From Law.Com and its Legaltech news former Microsoft CTO Adrian Clarke (Evident Proof) reports on the technology of Blockchain and its purported major security benefits for the supply ecosystem. “The blockchain is a transaction ledger that is uneditable and virtually unhackable. New information can be written onto the blockchain, but the previous information (stored in what are known as blocks) can’t be adjusted. Every single block (or piece of data) added to the chain is given an encrypted identity. Cryptography effectively connects the contents of each newly added block with each block that came before it. So any change to the contents of a previous block on a chain would invalidate the data in all blocks after it.” Clarke’s report here is perhaps some comfort for an exponentially growing sector of the world wide economy which relies on supply chain management on a massive scale. See his piece in Law Journal Newsletters at http://tinyurl.com/y7mqfnem
Attorneys Bill Cheng and John Frank Weaver at McLane Middleton, P.A. in New Hampshire posted this piece in the NH Business Review at: http://tinyurl.com/yblh6nqp regarding the interaction between Blockchain and Bitcoin and how the GDPR for example will struggle to deal with these technologies, given the protections that GDPR attempts to provide to data owners so that they can control their personal information and data. Blockchain, particularly in conjunction with Bitcoin as the currency for a Blockchain secured transaction will prove a challenge to the GDPR rules. CTOs, Industrial Engineers and Supply Chain designers have big decisions to make in the years to come regarding security and whether Blockchain is the answer to some data protection issues. Photo courtesy of Law.Com.
Posted by Henry M. Sneath, EsquireCo-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C.401 Liberty Avenue, Pittsburgh, Pa. 15222. Sneath is also an Adjunct Professor of Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law.Please contact Mr. Sneath at 412-288-4013 email@example.com.
As the Internet of Things (IoT) develops, there is an increasing need to “sense” changes in the atmospherics which surround semiconductors. In other words, the working chips must get smarter and smarter and have feel! Some of that AI feel in chips is being supplied by sensing chips – the layered structure of wafers of semiconductor material which can “sense” changes in the environment it is measuring or into which it is placed. Gas sensors are particularly important and patent applications for these devices are on the upswing internationally, with Sony and Samsung leading the way. See Relecura article at http://tinyurl.com/ybrojuq2
Edaphic Scientific describes a gas sensor’s performance as follows: “Semiconductor gas sensors rely on a gas coming into contact with a metal oxide surface and then undergoing either oxidation or reduction. The absorption or desorption of the gas on the metal oxide changes either the conductivity or resistivity from a known baseline value. This change in conductivity or resistivity can be measured with electronic circuitry. Usually the change in conductivity or resistivity is a linear and proportional relationship with gas concentration. Therefore, a simple calibration equation can be established between resistivity/conductivity change and gas concentration.” http://tinyurl.com/y6ufz7vx
The IoT relies on smarter and smarter technology as it governs many things around us. Products will have this smarter and smarter technology and converting “sensing” into electronic circuitry will likely have a positive impact on performance, but will present new challenges as products fail and cause damage to person or property. How deep a dive will be required in products liability litigation for example when a “sensor chip” fails to sense. Sensor chips have been around for a while, but they are becoming tremendously sophisticated and integral to the virtual world in which we operate.
Is Quantum Computing the next Tech frontier? Collaboration between researchers at Google and UC Santa Barbara are working on super computing qubits which might lead to “quantum supremacy” in the computing world. One chief researcher describes it as the desire to “perform an algorithm or computation that couldn’t be done otherwise.” Where classical computers function in two states, zeroes and ones – qubits perform in three states with the extra state being a “superposition” of both zero and one “raising exponentially the number of possible states a quantum system can explore.” For more details seePhys.ORG
From our friends at Law.Com: In the growing market for cyber insurance, carriers are trying to compete on price. One carrier, Coalition is offering discounts if your company creates a partnership with a “white hat hacker” and establishes a bug bounty with that hacker. The hacker gets a bounty for finding vulnerabilities. Legal Tech author Rhys Dipshandetails the program in the article at this link: http://tinyurl.com/ydck3nxg
Dipshan reports that “bug bounties” are becoming a popular weapon in combating cyber attacks. “Unsurprisingly” Dipshan reports, “bounty programs are becoming increasingly common in the tech and corporate world, with companies such as Facebook, Microsoft and Uber offering compensation for vulnerability disclosures. They also have caught on in the federal government as well, with the Department of Defense launching its “Hack the Pentagon” and “Hack the Air Force” programs.” Do you need a cyber bounty hunter?
We are pleased to announce that the Pit IP Tech Blog has been named one of the Top 100 IP blogs on the net by Feedspot. The Pittsburgh law firm of Houston Harbaugh looks forward to continuing our coverage of IP and technology news and hope that you will continue to read our blog. Thanks for making us a Top 100 blog!
In an apparent case of first impression, a divided three-judge panel of the Pennsylvania Superior Court recently held that an employer does not owe a legal duty to its employees to protect the employees’ electronically stored personal and financial information. In Dittman v. UPMC, decided on January 12, 2017 (docket no. 971 WDA 2015), the Superior Court affirmed an opinion of the Court of Common Pleas of Allegheny County, PA (opinion by the Honorable R. Stanton Wettick, Jr.), sustaining defendant University of Pittsburgh Medical Center’s (“UPMC”) preliminary objections to an employee class action suit. The suit arose from a data breach of the employees’ personal information, which was provided to UPMC as a condition of employment.
The employees sued UPMC for negligence and breach of contract after their names, birth dates, social security numbers, tax information, addresses, salaries and bank information were stolen due to the data breach. Specifically, they alleged that UPMC failed to properly encrypt data, establish adequate firewalls and implement adequate authentication protocols to protect the information in its computer network. All of UPMC’s 62,000 employees and former employees were affected by the breach. Appellants consisted of two separate but overlapping classes. One class alleged that the stolen information had already been used to file fraudulent tax returns and steal the tax refunds of certain employees. The other class consisted of those who had not suffered this harm but alleged that they were at increased and imminent risk of becoming victims of identity theft crimes, fraud and abuse.
To determine whether a duty of care exists, the Pennsylvania courts look to five factors, none of which are determinative alone. Seebold v. Prison Health Servs., Inc., 57 A.3d 1232, 1243 (Pa. 2012); Althaus ex. rel. Althaus v. Cohen, 756 A.2d 1166, 1169 (Pa. 2000). The five factors are:
the relationship between the parties;
the social utility of the actor’s conduct;
the nature of the risk imposed and foreseeability of the harm incurred;
the consequences of imposing a duty upon the actor; and
the overall public interest in the proposed solution.
In Dittman, the court found that the first factor weighed in favor of finding a duty because the employer-employee relationship gives rise to duties on the employer. The court next weighed the second factor against the third: the need of employers to collect and store personal information about their employees against the risk of storing information electronically and the foreseeability of data breaches. The court concluded:
While a data breach (and its ensuing harm) is generally foreseeable, we do not believe that this possibility outweighs the social utility of electronically storing employee information. In the modern era, more and more information is stored electronically and the days of keeping documents in file cabinets are long gone. Without doubt,employees and consumers alike derive substantial benefits from efficiencies resulting from the transfer and storage of electronic data. Although breaches of electronically stored data are a potential risk, this generalized risk does not outweigh the social utility of maintaining electronically stored information. We note here that Appellants do not allege that UPMC encountered a specific threat of intrusion into its computer systems.
Analysis of the fourth factor looks to the consequences of imposing a duty. In this situation, the court considered that data breaches are widespread and that there is no safe harbor for entities storing confidential information. It was also the court’s opinion that no judicially created duty of care is needed to incentivize companies to protect confidential employee information because other statutes and safeguards are in place to prevent employers from disclosing confidential information. Thus, the court concluded that “it unnecessary to require employers to incur potentially significant costs to increase security measures when there is no true way to prevent data breaches altogether. Employers strive to run their businesses efficiently and they have an incentive to protect employee information and prevent these types of occurrences.”
Finally, the fifth factor looks to whether there is a public interest in imposing a duty. The Superior Court found persuasive the reasoning of the trial court that imposing a duty here would greatly expend judicial resources and would result in judicial activism. The Superior Court agreed with the trial court that the Pennsylvania legislature has considered the same issues and chose only to impose a duty of notification of a data breach. “It is not for the courts to alter the direction of the General Assembly because public policy is a matter for the legislature.”
Weighing all five factors, the court held that the factors weighed against imposing a duty. Judge Stabile filed a concurring opinion, which Judge Olson, the writer for the majority opinion, joined. Judge Stabile agreed with the ruling but emphasized that the law in this area is quickly changing and that the ruling was based on the facts pled in that particular case. One of the key facts for Judge Stabile was the fact that the employees had not alleged that UPMC was on notice of any specific security threat. In a dissenting opinion, Judge Musmanno concluded that allegations that UPMC failed to properly encrypt data, establish adequate fire walls and implement appropriate authentication protocols was sufficient to allege that UPMC knew or should have known that there was a likelihood data would be stolen. Judge Musmanno also disagreed with the majority’s assumption that employers are sufficiently incentivized to protect employee data without a duty imposed upon them to do so.
The employees filed a motion for reconsideration and reargument on January 26, 2017. Thus, the Superior Court’s January 2017 opinion may not be the final word on the issue.
Dittman is interesting in the world of data breach lawsuits because it does not address standing. Many data breach defendants have relied upon the theory that plaintiffs lack standing to bring claims for data breaches where plaintiffs cannot prove actual harm from the breach. Proof of actual harm can be challenging because evidence regarding the use of the stolen information may be difficult to find. Here, standing was not discussed by the Superior Court. In the trial court below, UPMC had argued that the claims against it should be dismissed on the grounds that the employees lacked standing to assert claims on behalf of employees who had not yet been injured. UPMC also asserted that the employees’ negligence and breach of implied contract claims failed as a matter of law. After oral argument on these issues, the trial court ordered both parties to file supplemental briefs on the issue of whether UPMC owed a duty to its employees with respect to the handling of their personal and financial data. This ultimately proved to be the issue that the trial court and the Superior Court found to be determinative.
Posted onJune 3, 2015byHenry Sneath|Comments Off on Pittsburgh Court Rules on Data Breach Class Claims – Denying Cause of Action
Posted By Henry M. Sneath,Chair of the Cybersecurity and Data Breach Prevention and Response Team at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C. firstname.lastname@example.org or 412-288-4013
A Pittsburgh, Pennsylvania Judge has ruled at the trial court level that there is no private cause of action for the alleged failure of a major hospital network to secure and protect PII and PHI. Denying Class claims, Judge Wettick has ruled that because the legislature has not created such a right, that only the Pennsylvania Attorney General has the right to bring a claim in this circumstance. See the Legal Intelligencer article here: http://tinyurl.com/nphostc We will get more details on this case and pass them along with our analysis.
Posted By Henry M. Sneath,Chair of the Cybersecurity and Data Breach Response team at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C. email@example.com or 412-288-4013
Privacy concerns continue to dog the CISA (formerly CISPA) bill, but it easily passed out of the Senate Intelligence Committee yesterday. Pundits claim that the bill pits “big government – NSA, Homeland Security et al allegedly aided by Big Tech Companies” against privacy advocates who want less regulation of data and the internet. I’m not sure if it lines up that neatly however. See this short article with a summary of the committee process from Wired.Com.
Here is an advocacy website piece which supports defeat of he bill.
We will continue to monitor the path of the bill to see if it makes it to the Senate Floor for a vote. For the complete text of the bill, view it at this link.
I attended the Pittsburgh Technology Council’s breakfast briefing this morning and heard a great presentation by Jeffrey Hennion, President of Pittsburgh based Branding Brand: http://www.brandingbrand.com/ Founded by 3 CMU students, the company is now an industry leader in Mobile Commerce website and application development. They serve some of the largest retailers and businesses who are now true believers in the power of mobile commerce and mobile wallet apps – shopping from a phone. Costco (See Image below), Dicks Sporting Goods, Sephora, Ralph Lauren and countless more retailers have large percentages of sales now flowing through Branding Brand platforms. Starbucks is currently the leader in mobile commerce sales with its QR code based “mobile wallet”, which allows purchases from a scan of your phone screen. A next big market for these products is the travel industry. As you ride from the airport to the hotel, you use your phone to check into the hotel, you skip the registration desk, open your room with your phone which has been activated with a mobile key. As Jeff described it – these developments are fascinating, but sometimes a little creepy. The percentage of phone driven ordering, and mobile wallet purchased sales is zooming upward and some companies could face loss of significant market share if they don’t keep up.
By Henry M. Sneath, Esq. – Chair of the Picadio Sneath Miller & Norton, P.C. Intellectual Property Group. Contact him at firstname.lastname@example.org
Last week a Pittsburgh federal court jury found on behalf of local university CMU against hard drive chip maker Marvell (See attached photo) on claims of patent infringement and willfulness. The $1.17 Billion award was huge by any standards and still faces post trial motions which could vacate the verdict or increase it for willfulness, which the jury found. Judge Fischer could grant any number of what will surely be multiple post trial motions including a motion for mistrial, which was made by Marvell counsel during CMU’s closing argument and on which she denied the motion without prejudice to rule on it after the announcement of a verdict. In other words, she could still grant a mistrial and vacate the one month trial and verdict. She could also increase the verdict by as much as threefold based on the willfulness finding. The article attached below indicates that no tech verdict this large has ever stood the test on appeal. Here is one of a number of good descriptions of the case as it has been written about extensively over the last week: http://arstechnica.com/tech-policy/2012/12/jury-slams-marvell-with-mammoth-1-17-billion-patent-verdict/
Here also is an interesting video take on the case. http://www.bloomberg.com/video/david-martin-on-carnegie-mellon-marvell-patent-case-er1U0P~yQXC616MuXqU_Hw.html
Our Law Firm: Houston Harbaugh in Pittsburgh, Pa. Business Litigation. Pittsburgh Strong.®
Contact our Pittsburgh Intellectual Property, Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP Section Chair Henry M. Sneath at 412-288-4013 or email@example.com. Some posts herein were published by the law firm Picadio Sneath Miller & Norton, P.C. (PSMN®) which has merged with HoustonHarbaugh, P.C. and are used by permission. DTSALaw® is a federally registered trademark. See Firm Website at: www.hh-law.com