “right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” It requires search warrants to obtain online communications or data stored in the cloud.

But while the bill is silent on encryption, US search warrants deal with it head-on. The Justice Department’s warrant form says “For any computer hard drive or other electronic media…(b) … encryption keys.” Searching and Seizing Computers and Obtaining Electronic Evidence in Criminal Investigations, https://www.justice.gov/sites/default/files/criminal-ccips/legacy/2015/01/14/ssmanual2009.pdf .

The EU privacy czar and WP29 would prevent any and all searches and surveillance of encrypted communications. US law  grounded on the Fourth Amendment’s protection allows search warrants based on “probable cause.” This is qualified privacy protection, not absolute.

When the US encourages and rewards encryption such as with the HIPAA Security Rule on personal health information in place more than a decade, it also recognizes the encrypted information can be required by court order and warrants.

As the US and EU head toward a showdown, encryption is looking like the new killer app. WhatsApp launched end-to-end encryption for about a billion users in April. Viber did the same for 700 million users. Facebook knows firsthand how serious the EU is about privacy and is now beta testing “Secret Conversations.”

If you are shopping for encryption solutions, you need to know if the vendor is offering virtually warrant-proof encryption or if they have back doors or decryption software. Whatever you decide in light of the conflict between US law and EU proposals, please remember that even warrant proof encryption is no safer than the security of your company’s devices and your employee’s alertness.

Devices can be hacked and the cryptographic keys stolen. And everyday spear phishing can give wrongdoers the ability to read decrypted messages.

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Smaller Businesses and the US / EU Privacy Shield Launch Today

If you have customers or employees in the European Union, you should look into signing up to operate under the US / EU Privacy Shield. Registration began this morning. It closes in two months.

Signing up means you self-certify you will be in compliance with tough privacy protection guidelines in exchange for a nine-month grace period to get ready. Then you have to recertify yearly.  If you collect information about Europeans and don’t sign up, you are subject to enforcement in fact one way or the other, with no grace period.

American overall enforcement will be the job of the US Department of Commerce. Their information on the whole process is on the Privacy Shield Framework website. https://www.privacyshield.gov/welcome. Go to Requirements of Participation.

Privacy Shield negotiations went on for a while before it abruptly became a hurry up replacement for the EU Safe Harbor struck down last fall by a European court. Now Privacy Shield is under attack in Europe, but no matter what the outcome count on continual EU efforts to protect the privacy of their citizens aggressively.

Smaller manufacturers and retailers dealing directly with EU consumers will find compliance pretty challenging. One example is the complaint process.

Participating companies must have complaint forms and respond to consumer complaints in 45 days. And if the response doesn’t work, they must provide the consumer an “independent recourse mechanism” to resolve the dispute.

And the participating company must pay for everything regardless of outcome. TRUSTe, the Better Business Bureau, and the International Institute for Conflict Prevention and Resolution (CPR) are among those offering services.

Remedies and sanctions that could be imposed start with fixing the privacy issue, but go on to include public statements, loss of certification, and compensation to the consumer.

Signing up is truly a choice, and it should be informed. Staying informed about privacy protection obligations will remain an evolving process. Whether forced by legal developments or not, every company needs a privacy protection officer. Even if your size means that is a person with three or four other titles.

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Brexit Multiplies Uncertainty Over EU Privacy Regulations and Shield

US companies doing business in the EU face a May 25, 2018 deadline to comply with its General Data Protection Regulation [GDRP], a 200+ page law. It is so riddled with questions it requires a new European Data Protection Board [EDPB] to give answers, guidelines, and recommend best practices.

Those answers will be influenced by what is called the EU-US Privacy Shield now being angrily negotiated. And something called the Article 29 Working Party [A29WP] with members from each EU member state is supposed to issue important opinions on data protection.

Clear as crystal. And there is much more. The Irish Data Protection Commissioner, for example, may ask Ireland’s High Court to rule on whether standard EU contract clauses on data protection are valid. That could put the issue in front of the EU’s Court of Justice.

And then the UK voted to leave the EU. To the cascade of speculation underway about what happens next, you can now add an uncertainty multiplier about what rules and best practices you must follow in handling the personal and business data of European residents.

The one certainty in all this is that no one knows what will happen or when. The EDPB and A29WP may give clear direction, but it could come in waves instead of one comprehensive set of do’s and don’t’s. The UK could go it alone and adopt its own laws and regulations. Privacy Shield negotiations and court decisions could change all the above. And no matter what legislators do, technology will keep pointing to new ways to protect and new ways to compromise personal and business data.

So how do you get ready to comply with whatever may be coming? By focusing on guiding principles that must be served no matter how the legal chaos resolves.

Active consent. The GDRP wants you to get active consent to use customer, employee, or vendor data. Think of it as contracts versus implied contracts, clicking “I Agree” instead of relying on unread Terms of Use saying continued access to a website is conditioned on agreeing to the terms.

To implement active consent, you must first know all the kinds of personal and business data you are collecting or already possess. You must take inventory of your data.

Right to Be Forgotten. This is a startling idea for Americans whose use of information is shaped by the First Amendment. Our closest legal recognition of it may be the limited laws allowing expungement of juvenile or adult arrest or conviction records. The right is a recent development in European law largely driven by a desire to have the power to require information, photos, and videos deleted so search engines can’t find them.

Unlike the goal of privacy which is preventing information from becoming public, the right to be forgotten aims to eradicate forever information that is already public. It is a right to disappear into the crowd without a trace.

Exercising the right requires a request, but once you are asked there will be limited time to comply and sanctions for failing.

Your first task is to understand whether you currently can, and if not what is need to, permanently delete the personal or business data you obtain. This is not business as usual for most companies which have nothing beyond an unsubscribe capability for their mailing lists.  The technical difficulties can be substantial.

Rapid Disclosure of Data Breaches. Indiana requires notification within 45 days after discovering a data breach. The GDRP will require notification to its Data Protection Authority in 72 hours ─ 3 days.

No matter how the regulations develop, you must first understand your capabilities for identifying a data breach. If you don’t actively monitor your networks and the personal devices accessing it, start investigating what it will take.

Long Arm Jurisdiction. As Google learned many times, EU member states will exert jurisdiction over any business dealing in the personal or business information of an EU individual resident or company. The determination to exert legal authority over those outside the EU is unlikely to change no matter how the UK separation or further withdrawal votes go.

Lawyers have a way of telling people to do this and that as each new challenge comes along. But here the GDRP has value as a prod to do what’s needed for your organization now. The good thing about the self-knowledge to implement whatever final requirements are imposed by the EU is that it will help with what you’re facing from cyber threats in the next 24 hours.

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Something Old Becomes Something New and Makes Copyright Royalties Disappear

The Old is pre-1972 recordings not covered by federal copyright law. The New is remastered versions of the Old played on broadcast radio. The disappearing royalties are the ones supposed to be paid by radio to copyright owners after Flo & Eddie’s state copyright law victories in California and New York.

 

With the recorded music industry preoccupied by the question “who owes me?”, another answer came from Los Angeles federal court on Memorial Day when Judge Percy Anderson ruled that CBS Radio owed nothing for its stations playing pre-1972 recordings because they were not pre-1972 recordings. ABS Entertainment, Inc. v. CBS Corporation, et al. CV 15-6257 PA (AGRx) May 30, 2016.

 

The Flo & Eddie litigation is on appeal while major recording companies walked away with $210 million from a settlement with SiriusXM over pre-1972 recordings as reported last year. The core question in those cases was ─ do state laws actually create enforceable rights to fill the vacuum left by the federal Copyright Act not covering sound recordings made before February 15, 1972? 17 USC §301(c).

 

CBS asked a different core question in the lawsuit decided Monday, the kind of question so often overlooked in copyright disputes that many commentators found it shocking ─ what recordings was CBS playing?

 

Aristotle shocked his colleagues in the world of ancient Greek philosophy in much the same way. He ended centuries of debate about how many teeth a horse has by saying in effect “let’s stop arguing and go look.”

 

When they looked in the ABS Entertainment case, they saw that CBS radio was broadcasting remastered versions of old records, not the original recordings. CBS claimed they were what the Copyright Act calls derivative works. And the since the remastered versions were made after February, 1972, CBS argued they came under the Copyright Act which says radio can play the recordings without paying royalties to rights owners.

 

Judge Anderson told the parties to brief the question “whether a sound engineer’s remastering of a pre-1972 sound recording – through subjectively and artistically altering the work’s timbre, spatial imagery, sound balance, and loudness range, but otherwise leaving the work unedited – is entitled to federal copyright protection.” In other words, is the New a group of derivative works?

 

Both sides submitted expert testimony and the answer from the court last Monday was Yes, they are. To qualify as a derivative work under the Copyright Act, the differences between Old and New can’t be trivial mechanical changes and need to be enough for people to notice.

While any artist today knows the differences you hear can be huge depending on mastering, it’s also true people hear, or fail to hear, different things. So what impressed the court were results of forensic tests of timbre, spatial imagery, sound balance, and loudness range. The Old and New were very different.

 

The remastered recordings in the lawsuit by artists such as the Everly Brothers, Jackie Wilson and Mahalia Jackson were all authorized by the artists in license agreements permitting remastering. That’s important because the Copyright Act gives the owner of the original work the exclusive right to authorize a derivative work based on it.

 

So CBS won and ABS Entertainment will undoubtedly get in line for the Ninth Circuit appeals court to review the decision. Meanwhile, radio owners are breathing easier while record labels and artists have more cause to complain about the size of their share of the shrunken recorded music revenue pie.

 

Aristotle, however, would approve of the court looking at the horse’s mouth instead of having the lawyers debate how many teeth were there.

 

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Making a Federal Case Out of Your Trade Secrets: DTSA Creates Federal Civil Action for Trade Secret Owners

Authored by Andrew McNeil

Want to make a federal case out of your trade secrets? It got easier to do just that after President Obama signed the Defend Trade Secrets Act of 2016 (“DTSA”) into law on May 11, 2016. Effective immediately, DTSA creates a federal civil action for the owner of a trade secret that “is related to a product or service used in, or intended for use in, interstate or foreign commerce.” In other words, if you have a trade secret, you probably have a trade secret protected by the DTSA.

In many ways, the DTSA is similar to the Uniform Trade Secrets Act (“UTSA”), which has been adopted or introduced for adoption in every state in the Union except for North Carolina. An early comer to the UTSA, Indiana passed it into law in 1982. The DTSA and the UTSA both provide for injunctive and monetary relief for the “misappropriation” of a “trade secret,” and both laws similarly define those and related concepts.

The DTSA adds some wrinkles, though, that are unique to it. While both state and federal law authorize courts to issue injunctions relating to the misappropriation of trade secrets, DTSA expressly authorizes a “seizure” process. Under this process, a party may ask the court, without a hearing, to direct the United States Marshals to seize the trade secret in issue and place it in the custody of the court while the parties litigate over the substantive claims. After ordering a seizure, the court is authorized to issue a wide array of orders, including ordering expedited proceedings, prohibiting any party (including the applicant) from accessing the trade secret, and requiring a bond in case the seizure turns out to be a mistake.

The DTSA also tackles the “inevitable disclosure” theory. Under that theory, plaintiff employers argue that their former employees cannot work for a competitor because the former employees are so imbued with the former employers’ trade secrets and would inevitably disclose those trade secrets in the course of working for a new employer. The DTSA expressly provides that any injunction prohibiting the actual or threatened misappropriation of a trade secret cannot prevent a person from entering into an employment relationship and that any conditions placed on such employment must be based on evidence of threatened misappropriation, not merely on the information the person knows.

Lest one assume that the DTSA is just for lawyers, all employers with trade secrets have some work to do, too. The DTSA contains a two-fold “immunity” provision for whistleblowers. First, the DTSA provides that an individual who discloses a trade secret in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of the law is immune from liability under the DTSA for that disclosure. Second, the DTSA authorizes an employee who files a lawsuit for retaliation by an employer for reporting a suspected violation of law to disclose the trade secret in those court proceedings without liability, provided the disclosure is made under seal.

Now comes the practical part for employers. The DTSA requires all employers, regardless of size, to provide employees notice of the immunity provisions of the DTSA “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” The contract provision must also cross-reference the employer’s policy document “that sets forth the employer’s reporting policy for a suspected violation of law.” If an employer does not comply with this notice requirement, “the employer may not be awarded exemplary damages or attorney fees . . . against an employee to whom notice was not provided.”

As with many new federal laws, it is time to review your contracts and policy documents to ensure they comply with DTSA. It is also a good time to review all matters related to the development and preservation of the company’s intellectual property—patents, trademarks, copyrights and trade secrets. They often overlap or work together, and for the first time they are all covered by federal law.

If you have any questions on your contract and policy documents please contact your Bose McKinney & Evans LLP attorney.

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Low-Cost Low-Tech Foolproof Cyber Defense: A Phone Call

The FBI warned again Monday about the dangers of “business email compromise.” A posting on its Phoenix bureau website says known losses from these scams exceeded $2.3 billion from October 2013 through February this year. The Bureau has documented cases involving 17,642 businesses of all sizes in 79 countries around the world. The average loss in Arizona was $25 to $75 thousand. My personal experience in Indiana has usually involved cases above the high end.

This post is about protecting your cash, but the same schemes are used to get information like Wall Street law firm files on pending transactions to use for insider trading. The scam is also called “spear phishing,” a more pointed and dangerous form of phishing.

The steps in the scam follow a simple pattern. First, the hackers get access to a personal email account and read your emails. Second, they set up an email account with an address so similar that people don’t notice the slight difference between it and your real account.

If I’m the target, they might open a “craigpintus@gmail.com” account which looks like “craigpinkus@gmail.com.” Try reading them at a glance in 8pt. Arial font on the From line.

Last, they email someone I correspond with who handles accounting at my firm. They have a good idea who that is because they invest the time to read my email traffic. The phony email says an amount of money must be transferred urgently to a person outside the firm I also correspond with, and gives wire transfer instructions. If questions are fired back, the hacker will give fast responses and stress the urgency of the transfer.

People believing they are doing their job authorize wire transfers to thieves every minute of the day because they think they know who is requesting the transfer and where it is going. The transfer is actually going to make three or more jumps to different financial institutions before heading to its ultimate destination. That could be in the United States or outside. If the money stays in the US, it will go to an account opened for the scam with false credentials, it will be withdrawn immediately, and the account abandoned.

You can and should train everyone in your organization on how to spot incoming scams. There are software solutions you may have in place to identify and hold suspicious emails until released. But people get tired or distracted and the software is only as good as the person deciding what emails to let through.

The one foolproof defense is a simple rule: always call the person requesting the transfer. You can already hear the conversation. “I’m calling about that wire transfer to Ms. Jones.” “What wire transfer?” And your funds will stay where they belong every time.

 

 

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