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 practice on cross-border investment and national security matters, including reviews conducted by the Committee on Foreign Investment in the United States (CFIUS), and is a partner in the firm’s data privacy and cybersecurity practice.

David has…

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

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 being named The American Lawyer’s Dealmaker of the Year three times. His work includes successfully securing three of the four Presidential approvals in the history of CFIUS; securing the only Presidential order protecting a client against a proposed hostile takeover; and negotiating the only “golden share” the U.S. government has taken in a U.S. company. 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).

For more than two decades, 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 encounter challenges in CFIUS; provide strategic counsel to clients on navigating and addressing U.S. national security considerations in commercial transactions; and negotiate solutions with the U.S. government, including equity arrangements, that protect national security interests while preserving shareholder value and U.S. business interests.

In the enforcement area, David has represented clients in numerous enforcement actions pursued by CFIUS, including two of the three largest penalty cases resolved with CFIUS.

Reflecting his experience on complex U.S. national security matters intersecting with China, David is regularly engaged by the world’s leading multinational companies to advise on emerging legal issues, including outbound investment restrictions and regulations governing information and communications technologies and services (ICTS), as well as strategic legal projects related to the evolving U.S.-China competitive landscape.

In addition, in the foreign investment and national security area, David routinely advises clients on matters requiring mitigation of foreign ownership, control, or influence (FOCI) under applicable national industrial security regulations. His work includes advising many of the world’s leading aerospace and defense companies and private equity firms, as well as telecommunications transactions subject to public safety, law enforcement, and national security review by Team Telecom.

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