State of the Union Address Places the President's Privacy and Cybersecurity Proposals Front and Center

In his January 20, 2015, State of the Union Address, President Barack Obama notably focused on privacy and cybersecurity, stressing the urgent need for comprehensive legislation. He raised the specter of foreign nations and hackers shutting down American networks, stealing trade secrets, and invading the privacy of American families. Not surprisingly, he also urged Congress to take bipartisan action.

The president's statement capped a week-long promotional effort in support of various White House privacy and cybersecurity initiatives, including speeches at the Federal Trade Commission ("FTC") (and accompanying fact sheet) and the National Cybersecurity and Communications Integration Center ("NCCIC") (and accompanying fact sheet), remarks before congressional leadership, a joint statement with Prime Minister David Cameron on U.S./U.K. cybersecurity cooperation, and an announcement by Vice President Joseph Biden regarding a cybersecurity consortium at historically black colleges and universities.

The president's announcements leading up to the State of the Union Address provide a substantive backdrop to his insistence on bipartisan privacy and cybersecurity legislation, which as proposed includes a wide array of initiatives aimed at information sharing between government and the private sector, student privacy, identity theft, and the authority of law enforcement to pursue and prosecute cybercriminals. The key components of the president's various proposals follow.

• Facilitating cyber threat information sharing between government and the private sector. Under the president's proposed plan, companies that share cyber threat information with the NCCIC would receive "targeted liability protection"—a largely undefined phrase—provided they comply with certain privacy restrictions such as removing unnecessary personal information and taking measures to protect any information that must be shared. The NCCIC would disseminate the threat information in as close to real time as practicable to relevant federal agencies and also to private sector information sharing and analysis organizations. The Department of Homeland Security and the attorney general, in consultation with the Privacy and Civil Liberties Oversight Board and others, would develop receipt, retention, use, and disclosure guidelines for the federal government.
• Updating law enforcement authority to pursue and prosecute cybercriminals. The president proposed amending the Racketeering Influenced and Corrupt Organizations ("RICO") Act so that it applies to cybercrimes, clarifies the penalties for computer crimes, and harmonizes those penalties with that applicable to other similar non-cybercrimes. He also would amend the Computer Fraud and Abuse Act so that "insignificant conduct does not fall within the statute," while reinforcing that the Act can be used to prosecute insiders who abuse their ability to access information for their own purposes. The proposal would allow for the prosecution of those that sell botnets and those that sell stolen U.S. financial information overseas. It also would increase federal authority by enabling law enforcement to deter the sale of stalking and identity-theft-related spyware, and it increases judicial authority by giving courts the ability to shut down botnets used in criminal activity, such as distributed denial of service attacks and others.
• Establishing a national data breach notification standard. Citing the cost and confusion caused by different state data breach notification statutes, the president proposed the Personal Data Notification and Protection Act, which would preempt state notification statutes. Among its many notable requirements, the Act would generally establish a rigid 30-day notification requirement from the discovery of a breach and preempt all existing state data breach notification laws currently on the books in 47 states.
• Allowing educational data to be used only for educational purposes. The president proposed legislation in the form of the Student Digital Privacy Act that would prohibit companies from using or selling data collected on students in the classroom to third parties for purposes that are not related to education, such as online marketing, targeted advertising, or profiling. The bill was modeled on California's Student Online Personal Information Protection Act and builds on the recommendations of the White House Big Data and Privacy review. In addition, the Department of Education's Privacy Technical Assurance Center will release tools to help educators protect student privacy, such as model terms of service and teacher training assistance.
• Advancing a renewed proposal for a Consumer Privacy Bill of Rights. The president advanced a renewed proposal for a Consumer Privacy Bill of Rights that he first proposed in 2012, which contains "basic baseline protections"—arguably amorphous in nature—that would apply across industries and purport to secure the consumer's ability to decide what information companies can collect on them and how that data is used and the expectation that companies will store consumer data securely and be held accountable for its use.
• Launching Department of Energy programs. The Department of Energy will release a voluntary code of conduct for utilities and third parties to protect electricity customer data, including energy usage information. Over the next five years, the department pledges $25 million in grants to support a cybersecurity education consortium consisting of 13 historically black colleges and universities, two national labs, and the Charleston County School District.
• Convening cybersecurity summit at Stanford University. On February 13, the White House will convene a cybersecurity summit at Stanford University, bringing together government officials, industry leaders, academics, and privacy professionals to address a range of topics, such as public–private partnerships and cybersecurity information sharing, cybersecurity practices and technologies, and secure payment technologies.

Prior efforts to push a consumer privacy bill of rights and a national data breach notification scheme have stalled. And given the current political environment, the likelihood that any of the president's new proposals gains real traction remains to be seen. At the very least, however, the president's State of the Union Address confirms that companies can expect increased attention from Washington on privacy and cybersecurity issues.

As Congress considers the president's proposals, the deliberative process will surely spark increased dialogue as government and industry alike weigh the benefits of the various proposals against the risk of liability and additional compliance burdens that each may create. With or without action from Congress, it is imperative that companies assess their privacy and cybersecurity policies and procedures in order to minimize the attendant compliance risks.

Lawyer Contacts

For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at www.jonesday.com.

Mauricio F. Paez
New York
+1.212.326.7889
mfpaez@jonesday.com

Todd S. McClelland
Atlanta
+1.404.581.8326
tmcclelland@jonesday.com

Richard J. Johnson
Dallas
+1.214.969.3788
jjohnson@jonesday.com

Gregory P. Silberman
Silicon Valley
+1.650.739.3954
gpsilberman@jonesday.com

Gabriel Ledeen, an associate in the San Francisco Office, assisted in the preparation of this Alert. 

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