Consumer

While the Canadian government has said it intends to pass legislation dealing with cybersecurity (see Bill C-26 to enact the Critical Cyber Systems Protection Act), many companies have already taken significant steps to protect their IT infrastructure. However, the Internet of Things is too often overlooked in this process. This is in spite of the fact that many devices are directly connected to the most important IT infrastructure for businesses. Industrial robots, devices that control production equipment in factories, and devices that help drivers make deliveries are just a few examples of vulnerable equipment. Operating systems and a range of applications are installed on these devices, and the basic operations of many businesses and the security of personal information depend on the security of the devices and their software. For example: An attack could target the manufacturing equipment control systems on the factory floor and result in an interruption of the company’s production and significant recovery costs and production delays. By targeting production equipment and industrial robots, an attacker could steal the blueprints and manufacturing parameters for various processes, which could jeopardize a company’s trade secrets. Barcode scanners used for package delivery could be infected and transmit information to hackers, including personal information. The non-profit Open Web Application Security Project (OWASP) has released a list of the top ten security risks for the Internet of Things.1 Leaders of companies that use this kind of equipment must be aware of these issues and take measures to manage these risks. We would like to comment on some of the risks which require appropriate policies and good company governance to mitigate them. Weak or unchangeable passwords: Some devices are sold with common or weak initial passwords. It is important to ensure that passwords are changed as soon as devices are set up and to keep tight control over them. Only designated IT personnel should know the passwords for configuring these devices. You should also avoid acquiring equipment that does not allow for password management (for example, a device with an unchangeable password). Lack of updates: The Internet of Things often relies on computers with operating systems that are not updated during their lifetime. As a result, some devices are vulnerable because they use operating systems and software with known vulnerabilities. Good governance includes ensuring that such devices are updated and acquiring only devices that make it easy to perform regular updates. Poor management of the fleet of connected devices: Some companies do not have a clear picture of the Internet of Things deployed in their company. It is crucial to have an inventory of these devices with their role in the company, the type of information they contain and the parameters that are essential to their security. Lack of physical security: Wherever possible, access to these devices should be protected. Too often, devices are left unattended in places where they are accessible to the public. Clear guidelines should be provided to employees to ensure safe practices, especially for equipment that is used on the road. A company’s board of directors plays a key role in cybersecurity. In fact, the failure of directors to monitor risks and to ensure that an adequate system of controls is in place can expose them to liability. Here are some elements of good governance that companies should consider practising: Review the composition of the board of directors and the skills matrix to ensure that the team has the required skills. Provide training to all board members to develop their cyber vigilance and equip them to fulfill their duties as directors. Assess cybersecurity risks, including those associated with connected devices, and establish ways to mitigate those risks. The Act to modernize legislative provisions respecting the protection of personal information sets out a number of obligations for the board of directors, including appointing a person in charge of the protection of personal information, having a management plan and maintaining a register of confidentiality incidents. For more information, you can read the following bulletin: Amendments to Privacy Laws: What Businesses Need to Know (lavery.ca) Lastly, a company must at all times ensure that the supplier credentials, passwords and authorizations that make it possible for IT staff to respond are not in the hands of a single person or supplier. This would put the company in a vulnerable position if the relationship with that person or supplier were to deteriorate. See OWASP top 10

Earlier this month, Canadian Heritage Minister Pablo Rodriguez introduced Bill C-18 (Online News Act) in Parliament. This bill, which was largely inspired by similar legislation in Australia, aims to reduce bargaining imbalances between online platforms and Canadian news outlets in terms of how these “digital news intermediaries” allow news content to be accessed and shared on their platforms. If passed, the Online News Act would, among other things, require these digital platforms such as Google and Facebook to enter into fair commercial agreements with news organizations for the use and dissemination of news related content on their platforms. Bill C-18, which was introduced on April 5, 2022, has a very broad scope, and covers all Canadian journalistic organizations, regardless of the type of media (online, print, etc.), if they meet certain eligibility criteria. With respect to the “digital news intermediaries” on which the journalistic content is shared, Bill C-18 specifically targets online communication platforms such as search engines or social media networks through which news content is made available to Canadian users and which, due to their size, have a significant bargaining imbalance with news media organizations. The bill proposes certain criteria by which this situation of bargaining imbalance can be determined, including the size of the digital platform, whether the platform operates in a market that provides a strategic advantage over news organizations and whether the platform occupies a prominent position within its market. These are clearly very subjective criteria which make it difficult to precisely identify these “digital news intermediaries.” Bill C-18 also currently provides that the intermediaries themselves will be required to notify the Canadian Radio-television and Telecommunications Commission (“CRTC”) of the fact that the Act applies to them. The mandatory negotiation process is really the heart of Bill C-18. If passed in its current form, digital platform operators will be required to negotiate in good faith with Canadian media organizations to reach fair revenue sharing agreements. If the parties fail to reach an agreement at the end of the negotiation and mediation process provided for in the legislation, a panel of three arbitrators may be called upon to select the final offer made by one of the parties. For the purposes of enforceability, the arbitration panel’s decision is then deemed, to constitute an agreement entered into by the parties. Finally, Bill C-18 provides digital platforms the possibility of applying to the CRTC for an exemption from mandatory arbitration provided that their revenue sharing agreements meet the following criteria: Provide fair compensation to the news businesses for news content that is made available on their platforms; Ensure that an appropriate portion of the compensation would be used by the news businesses to support the production of local, regional and national news content; Do not allow corporate influence to undermine the freedom of expression and journalistic independence enjoyed by news outlets; Contribute to the sustainability of Canada’s digital news marketplace; Ensure support for independent local news businesses, and ensure that a significant portion of independent local news businesses benefit from the deals; and Reflect the diversity of the Canadian news marketplace, including diversity with respect to language, racialized groups, Indigenous communities, local news and business models. A bill of this scope will certainly be studied very closely by the members of Parliament, and it would not be surprising if significant amendments were made during this process. We believe that some clarifications would be welcome, particularly as to the precise identity of businesses that will be considered “digital information intermediaries” for the purposes of the Online News Act.

Ransomware has wreaked so much havoc in recent years that many people forget about other cybersecurity risks. For some, not storing personal information makes them feeling immune to hackers and cyber incidents. For others, as long as their computers are working, they do not feel exposed to no malware. Unfortunately, the reality is quite different. A new trend is emerging: malware is being released to collect confidential information, including trade secrets, and then such information is being sold to third parties or released to the public.1 The Pegasus software used to spy on journalists and political opponents around the world has been widely discussed in the media, to the point that U.S. authorities decided to include it on their trade blacklist.2 However, the use of spyware is not limited to the political sphere. Recently, a California court ordered a U.S. corporation, 24[7].ai, to pay $30 million to one of its competitors, Liveperson.3 This is because 24[7].ai installed competing technology on mutual client websites where LivePerson’s technology already is installed. Liveperson alleged in its lawsuit that 24[7].ai installed spyware that gathered confidential and proprietary information and data regarding Liveperson’s technology and client relationships. In addition, the software which 24[7].ai allegedly installed removed some features of Liveperson’s technology, including the “chat” button. In doing so, 24[7].ai interfered in the relationship between Liveperson and its clients. This legal saga is ongoing, as another trial is scheduled to take place regarding trade secrets related to a Liveperson client.4 This legal dispute illustrates that cybersecurity is not only about personal information, but also about trade secrets and even the proper functioning of business software. A number of precautions can be taken to reduce the risk of cybersecurity incidents. Robust internal policies at all levels of the business help maintain a safe framework for business operations. Combined with employee awareness of the legal and business issues surrounding cybersecurity, these policies can be important additions to IT best practices. In addition, employee awareness facilitates the adoption of best practices, including systematic investigations of performance anomalies and the use of programming methods that protect trade secrets. Moreover, it may be advisable to ensure that contracts with clients provide IT suppliers with sufficient access to conduct  the necessary monitoring for the security of both parties. Ultimately, it is important to remember that the board of directors must exercise its duty with care, diligence and skill while looking out for the best interests of the business. Directors could be held personally liable if they fail to meet their obligation to ensure that adequate measures are implemented to prevent cyber incidents or if they ignore the risks and are wilfully blind. Thus, board members must be vigilant, be trained in and aware of cybersecurity in order to integrate it into their risk management approach. In an era in which intellectual property has become a corporation’s most important asset, it goes without saying that it is essential to put in place not only the technological tools, but also the procedures and policies required to adequately protect it! Contact Lavery for advice on the legal aspects of cybersecurity. See Page, Carly, “This new Android spyware masquerades as legitimate apps,” Techcrunch, November 10, 2021. https://techcrunch.com/2021/11/10/android-spyware-legitimate-apps; Page, Carly, “FBI says ransomware groups are using private financial information to further extort victims,” Techcrunch, November 2, 2021. https://techcrunch.com/2021/11/02/fbi-ransomware-private-financial-extort. Gardner, Frank, “NSO Group: Israeli spyware company added to US trade blacklist,” BBC News, November 3, 2021. https://www.bbc.com/news/technology-59149651. Claburn, Thomas, “Spyware, trade-secret theft, and $30m in damages: How two online support partners spectacularly fell out,” The Register,June 18, 2021. https://www.theregister.com/2021/06/18/liveperson_wins_30m_trade_secret. Brittain, Blake, “LivePerson wins $30 million from [24]7.ai in trade-secret verdict,”Reuters, June 17, 2021. https://www.reuters.com/legal/transactional/liveperson-wins-30-million-247ai-trade-secret-verdict-2021-06-17.

Bill 64, also known as the Act to modernize legislative provisions as regards the protection of personal information, was adopted on September 21, 2021, by the National Assembly of Québec. This new bill amends some 20 laws relating to the protection of personal information, including the Act respecting Access to documents held by public bodies and the Protection of personal information ("Access Act"), the Act respecting the protection of personal information in the private sector (“ARPIPS”) and the Act to establish a legal framework for information technology (“AELFIT”). While these changes will affect both public bodies and private businesses, this article focuses exclusively on the new requirements for public bodies covered by the Access Act.  We have prepared an amended version of the Access Act in order to reflect the exact changes brought about by Bill 64. 1. Strengthening consent mechanisms and increasing individual control over personal information By way of Bill 64, some important changes were made to the notion of consent when disclosing personal information to public bodies. From now on, any time an individual’s consent is required by the Access Act, public bodies must ensure that the concerned individual’s consent is given separately from any other disclosed information (s. 53.1). Furthermore, any consent to the collection of sensitive personal information (e.g., health or financial information that gives rise to a reasonable expectation of privacy) will have to be expressly obtained from the data subject (s. 59). The amended Access Act now also provides that minors under the age of 14 must have a parent or a guardian consent to the collection of their personal information. For minors over the age of 14, consent can be given either directly by the minor or by their parent or guardian (s. 53.1). The right to data portability is one of the new rights enforced by Bill 64. These added provisions to the Access Act allow data subjects to obtain data that a public body holds on them in a structured and commonly used technological format and to demand that this data be released to a third party (s. 84). Whenever a public body renders a decision based exclusively on automated processing of personal information, the affected individual must be informed of this process. If the decision produces legal effects or otherwise affects the individual concerned, upon request, the public body must also disclose to the individual (i) the personal information used in reaching the decision, (ii) the reasons and main factors leading to the decision, and (iii) the individual’s right to have this personal information rectified (s. 65.2).  Furthermore, public bodies that use technology to identify, locate or profile an individual must now inform the affected individual of the use of such technology and the means that are available to them in order to disable such functions (s. 65.0.1). 2. New personal data protection mechanisms Public bodies will now be required to conduct a privacy impact assessment whenever they seek to implement or update any information system that involves the collection, use, disclosure, retention or destruction of personal data (s. 63.5). This obligation will effectively compel public bodies to consider the privacy and personal information protection risks involved in a certain project at its outset. In fact, the Access Act now states that every public body must create an access to information committee, whose responsibilities will include offering their observations in such circumstances. 3. Promoting transparency and accountability for public bodies The changes brought about by Bill 64 also aim to increase the transparency of processes employed by public bodies in collecting and using personal data, as well as placing an emphasis on accountability. As such, public bodies will now have to publish on their websites the rules that govern their handling of personal data in clear and simple language (s. 63.3). These rules may take the form of a policy, directive or guide and must set out the various responsibilities of staff members with respect to personal information. Training and awareness programs for staff should also be listed. Any public body that collects personal information through technological means will likewise be required to publish a privacy policy on their website. The policy will have to be drafted in clear and simple language (s. 63.4). The government may eventually adopt regulations to specify the required content of such privacy policies. Moving forward, public bodies will also have to inform data subjects of any personal data transfer outside of the province of Quebec (s. 65). Any such transfer will also need to undergo a privacy impact assessment, which will include an analysis of the legal framework applicable in the State where the personal information will be transferred (s. 70.1). Furthermore, any transfer of personal data outside of Quebec must be subject to a written agreement that takes into account, in particular, the results of the privacy impact assessment and, if applicable, the agreed-upon terms to mitigate the risks identified in the assessment (s. 70.1). A public body that wishes to entrust a person or body outside of Quebec with the task of collecting, using, communicating or retaining personal information on its behalf will have to undertake a similar exercise (s. 70.1 (3)). 4. Managing confidentiality incidents Where a public body has reason to believe that a confidentiality incident (which is defined in Bill 64 as the access, use, disclosure or loss of personal information) has occurred, public bodies will be required to take reasonable steps to mitigate the injury caused to the affected individuals and to reduce the risk of further confidentiality incidents occurring in the future (s. 63.7). In addition, where the confidentiality incident poses a risk of serious harm to the affected individuals, these individuals and the Commission d’accès à l’information (“CAI”) must be notified (unless doing so would interfere with an investigation to prevent, detect or suppress crime or violations of law) (s. 63.7). Public bodies must now also keep a register of confidentiality incidents (s. 63.10), a copy of which must be sent to the CAI upon request. 5. Increased powers for the CAI Bill 64 also grants the CAI an arsenal of new powers aiming to ensure that public bodies, as well as private companies, comply with privacy laws. For example, in the event of a confidentiality incident, the CAI may order any public body to take appropriate action to protect the rights of affected individuals, after allowing the public body to make representations (s. 127.2). Furthermore, the CAI now has the power to impose substantial administrative monetary penalties, the value of which may reach up to $150,000 for public bodies (s. 159). In the event of repeat offences, fines will be doubled (s. 164.1). 6. Coming into force The amendments made by Bill 64 will come into force in several stages. Most of the new provisions of the Access Act [DM1] will come into force two years after the date of assent, which was granted on September 22, 2021. However, some specific provisions will take effect one year after that date, including: The requirements regarding actions to be taken in response to confidentiality incidents (s. 63.7) and the powers of the CAI upon disclosure by an organization of a confidentiality incident (s. 137.2); and The exception to disclosure without consent for research purposes (s. 67.2.1). Conclusion The clock is now ticking for public bodies to implement the necessary changes in order to comply with the new privacy requirements outlined in Bill 64, which received official assent on September 22, 2021. We invite you to consult our privacy specialists to help ensure proper compliance with the new requirements of the updated Access Act. The Lavery team would be more than pleased to answer any questions you may have regarding the upcoming changes and the potential impacts on your org