Tag: FISA

SaaS Agreements – GDPR – US Companies

From the 25th of May 2018 the EU General Data Protection Regulation (GDPR) will come into force and change existing UK data protection laws. The GDPR does not just apply to SaaS suppliers and SaaS customers located in the EU. The GDPR also applies outside the EU, i.e. to SaaS suppliers and SaaS customers located in the USA and other non-EU countries.

GDPR Applies to US SaaS Customers and SaaS Suppliers

The GDPR will apply to SaaS suppliers and SaaS customers located in the USA if:

  • They offer goods or services to SaaS customers located within the EU; or
  • They monitor the behaviour of EU data subjects;

Even though the SaaS supplier or SaaS Customer is not located within the EU.

US SaaS suppliers and US SaaS customers must therefore comply with the provisions of the GDPR from the 25th of May 2018.

Offering Goods or Services

In order for a US SaaS customer or supplier to be deemed to be offering SaaS goods or services it must be clear that the US company envisages offering SaaS goods or services to data subjects in one or more EU countries. This will be determined by looking at:

  • The use of any country specific domain names, e.g. co.uk;
  • The languages in which goods or services are offered, e.g. French;
  • The currencies in which goods or services are offered e.g. Euros.

Monitoring Behaviour of EU Data Subjects

In order for a US SaaS customer or supplier to be deemed to be monitoring the behaviour of EU data subjects, this will be the case if you track individuals on the Internet for profiling purposes, e.g. through the use of cookies.

Fines for Non-compliance

Data subjects will be able to claim damages directly from SaaS suppliers or SaaS customers who breach any obligations under the GDPR.

In addition data protection authorities will be able to fine SaaS suppliers and/or SaaS customers up to 4% of annual global turnover or 20m Euros (whichever is higher) for breaches of the GDPR.

How to Comply

US SaaS customers and SaaS suppliers need to take the following actions to comply with the GDPR by the 25th of May 2018:

  • Identify what personal data of data subjects located in the EU they collect/process;
  • Review and amend SaaS agreement terms for compliance with the GDPR;
  • Create GDPR compliant data processing agreements (DPA);
  • Amend existing privacy policies to comply with the GDPR;
  • Implement the security, technical and administrative changes required to comply with the GDPR and set out in the above legal documentation.

NB/ US SaaS customers or SaaS suppliers who do not, or cannot, comply with the GDPR, should enact measures to prevent orders being placed on their websites by EU data subjects.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 15 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

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SaaS Agreements – GDPR – The General Data Protection Regulation

The General Data Protection Regulation (GDPR) has now replaced the existing EU Data Protection Directive in an aim to harmonise European data protection law. In the UK the GDPR and the Data Protection Act 2018 (DPA) replaced the Data Protection Act 1998 on the 25th of May 2018. These changes in data protection law will have a significant effect on both SaaS suppliers and SaaS customers who must comply with both the terms of the GDPR and the DPA. Below is a summary of the main provisions of the GDPR that SaaS suppliers and customers need to be aware of.

Brexit

The GDPR will continue to apply in the UK after any future Brexit.

SaaS Agreement Terms

SaaS suppliers and SaaS customers must ensure that all contractual documents that involve data processing, such as SaaS agreements, privacy policies and hosting and support agreements comply with the new rules under the GDPR and the DPA.

Harmonisation

SaaS suppliers and SaaS customers should be aware that the GDPR does not fully harmonise data protection law throughout Europe. Each EU country may introduce their own requirements in certain instances under the various derogations permitted under the GDPR.

New Data Processor Obligations

The GDPR applies to data controllers (SaaS customers) and data processors (SaaS suppliers) and in particular SaaS suppliers should be aware that some GDPR obligations apply directly to data processors who are now subject to compliance obligations and sanctions for non-compliance.

Consent

SaaS suppliers and SaaS customers relying on consent to process personal data will need to show that the consent is:

  • freely given;
  • specific and informed; and
  • an “unambiguous indication” of a data subject’s wishes and expressed either by a statement or a clear affirmative action (i.e. ticking a consent box when visiting a website).

Consent must be purpose limited i.e. related to explicitly specified purposes.

The default age for giving valid consent and using online services is 16, however each EU country will be able to reduce this to 13, if they wish to. The UK has already included this derogation in the DPA.

Penalties

The maximum penalty for a breach of the GDPR will be substantially higher than under current legislation. Fines can be imposed on SaaS suppliers or SaaS customers. Fines of up to 4% of annual global turnover or up to 20m Euros (whichever is higher) can be applied.

Applicable to Non-EU Entities

The GDPR will apply not just to EU SaaS customers and suppliers but also to non-EU SaaS customers and suppliers who:

  • offer goods or services to data subjects in the EU; or
  • monitor the behaviour of EU citizens to the extent that the behaviour takes place in the EU.

Enforcement – One Stop Shop

SaaS suppliers and SaaS customers will be regulated by a single regulator in the place of their main establishment, which shall be their main administrative location in the EU. Data subjects will be able to make complaints to regulators in their own EU country.

Data Protection Officer

An independent data protection officer (“DPO”) must be appointed where an organisation’s core business involves processing personal data involving regular and systematic monitoring of data subjects or large amounts of sensitive personal data. Each EU country may enact national provisions imposing further requirements regarding the appointment of DPOs. This will be particularly relevant in Germany where this is already a legal requirement.

Notification

There is no requirement for a SaaS supplier or SaaS customer to notify local data protection authorities of any data processing activities but there is a requirement to keep records of data processing activities (subject to limited exceptions).

Breach Reporting

SaaS customers and SaaS suppliers must report breaches to the relevant local regulator without undue delay and, where feasible, within 72 hours of becoming aware of the breach. Data subjects must be informed of breaches without undue delay where the breach is likely to result in a high risk to the data subject’s rights and freedoms unless:

  • the data has been rendered unintelligible to any third party (for example by encryption);
  • the data controller has taken steps to ensure the high risk is unlikely to materialise; or
  • it would involve disproportionate effort to inform data subjects individually, in which case a public announcement can be made.

Data processors (SaaS suppliers) are required to inform data controllers (SaaS customers) of any breach without undue delay.

Impact Assessments

SaaS customers will be required to carry out data protection impact assessments (“DPIAs”) if their proposed activities are likely to result in a high risk for the rights and freedoms of individuals, in particular, through the use of new technologies and in cases of profiling.

Data Subject Rights

The following rights shall be granted to data subjects:

  • data portability;
  • the right to be forgotten;
  • the right to prevent profiling;
  • the right to object to processing;
  • the right to rectification and erasure.
  • subject access requests (“SARs”).

SARs must be responded to by the data controller (SaaS customer) without undue delay and, at the latest, within one month of receipt of the request. The data controller only has the right to charge a reasonable fee to cover administrative costs where the requests are “manifestly unfounded or excessive”.

Compliance

Now the GDPR is in force, it is essential that SaaS customers and SaaS suppliers comply with its terms. For example by:

  • Including written data processing agreements in existing SaaS agreements and future SaaS agreements with relevant customers;
  • Ensuring that privacy policies comply with the GDPR rules;
  • Appointing a data protection officer (where appropriate);
  • Using a documentation system for recording data processing activities;
  • Being able to show how and when any consents have been obtained from data subjects.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 15 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

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SaaS Agreements – Data Protection – General Data Protection Regulation (GDPR)

The General Data Protection Regulation (“GDPR”) will replace the existing EU Data Protection Directive and harmonise European data protection law from the 25th of May 2018. In the UK the GDPR will replace the Data Protection Act 1998 from the 25th of May 2018. This will have a significant effect on both SaaS suppliers and SaaS customers who will need to comply with the terms of the GDPR.

Harmonisation

SaaS suppliers and SaaS customers should be aware that the GDPR will not fully harmonise data protection law throughout Europe, as each EU country may introduce their own requirements in certain instances. However, SaaS suppliers and SaaS customers will need to start making organisational changes now to their data processing activities in order to comply with the new rules on consent, audit rights, data exports, increased administrative requirements and the new obligations of data processors.

Below is a summary of the main provisions of the GDPR that SaaS suppliers and customers need to be aware of.

New Data Processor Obligations

The GDPR applies to data controllers (SaaS customers) and data processors (SaaS suppliers) and in particular SaaS suppliers should be aware that some of the GDPR applies directly to data processors who will be subject to compliance obligations and sanctions for non-compliance.

Consent

SaaS suppliers and SaaS customers relying on consent to process personal data will need to show that the consent is:

  • freely given;
  • specific and informed; and
  • an “unambiguous indication” of a data subject’s wishes and expressed either by a statement or a clear affirmative action (i.e. ticking a consent box when visiting a website).

Consent must be purpose limited i.e. related to explicitly specified purposes.

The default age for giving valid consent and using online services is 16, however each EU country will be able to reduce this to 13.

Penalties

The maximum penalty for a breach of the GDPR will be substantially higher than under current legislation. Fines can be imposed on SaaS suppliers or SaaS customers. Fines of up to 4% of annual global turnover or up to 20m Euros (whichever is higher) can be applied.

Applicable to Non-EU Entities

The GDPR will apply not just to EU SaaS customers and suppliers but also to non-EU SaaS customers and suppliers who:

  • offer goods or services to data subjects in the EU; or
  • monitor the behaviour of EU citizens to the extent that the behaviour takes place in the EU.

Enforcement – One Stop Shop

SaaS suppliers and SaaS customers will be regulated by a single regulator in the place of their main establishment, which shall be their main administrative location in the EU. Data subjects will be able to make complaints to regulators in their own EU country.

Data Protection Officer

An independent data protection officer (“DPO”) must be appointed where an organisation’s core business involves processing personal data involving regular and systematic monitoring of data subjects or large amounts of sensitive personal data. Each EU country may enact national provisions imposing further requirements regarding the appointment of DPOs. This will be particularly relevant in Germany where this is already a legal requirement.

Notification

There is no requirement for a SaaS supplier or SaaS customer to notify local data protection authorities of any data processing activities but there is a requirement to keep records of data processing activities (subject to limited exceptions).

Breach Reporting

SaaS customers and SaaS suppliers must report breaches to the relevant local regulator without undue delay and, where feasible, within 72 hours of becoming aware of the breach. Data subjects must be informed of breaches without undue delay where the breach is likely to result in a high risk to the data subject’s rights and freedoms unless:

  • the data has been rendered unintelligible to any third party (for example by encryption);
  • the data controller has taken steps to ensure the high risk is unlikely to materialise; or
  • it would involve disproportionate effort to inform data subjects individually, in which case a public announcement can be made.

Data processors (SaaS suppliers) are required to inform data controllers (SaaS customers) of any breach without undue delay.

Impact Assessments

SaaS customers will be required to carry out data protection impact assessments (“DPIAs”) if their proposed activities are likely to result in a high risk for the rights and freedoms of individuals, in particular, through the use of new technologies and in cases of profiling.

Data Subject Rights

The following rights shall be granted to data subjects:

  • data portability;
  • the right to be forgotten;
  • the right to prevent profiling;
  • the right to object to processing;
  • the right to rectification and erasure.
  • subject access requests (“SARs”).

SARs must be responded to by the data controller (SaaS customer) without undue delay and, at the latest, within one month of receipt of the request. The data controller only has the right to charge a reasonable fee to cover administrative costs where the requests are “manifestly unfounded or excessive”.

Preparing for Change

Although the GDPR will not come into force until the 25th of May 2018, it is essential that SaaS customers and SaaS suppliers start to prepare for the changes now. For example, by appointing a data protection officer (where appropriate), devising a documentation system for recording data processing activities, reviewing how consent is obtained from data subjects, adding written data processing agreements to existing SaaS agreements and future SaaS agreements with relevant customers and amending existing privacy policies to comply with the GDPR rules.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

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SaaS Agreements – Data Protection – Microsoft must disclose data on EU server

Many SaaS customers falsely believe that if their SaaS data is stored in a data centre located in the EU it will be protected against disclosure to the US authorities. This is incorrect. The recent US court ruling against Microsoft has confirmed the position, namely that SaaS suppliers and SaaS customers who use data centres located in the EU, owned by US companies, cannot prevent US authorities from accessing their data.

Microsoft Case

In April this year a New York court ruled that Microsoft must reveal email data stored on its servers at its Irish data centre. Microsoft received a search warrant issued pursuant to the Stored Communications Act (SCA) requiring them to disclose the data. Under the SCA a US company is obliged to produce information in its possession, custody, or control regardless of the location of that information.

Microsoft currently offers SaaS customers the option of storing all data at its data centre in Ireland, in an attempt to address valid EU customer concerns about the ability of the US authorities to access their data and in an attempt to comply with EU data protection laws. However this recent court decision undermines the effectiveness of this option, as following this decision it is clear that US authorities can access data located outside of the US.

Microsoft plans to challenge the court decision but regardless of the final outcome of this case, US authorities will still be able to access data stored in the EU using other US laws.

Prism, FISA and the Patriot Act

Ignoring the issue of “Prism” the US government can secretly access SaaS customer stored in the EU under the Foreign Intelligence Security Act (FISA) and the Patriot Act.

What is FISA?

FISA allows the US government to access and monitor the personal data of non-US citizens (located outside of the USA) held by US public cloud providers. Public cloud providers such as Amazon and Google must secretly provide all assistance, facilities and information requested by the government if they request access to SaaS customer data. The public entity is not allowed to inform the SaaS supplier that it has disclosed or been asked to disclose personal data, nor that the data is being monitored.

The Patriot Act

The Patriot Act gives US law enforcement authorities the right to access personal data held by SaaS suppliers, regardless of where in the world the data is stored. The Act also gives US law enforcers the right to prevent SaaS suppliers from informing customers that they have handed over personal data. The Act applies not just to SaaS suppliers owned by a US company but also to any SaaS suppliers using the services of a US company i.e. a US data centre.

Summary

Under the SCA, Patriot Act, FISA (and “prism” where applicable) the personal data of SaaS customers based in the EU must be shared with US law enforcers without the SaaS customer being informed, even though this conflicts with the provisions of the EU Data Protection Directive and the data protection laws of the 28 EU member states.

Local EU data protection authorities and EU member state governments are currently investigating how to resolve this conflict, for example by adding provisions preventing disclosure in the draft proposed EU data protection regulation. While the position remains unresolved, SaaS suppliers should be considering how to minimise the risk this poses to their business model, whilst assuring SaaS customers that their concerns are being addressed.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

Speaker at the Berlin CloudConf 2013.

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SaaS Agreements – Data Protection – Update on the EU Draft Data Protection Regulation

SaaS suppliers should be aware of the recent changes made by the EU Parliament to the draft EU Data Protection Regulation (Regulation). If this amended version of the Regulation becomes law next year the obligations of SaaS suppliers who process personal data on behalf of customers will radically change. A summary of the current main proposed provisions is set out below.

Fines

The proposed fine for breaching data protection law will be increased to the higher of:

  • 5% of annual worldwide turnover; or
  • €100 million

Currently the maximum UK fine for a breach of data protection law is £500,000.

Data Protection Officer

A data protection officer must be appointed where:

  • a SaaS supplier processes the personal data of more than 5,000 individuals in any consecutive 12 month period; or
  • special categories of data, location data, data relating to children, or employee data in large scale filing systems is processed.

The data protection officer must be appointed for:

  • a minimum of 2 years; and
  • meet specific minimum requirements set out in the Regulation.

Notification of Data Protection Breaches

SaaS suppliers must notify breaches of data protection law without undue delay.

Data Processor Obligations

The obligations and duties of SaaS suppliers (data processors) have been more specifically defined. For example SaaS suppliers should:

  • only employ staff who have given confidentiality undertakings or commitments;
  • obtain permission from SaaS customers (data controllers) before employing a sub-processor i.e. using a third party hosting centre;
  • ensure that security measures are implemented; and
  • maintain documentation of all processing operations.

Data Transfers – Prism

The transfer of an individual’s personal data to third parties has been restricted in light of recent revelations about the NSA and Prism. No transfer of personal data will be permitted in relation to a third country court decision or administrative authority (i.e. under the Patriot Act or FISA) if this does not comply with a mutual legal assistance treaty or an international agreement.

Additionally, individuals will have the right to know if their personal data has been disclosed to a public authority.

Territorial Scope

The Regulation will apply to companies located outside of the EU whenever they process the personal data of individuals located in the EU. This means that if a UK SaaS supplier uses a data centre located outside of the EU to host EU SaaS customer data the provisions of the new Regulation will apply to both the SaaS provider and the data centre. For example if a SaaS supplier uses Microsoft to host EU customer data both will be directly subject to EU data protection law.

Right to be Forgotten

This has been changed to the right to be erased. This right will not apply to data which cannot be erased due to the type of storage technology used, provided that the technology was installed prior to the Regulation coming into force.

Summary

The above is a summary of the current status of the draft Regulation. The Regulation may be amended before it becomes law in 2014 and SaaS suppliers should continue to monitor the position to ensure they are ready to adapt their existing procedures and compliance regimes to comply with any change in their legal obligations.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 15 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To learn more about SaaS and cloud computing join me at the Berlin CloudConf 2013 on 5th of December.

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SaaS Agreements – Data Protection – Advantages of Hosting in Switzerland

SaaS suppliers are increasingly using data centres located in Switzerland to host SaaS software and store customer data. In light of recent media revelations about “prism” and the already existing concerns over access to customer data under the Patriot Act and FISA this could be an increasing trend. The advantages of hosting SaaS data in Switzerland are summarised below.

Why Switzerland?

Switzerland is often viewed internationally as representing the following values – stability, neutrality, discretion and trustworthiness based on its banking history. For this reason Swiss law is often accepted by non-European customers in international agreements when there is a disagreement about which law or arbitration rules should apply to the contract.

Confidentiality

Currently many global SaaS suppliers use data centres located in the USA. However, when dealing with European customers, SaaS suppliers often encounter problems with customers raising concerns about the application of:

  • the Patriot Act, a US law which permits US authorities to access EU customer data stored in the USA or EU customer data stored outside of the US where there is a US parent company such as Microsoft; and
  • FISA which allows the US government to access and monitor the personal data of non-US citizens held by US public cloud providers such as Amazon or Google.

An additional benefit of using a Swiss data centre is that generally data stored in Switzerland is not traceable to a named person, but only to a number.

Safe Harbor not Adequate

SaaS customers and data protection authorities, particularly in Germany, are raising concerns about the adequacy of the safe harbor status of US companies. It is often claimed that safe harbour certification is little more than a paper exercise which in practice does not comply with European levels of data protection.

Compliance with EU Data Protection Laws

An added advantage of using Swiss data centres is that Switzerland is accepted by the EU as having equivalent protection to EU data protection laws. Therefore no additional consents are required from SaaS customers to enable data to be stored and processed in Switzerland.

Language

Although English is not one of the official languages of Switzerland, it is widely spoken and is the language of preference for business transactions. In addition French, German and Italian are official languages providing the added bonus of SaaS suppliers being able to request hosting services in any, or all, of the four languages. This makes Switzerland very attractive to global companies who are often wary of hosting outside of their territory due to language barriers.

Summary

Under the provisions of the US Patriot Act and FISA, the personal data of SaaS customers based in the EU must be shared with US law enforcers without the customer being informed, even though this conflicts with EU data protection law.

By using a data centre located in Switzerland a SaaS supplier can process and store customer data in compliance with EU data protection rules, provided that the hosting company located in Switzerland, is not owned by a US parent company.

For the above reasons some well known global companies such as Swift, Yahoo and Hewlett Packard have in recent years relocated their hosting services to Switzerland.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

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SaaS Agreements – FAQs – Prism

In light of recent and ongoing “prism” revelations, SaaS suppliers are having to deal with numerous queries about the safety of SaaS customer data. Many customers mistakenly believe that by using a non-US data centre their SaaS customer data is protected against disclosure to the US authorities. Below is a summary of the relevant laws and most common concerns being raised by SaaS customers.

What is Prism?

“Prism” refers to the National Security Agency (NSA) secretly accessing personal data stored on the servers of Microsoft, Apple, Google, Yahoo, Facebook and some other major US public companies.

Prism, FISA and the Patriot Act

Prism is not the only problem. The US government has been secretly accessing SaaS customer data for years under the Foreign Intelligence Security Act (FISA) and the Patriot Act. Prism is just part of the whole range of tools that are being used by the US to access SaaS data of EU citizens.

What is FISA?

FISA allows the US government to access and monitor the personal data of non-US citizens (located outside of the USA) held by US public cloud providers. Public cloud providers such as Amazon and Google must secretly provide all assistance, facilities and information requested by the government if they request access to SaaS customer data. The public entity is not allowed to inform the SaaS supplier that it has disclosed or been asked to disclose personal data, nor that the data is being monitored.

The Patriot Act

The Patriot Act gives US law enforcement authorities the right to access personal data held by SaaS suppliers, regardless of where in the world the data is stored. The Act also gives US law enforcers the right to prevent SaaS suppliers from informing customers that they have handed over personal data. The Act applies not just to SaaS suppliers owned by a US company but also to any SaaS suppliers using the services of a US company i.e. a US data centre.

Safe Harbor

Safe Harbor does not protect SaaS customer data against secret access by the US authorities. Safe harbor, simply means that a US company registered under the “safe harbor” scheme is deemed to have data protection principles in place which are accepted in the EU as being adequate. This simply allows SaaS customer data to be legally transferred outside of the EU i.e. to be processed in a US data centre.

Summary

Many SaaS customers falsely believe that if their SaaS data is stored in a data centre located in the EU it will be protected against disclosure to the US authorities. Under the Patriot Act, FISA (and “prism” where applicable) the personal data of SaaS customers based in the EU must be shared with US law enforcers without the customer being informed, even though this conflicts with the EU Data Protection Directive and the data protection laws of the 28 EU member states.

Local EU data protection authorities and EU member state governments are currently investigating how to resolve this conflict, for example by adding provisions preventing disclosure in the draft proposed EU data protection regulation. While the position remains unresolved, SaaS suppliers should be considering how to minimise the risk this poses to their business model, whilst assuring SaaS customers that their concerns are being addressed.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – Data Protection – FISA Customer Concerns

SaaS suppliers who use US public cloud providers to store, process or host their SaaS customer’s data as part of their SaaS services may now experience customers raising concerns about the risk of disclosure to, and monitoring of, their data by the US government under the Foreign Intelligence Security Act (FISA).

FISA

FISA (a US law) gives the US government the right to access and monitor the personal data of non-US citizens (who are located outside of the USA) held by US public cloud providers (i.e. Amazon or Google), without a warrant for a period of up to one year, for the purposes of acquiring foreign intelligence information. Public cloud providers must secretly provide all assistance, facilities and information requested by the government. They are not permitted to inform SaaS suppliers that they have disclosed or been asked to disclose personal data or that it is being monitored.

Breach of European Data Protection Laws

Data protection laws in the 27 countries of the EU all prohibit the disclosure of personal data without a data subject’s consent or knowledge. The provisions of the FISA conflict directly with English and EU data protection laws.

The recent amendment to this US law adds to the concerns raised by the Article 29 Working Party last year in their opinion on cloud computing and data protection. In this opinion, which amongst other things the working party said that EU businesses using cloud services i.e. SaaS customers must ensure that non-EU providers i.e. SaaS suppliers comply with EU data protection laws and that simply relying on a US company’s safe harbor registration was not enough.

FISI is not the only Problem

SaaS customers often falsely believe that their data is “unsafe” due to the fact that SaaS supplier’s use third party data centres to store and process their data. However the risks of personal data being disclosed apply regardless of whether or not data is stored or processed in a SaaS model. Most countries including the UK, France, Spain and Belgium have data disclosure laws that all, not just SaaS suppliers, must comply with. For example in the UK the Regulation of Investigatory Powers Act 2000 (RIPA) requires companies to disclose the content of communications to police forces.

Also data stored or processed anywhere outside of the EEA, in a country which does not have equivalent protection, will be subject to all local disclosure laws i.e. in China and India, and such local laws may be much wider than FISA.

In addition, in the USA notwithstanding FISA, the US authorities can access customer data when it is hosted outside of the USA and there is no company presence in the USA under Mutual Assistance Legal Treaties (MLAT).

Assessing the Actual Risks

SaaS customer concerns about FISA are valid but these must be considered in light of:

  • The type of data SaaS customer’s are providing;
  • The likelihood of the customer data ever being monitored or requested; and
  • The fact that customer data is already subject to similar disclosure obligations to the UK government and foreign governments under other existing laws.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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