Telecommunications, Media And Technology (TMT) Law Update – Volume 25
Key recent developments in the area of Technology, Media and Telecommunications are summarised below.
Interlocutory injunction restrains mobility of IT employee
A decision by the Supreme Court of New South Wales on 11 January 2019 to grant an interlocutory injunction enforcing an employment restraint highlights many of the issues to be considered when seeking to contractually protect confidential information in this manner: Quantum Service and Logistics Pty Ltd v Schenker Australia Pty Ltd  NSWSC 2. The employer, Quantum, had entered into a sub-contract with Schenker to provide technical services (such as software configurations and installations and post-sales warranty services) to a client of Schenker, Fuji Xerox Australia. The contract between Quantum and Schenker included a restraint which prevented Quantum employees taking up employment with Schenker for six months following termination of the agreement. The court noted that a restraint between substantial commercial organisations might generally be treated more favourably than a restraint in an employment contract, particularly in circumstances where it was necessary to protect a company’s confidential information or, in some instances and to some extent, the stability of its workforce, but it might nevertheless be unenforceable if it unreasonably impacted on individual employees. Whilst a blanket restriction on all employees might not be justifiable, in this instance the individual in question did possess “significant confidential information concerning how Quantum effectively provides sub-contract services”. The individual might not have been able to avoid using this information, even if it was not positively disclosed to his new employer.
Beyoncé turns our focus to website accessibility
On 3 January 2019, a class action was filed in the New York Southern District Court against the management and entertainment company founded by singer Beyoncé, alleging that the website Beyonce.com denied equal access to vision-impaired users in contravention of the Americans with Disabilities Act (“ADA”): Conner v Parkwood Entertainment LLC No 1:19-cv-00053. Meanwhile, the US Court of Appeals for the 9th Circuit ruled on 15 January 2019 that the ADA applied to a national pizza chain’s website which was incompatible with the plaintiff’s screen-reading software: Robles v Domino’s Pizza, LLC No. 17-55504 (9th Cir. 2019). These proceedings provide a timely reminder to website owners – and website developers – about the potential ramifications in Australia of failing to provide an appropriate level of website accessibility. The prevailing international standard is WCAG (“Web Content Accessibility Guidelines”) 2.0, an updated version 2.1 having been released in draft form in June 2018. There is no statutory requirement in Australia for either the public or the private sector to comply with WCAG 2.0, although Commonwealth government policy is that all federal agencies must be compliant. But beyond WCAG, a failure to provide website accessibility for visually impaired users might constitute a breach of section 5(1) of the Disability Discrimination Act 1992 (Cth) which provides that discrimination occurs where “the discriminator treats or proposes to treat the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person without the disability”. A claim was successfully pursued on this basis before the Human Rights and Equal Opportunity Commission in respect of the accessibility of tickets to the Sydney 2000 Olympic Games: Maguire v Sydney Organising Committee for the Olympic Games  EOC 93‑123. Best practice in Australia is therefore to ensure that website development and related services are WCAG 2.0 compliant.
Modern slavery legislation comes into effect
On 1 January 2019, the Modern Slavery Act 2018 (Cth) came into effect. The legislation, which applies to entities carrying on business in Australia with a minimum annual consolidated revenue of $100m, introduces an annual reporting requirement involving the provision of a Modern Slavery Statement to the responsible Minister for publication on an online central register. This will impact big corporate players in the TMT space. A Modern Slavery Statement must describe the entity’s structure, operations and supply chains; the potential modern slavery risks in the entity’s operations and supply chains; actions the entity has taken to assess and address those risks, including due diligence and remediation processes; and how the entity assesses the effectiveness of those actions. “Modern slavery” is defined by reference to the Criminal Code, the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, and the ILO Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour. Essentially, modern slavery contemplates activity involving sexual servitude, child exploitation and abuse, forced labour, deceptive recruiting, forced marriage, trafficking in persons and debt bondage. Meanwhile, at State level, the Modern Slavery Act 2018 (NSW) was passed on 21 June 2018 but is yet to come into force – the New South Wales Act has a lower revenue threshold of $50m and, unlike its federal counterpart, incorporates significant financial penalties for non-compliance.
Japan achieves “adequacy” status under GDPR
On 23 January 2019, the European Commission determined that Japan’s data protection framework met the “adequacy” requirements of the General Data Protection Regulation (GDPR), meaning that personal data can now flow from the EU to Japan without further safeguards having to be put in place by the parties. Article 45 of the GDPR allows the transfer of personal data to a third country without further authorisation if the Commission has decided that the country’s laws ensure an “adequate level of protection” for the individual data subject. The decision was reached after Japan agreed to implement a number of additional safeguards for EU citizens. Japan joins Andorra, Argentina, Canada, Faeroe Islands, Guernsey, Israel, Isle of Man, Jersey, New Zealand, Switzerland, Uruguay and the United States (in the context of the EU-U.S. Privacy Shield) on the list of countries recognised as providing “adequate protection” for GDPR purposes. Australia, on the other hand, is not well positioned to achieve adequacy status – in 2001, the EU Article 29 Working Party determined that Australia’s privacy laws were not “adequate” for the purposes of the GDPR predecessor, EU Directive 95/46/EC, and so long as the small business exemption in section 6C and the employee record exemption in section 7B(3) of the Privacy Act 1988 (Cth) remain in place, this is unlikely to change.
Questions remain over GDPR adequacy status of EU-US Privacy Shield
On 24 January 2019, the European Data Protection Board (“EDPB”) announced that due to substantial shortcomings, the EU-US Privacy Shield risked being struck down by the European Court of Justice later this year. This announcement came despite the EU’s second “adequacy” review, tabled on 19 December 2018, which overall provided a favourable assessment of the data transfer arrangement, noting with approval that the US Department of Commerce had strengthened the certification process and introduced new oversight procedures and that the US Federal Trade Commission had recently issued administrative subpoenas to request information from a number of Privacy Shield participants. The EDPB nevertheless expressed ongoing concerns about the “indiscriminate collection and access of personal data for national security purposes”, the inadequate powers of the Ombudsperson, and an insufficiently robust compliance verification process. The EU-US Privacy Shield was implemented in 2016 to provide a mechanism for transferring personal data from the European Union to the United States – US companies which voluntarily commit to the 23 Privacy Shield Principles are deemed to provide “adequate” privacy protection for EU regulatory purposes despite the lack of national data protection laws in the US.
Privacy review of proposed Consumer Data Right approaches completion
On 18 January 2019, the consultation period on Treasury’s Draft Privacy Impact Assessment: Consumer Data Right came to an end. The proposed Consumer Data Right (CDR) will provide individuals and businesses with a right to access data relating to them held by businesses (for example, raw bank transaction data), and to authorise secure access to this data by accredited third parties. The CDR is scheduled to commence in the banking sector on 1 July 2019, in which context it will be referred to as “Open Banking”. Open Banking will be phased in over two years, to be followed by a CDR applicable to the energy and telecommunications sectors. The government initially committed to the introduction of a CDR on 9 May 2018 in line with the recommendations of the Review into Open Banking in Australia. The Draft Privacy Impact Assessment (PIA) for the CDR was prepared by Treasury in accordance with the Privacy (Australian Government Agencies – Governance) APP Code 2017. The Draft PIA is based on the CDR regulatory framework proposed in the Treasury Laws Amendment (Consumer Data Right) Bill 2018. It is anticipated that a revised PIA, incorporating the views of the public as well as key decisions on the Consumer Data Rules and standards, will be completed ahead of the Autumn Parliamentary sitting period.
Quarterly report on notifiable data breaches released by OAIC
On 7 February 2019, the Office of Australian Information Commissioner (OAIC) published its quarterly report on notifiable data breaches, covering the period October to December 2018. The OAIC publishes statistical information each quarter “to assist entities and the public to understand the operation of the scheme”. The report revealed that between 1 October and 31 December 2018, there were 262 reported data breaches, compared with 245 in the previous quarter. Of these, 64% (or 168) related to malicious or criminal attacks, 33% were attributable to human error and 3% were attributed to system faults. Sixty percent of the reports involved fewer than 100 individual data subjects. The top 5 sectors to report were private health service providers (54 reports), finance (40), legal, accounting and management services (23), private education providers (21) and mining and manufacturing (12).
Privacy risks associated with medical devices
On 20 December 2018, the Australian Department of Health, through the Therapeutic Goods Administration, issued a consultation paper which highlighted privacy risks associated with the use of some medical devices: Medical Device Cyber Security: Draft Guidance and Information for Consultation. The paper highlighted the potential for privacy breaches through the disclosure of personal information in the event of an “adverse medical device cyber security event” and through injudicious online content sharing involving public or private product forums for users of digital health products. The paper urged businesses to address medical device cyber security in their business plans and urged healthcare providers to specifically enquire, during the procurement process for medical devices, as to how data from the device is logged and stored, whether third party cloud survive providers were used and whether data was stored offshore.
My Health Record opt-out period ends
On 31 January 2018, the My Health Record opt-out period came to an end. The My Health Record system, established in 2012, is an electronic summary of an individual’s health information which can be shared online between healthcare providers. Until 31 January, patients had to expressly opt-in to be part of the scheme. The conversion to an opt-out model, announced on 1 June 2017 by the Department of Health, was intended to boost what had previously been a disappointingly low level of participation. Persons not opting-out by 31 January 2019 will automatically have an on-line My Health Record. The opt-out arrangement was initially due to expire on 15 October 2018 but was extended for a month pursuant to the My Health Records (National Application) Amendment (Extension of Opt-out Period) Rules 2018 due to lobbying from the Australian Medical Association and the Royal College of General Practitioners which sought more time for consideration of the implications. The period was then further extended to 31 January 2019 pursuant to the My Health Records (National Application) Amendment (Extension of Opt-out Period No.2) Rules 2018. The Rules were made under section 109 of the My Health Records Act 2012 and reflected public concern about the timeframe available to opt-out, the security of online storage and transmission, and the extent of authorised access. Late changes to the scheme included a prohibition on access for insurance or employment purposes, enhanced protection for persons at risk of domestic violence, restrictions on access by law enforcement and government agencies, and an express undertaking that the system would not be privatised or commercialised.