Several recent high profile privacy breaches have begun to focus the attention of corporate Canada on the important legal issues that result from personal information of customers or employees being disclosed in an unauthorized manner through loss or theft. What is the liability of the company when data is inadvertently disclosed? Should the company inform the affected data subjects, and if so, when? And what steps should be taken to minimize the damage to the company’s reputation; and how can future privacy breach incidents be better managed?

These are all good questions. But before turning to them, I want to step back and consider some of the broader trends that are behind our current vulnerability to privacy breaches. It is no coincidence that the volume and severity of these incidents is increasing. To understand why, reflect for a moment on the history of computing/networking over the past 40 years, particularly from the perspective of the challenges posed to computer security and data privacy by the principal phases of computing technology over this period.

The Low Risk Mainframe

During the first wave of computerization – in the 1960s and 1970s – each organization’s IT systems consisted of one (or more) centralized mainframe computer (aka "big iron"), which was operated in the bowels of the company by a handful of people. The mainframe stood alone, and was not connected to other computers, neither at the company, let alone to computers at other companies.

Computer security in such an environment was fairly straightforward. So long as the small team running the computer was honest, actually very little harm could come to the computer or the data residing on it. This computing environment did not raise a whole lot of privacy breach challenges, at least from a security perspective.

IT Diffusion
Ever since the appearance of the mainframe computer, engineers have been hard at work trying to replace it with smaller, more versatile computing machines. By the early 1980’s, so-called mid-range computers had found lots of favour in company IT strategies. These computers also had a string of dumb terminals (dumb, because they didn’t do processing themselves, but at least could access the mid-range computer that did the heavy lifting) attached to them and, lo and behold, these terminals found their way onto the desks of secretaries at the company. And so began the inexorable democratization of computing.

Mid-range computers, and their concomitant dumb terminals, showed companies the huge promise of distributed computing. Many new applications began to be used by the non-IT staff of the company (or other organizations, such as government department) using this powerful new hardware machine. Of course, from a privacy and security perspective, this new computing configuration meant that more people in the organization had access to sensitive customer and employee data. One bad apple employee now had the potential to access a myriad of company data.

From Office to Home
By the mid-1980s, computer democratization was picking up pace with the advent of the personal computer. Soon there would be a computer on every desk in the organization. And they would not be merely dumb terminals; rather, by utilizing ever more powerful, and smaller, microchips, they could process data themselves, though they would also connect to hub computers within the office called servers.

Moreover, the PC revolution wasn’t confined to the office. Soon, these powerful, but fairly compact, devices were insinuating themselves into the home. Floppy disks, containing large gobs of data, began travelling between the PC at the office and the one at home. Not surprisingly, we also began to get reports of the first serious incidents of data loss, as floppies were inadvertently mislaid – or worse, were stolen.

The Internet Changes All Things

In the mid-1990s, of course, everything changed with the coming of the Internet. Personal computers, servers, and even mainframes, could now all be networked, both within proprietary/closed systems, or increasingly through non-proprietary, open ones, like the Internet. For the first time, computers became as much data communication devices as they were data processing machines.

Computer crime has been with us since the beginning of the computer revolution. Canada’s Criminal Code, for example, was amended some 20 years ago to deal expressly with computer-related offences. Nevertheless, the Internet gave rise to a whole new type of computer criminal, the so-called hacker, and a whole new ease with which hackers could penetrate remote computer systems by means of the Internet. In a word, the Internet made information more vulnerable.

Wireless, Everywhere
In the last 10 years, computing devices have gotten smaller, more powerful and cheaper. The PC begat the laptop, which in turn (along with the cell phone) gave birth to the personal digital assistant, such as the Blackberry.

The microprocessor, however, is today not just in standalone computers. Rather, together with digitally-based sensors, they are being implanted into huge numbers of machines, and things as diverse as bridges and, dare I say, people. And what makes all this computer power even more compelling is that the sensors and chips can send their data to host computers over the ether, without having to be tethered by wires. Consider a few of the state-of-the-art applications.

The Digital Mousetrap

In the UK, a building maintenance firm has rigged mousetraps with digital sensors and microchips. Thus, when a rodent is caught, the firm learns about it in real-time. Also, as the different traps "report in", the firm can detect quickly if one of the buildings is perhaps experiencing an outbreak of the little critters (and can go investigate why). Even short of this important news, the information received from the traps simply teaches the firm where to put additional mousetraps, and when to go check on them.

While the data security and privacy implications of the digital mousetrap may not be readily apparent (though the track record of each building in this regard may indeed be very sensitive business information, with commercial implications for the landlord), consider the following new wireless computing applications that literally bristle with privacy law implications.

On the Digital Highway

Again in the UK, a car insurance company has unveiled an insurance product that provides much more granular pricing based on very detailed, real-time car usage patterns, which are tracked and processed by computers. So, if you drive down a highway (which is quite safe, surprisingly) on a Sunday, you pay a lot less insurance for that trip than you would for a drive downtown during a week-day rush hour.

This is a good example of what more and more miniature sized microprocessors can do: they can tell us, in real-time, what is going on around them. Other current new applications include: a school in Japan is putting wireless homing devices on young children, so the school never loses track of them. Similarly, a North American uniform maker is putting chips into firemen’s suits so that their position can be determined at all times while they are fighting a large blaze, perhaps in a large, multi-storey warehouse.

Under My Skin

A range of digitally driven, wireless connected medical devices is also hitting the market. Small chips, with long lasting power devices, are being implanted just under the skin of various patients, to facilitate monitoring of various vital statistics, or to collect more nuanced data. Essentially, these are tiny RFID (radio frequency identification) tags that let doctors monitor their patients from afar.

These digital implant technologies will not long be restricted to the health community. Indeed, there is a bar in Spain that embeds such a chip in a patron’s arm, to assist with identity and payment. Previously the stuff of only James Bond movies, these digital, wireless implant devices will grow into a huge business in a matter of years.

Security and Privacy Implications

These technology trends – and the business models generated by them – have profound implications for Canadian privacy law. In a nutshell, all the examples touched on above involve the collection of huge amounts of data, most of it of the sensitive, personal variety. And this data is then being transmitted hither and yon, over a variety of networks and by means of various technologies. All this activity brings significant benefits, but of course there is one inevitable downside to all this activity.

With so much data being collected, stored, processed and transmitted, it is merely a question of time before some of your data leaks out, notwithstanding the implementation of "best practices" procedures for security and privacy. And so the question can reasonably be asked: how is the current legal regime dealing with privacy breaches? It is to this topic we turn next month.