The fallout from the last month’s data breaches of Sony’s PlayStation Network and its Online Entertainment service continued this week. 

  • On Tuesday, Sen. Richard Blumenthal (D-CT) sent a follow-up letter to Sony saying he is “deeply concerned about the egregious inadequacy of Sony’s efforts thus far to notify its customers of these breaches,” and New York Attorney General Eric Schneiderman subpoenaed Sony.  
  • Also, on Tuesday, Sony responded to an inquiry from Rep. Mary Bono Mack (R-CA), chair of the House Subcommittee on Commerce, Trade and Manufacturing, in a letter indicating that it had suffered a “large-scale cyberattack” by “very professional, highly sophisticated”  criminals intent on stealing personal and credit card information. 
  • Rep. Bono Mack held a hearing on data security on Wednesday during which she was critical of the response to date. 
  • On the international front, the EU also reportedly is considering action; Australian Privacy Commissioner Timothy Pilgrim is planning to examine whether Sony’s Australian subsidiary violated the country’s Privacy Act; and a Canadian law firm announced a $1 billion class-action lawsuit against Sony.  

While the Sony breach is notable and has generated considerable attention, its impact on potential federal data security legislation remains to be seen.  Prior large breaches, such as TJX and Hartland Payment Systems, did not create much energy for such legislation, which also was felled by competing jurisdictional interests on the Hill, and data security will have to compete with other proposals on privacy and cybersecurity for congressional attention.  Thus, whether the recent spate of high-profile breaches, such including Sony, Epsilon, and EMC, creates any momentum for federal data security legislation remains very much an open issue. 

Tags: Breach, Congress, Data Security, Legislation, Sony
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Photo of David Fagan David Fagan

David Fagan co-chairs the firm’s top ranked practices on cross-border investment and national security matters, including reviews conducted by the Committee on Foreign Investment in the United States (CFIUS), and data privacy and cybersecurity.

David has been recognized by Chambers USA and Chambers…

David Fagan co-chairs the firm’s top ranked practices on cross-border investment and national security matters, including reviews conducted by the Committee on Foreign Investment in the United States (CFIUS), and data privacy and cybersecurity.

David has been recognized by Chambers USA and Chambers Global for his leading expertise on bet-the-company CFIUS matters and has received multiple accolades for his work in this area, including twice being named Dealmaker of the Year by The American Lawyer. Clients laud him for “[seeing] far more matters than many other lawyers,” his “incredible insight,” and “know[ing] how to structure deals to facilitate regulatory reviews” (Chambers USA).

David’s practice covers representations of both foreign and domestic companies before CFIUS and related national security regulators. The representations encompass matters in which the principal assets are in the United States, as well as those in which there is a smaller U.S. nexus but where solving for the CFIUS issues—including through proactive mitigation and carve-outs—is a critical path for the transaction. David has handled transactions for clients across every sector subject to CFIUS review, including some of the most sensitive and complex matters that have set the template for CFIUS compliance and security agreements in their respective industries. He is also routinely called upon to rescue transactions that have run into challenges in CFIUS, and to negotiate solutions with the U.S. government that protect national security interests, while preserving shareholder and U.S. business interests.

Reflecting his work on U.S.-China investment issues and his experience on complex U.S. national security matters intersecting with China, David is regularly engaged by the world’s leading multi-national companies across a range of industries to advise on strategic legal projects, including supply chain matters, related to their positioning in the emerging competition between the U.S. and China, as well as on emerging legal issues such as outbound investment restrictions and regulations governing information and communications technologies and services (ICTS). David also has testified before a congressional commission regarding U.S. national security, trade, and investment matters with China.

In addition, in the foreign investment and national security area, David is known for his work on matters requiring the mitigation of foreign ownership, control or influence (FOCI) under applicable national industrial security regulations, including for many of the world’s leading aerospace and defense companies and private equity firms, as well as telecommunications transactions that undergo a public safety, law enforcement, and national security review by the group of agencies known as “Team Telecom.”

In his cybersecurity practice, David has counseled companies on responding to some of the most sophisticated documented cyber-based attacks on their networks and information, including the largest documented infrastructure attacks, as well as data security incidents involving millions of affected consumers. He has been engaged by boards of directors of Fortune 500 companies to counsel them on cyber risk and to lead investigations into cyber attacks, and he has responded to investigations and enforcement actions from the Federal Trade Commission (FTC) and state attorneys general. David has also helped clients respond to ransomware attacks, insider theft, vendor breaches, hacktivists, state-sponsored attacks affecting personal data and trade secrets, and criminal organization attacks directed at stealing personal data, among other matters.

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