Ericson Scorsim. Lawyer and Consultant in Communication Law, in the areas of Technologies, Internet, Media and Telecommunications. PhD in Law from the University of São Paulo (USP). Author of the Communications Law eBook Collection.

In an interview given to the Brazilian newspaper Folha de São Paulo on June 11, 2020, Ambassador Todd Chapman of the United States declared that the financing of 5G technology for Brazil is of interest to U.S. national security. According to the representative of the U.S. government, it is in the interest of the United States to finance 5G technology, through the International Development Finance Corporation, for companies allied to North American interests, such as Ericsson (a private company originating in Sweden with global operations) and Nokia (a private company originating in Finland with global operations).  In fact, the legislation called the Build Act (Better Utilization of Investments Leading to Development Act of 2018) authorizes the IDFC (International Development Finance Corporation) to finance projects abroad with U.S. public funds. This legislation is a direct response to China’s action on emerging countries.

The goal of U.S. foreign policy is to stimulate investments in 5G for companies competing with Huawei. According to the U.S. Ambassador, Huawei’s 5G technology represents a risk of access to data and information, as there is a link between the company and the Chinese government. Thus, the company is obliged to share information with China’s intelligence services. Still, according to him, the U.S. State Department has adopted a 5G Clean Path program, which prohibits U.S. embassies from adopting the services of telecommunications operators that use equipment from high-risk 5G suppliers.[1] According to the Ambassador, it is unlikely that anyone will make investments in countries where their information is not protected.

Given this interview by the U.S. Ambassador, the question remains: why is there so much interest in 5G technology in Brazil? According to the Ambassador’s statement, there is U.S. national security interest in the issue. But the question remains: why this interest by the United States? Is the United States concerned about American companies operating in Brazilian territory and that may end up using Huawei’s 5G technology? Or, is the United States concerned about Brazilian companies using Huawei 5G technology? In an article published in the Communication Law Portal, I explained this issue of 5G technology and the dispute between the United States and China. In theory, there is a risk that Huawei will be forced by the National Intelligence Law of China to share data/information with the national intelligence service of that country. 

However, it must be noted that this type of risk may also exist in relation to U.S. telecommunications companies, which are obliged to collaborate with the U.S. national security intelligence, as determined by CALEA – the Communications Assistance for Law Enforcement Act. Moreover, global technology companies (Facebook, Twitter, YouTube, Microsoft, Amazon, among others), providers of Internet applications, may also, in principle, be required to collaborate with intelligence and national security services in cases of risks to national security and public safety. In sum, the current U.S. government accuses Huawei and China of conducting electronic espionage and unauthorized access to data/information, which is the reason for the ban on Huawei’s 5G technology in U.S. territory. But who can guarantee that American government agencies do not conduct these types of electronic espionage either? After all, in 2013, it is public and notorious that Brazil was the target of espionage carried out by the National Security Agency of the United States, a fact proven by the Parliamentary Commission of Inquiry of the Brazilian Congress. The European Union and the United Kingdom have put forward solutions for mitigating cyber security risks from qualified high-risk supplier technology by imposing partial restrictions on Huawei.[2] Finally, it is up to Brazil, as a sovereign nation, to carry out the protection of the communications of Brazilian citizens, companies and institutions, in the face of any risks of electronic espionage, whether from the United States or China. If the Brazilian government and Congress do not respond to the challenge of protecting the infrastructure of communications networks regarding 5G technology, they may be held accountable for this omission to their institutional responsibility.

International strategic alliances are dangerous because they represent the risk of unconditional and uncritical adherence to the priority agenda of the country that is strongest in the relationship.  Hence the care required in the formulation of Brazil’s foreign policy in relation to the 5G theme. And Brazil’s automatic alignment to a foreign power has the potential to cause serious damage to its international relations. 

Automatic alignment can be the fruit of a colonized leadership; a colonized mentality submissive to the colonizer. Brazil’s national security policy regarding 5G communication network technology cannot be submitted to either the United States or China. A policy of submission is an attack on national sovereignty. Maybe it’s time to proclaim: Brazil First!

[1] According to the U.S. State Department: “The 5G Clean Path is an end-to-end communication path that does not use any 5G transmission, control, computing, or storage equipment from an untrusted vendor. A 5G Clean Path embodies the highest standards of security against untrusted, high-risk vendor’s ability to disrupt or deny services to private citizens, financial institutions, or critical infrastructure”.

[2]See: Scorsim, Ericson. A tecnologia competitiva de 5G da Huawei nas redes de telecomunicações de 5G: o alvo da geoestratégia da lawfare imposta pelos Estados Unidos contra Huawei e a China. Estudo completo do caso de repercussão sobre o Brasil. www.direitodacomunicacao.com

On May 15, the President of the United States issued the Executive Order on Securing the Information and Communications Technology. The decision was grounded on the International Emergency Economic Powers Act, National Emergencies Act, and the United States Code. According to the justification of the Executive Order, foreign adversaries are increasingly creating and exploiting vulnerabilities in information and communications technology and services, which store and communicate vast amounts of sensitive information, facilitate the digital economy, and support critical infrastructure and vital emergency services. Foreign adversary means any foreign government or foreign non-government person engaged in a long‑term pattern or serious instances of conduct significantly adverse to the national security of the United States or security and safety of United States persons. There are risks of malicious actions, including industrial espionage against the United States and its people There are threats caused by foreign adversaries to the national security, foreign policy, and economy of the United States. Hence, the Executive Order forbids any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service (transaction) by any person, or with respect to any property, subject to the jurisdiction of the United States, where the transaction involves any property in which any foreign country or a national thereof has any interest, from the date that this order is issued.

The presidential act has the purpose to ensure the control by the North American government of commercial transactions that involve information and communications technology or services designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary; transactions that pose an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of information and communications technology or services in the United States; transactions that pose an undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy of the United States; or otherwise poses an unacceptable risk to the national security of the United States or the security and safety of its citizens.

The presidential act grants powers to the Secretary of Commerce, in consultation with other authorities (the Secretary of the Treasury, Secretary of State, the Secretary of Defense, the Attorney General, the Secretary of Homeland Security, the United States Trade Representative, the Director of National Intelligence, the Administrator of General Services, the Chairman of the Federal Communications Commission) to design or negotiate measures to mitigate concerns related to the risks described in the Executive Order. Such measures may serve as a precondition to the approval of a transaction or of a class of transactions that would otherwise be prohibited pursuant to the Executive Order. The Secretary of Commerce, in consultation with other authorities, is authorized to take such actions to cease the transactions prohibited by the Executive Order, adopting the appropriate rules and regulations.  The Secretary, in consultation with the other federal authorities, is authorized to submit a final report to the Congress on control of such activities. The Director of National Intelligence shall continue to assess threats to the United States and its people from information and communications technology or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.   The Secretary of Homeland Security shall continue to assess and identify entities, hardware, software, and services that present vulnerabilities to the United States and that pose the greatest potential consequences to the national security of the United States.

The Executive Order does not mention any specific countries or companies. However, it is known that the Trump administration is targeting the Chinese company Huawei. This measure is being adopted in the context of the trade war between the United States and China. The dispute is for the market that supplies equipment for telecommunications networks and the 5G market. The United States government wants to bar the Chinese company Huawei and its partners from purchasing American components and technologies without prior government approval. So the US authorities will prepare a list of companies and products deemed harmful to the interests of the United States, as they are promoted by foreign adversaries. According to information published by Reuters, Huawei is not able to manufacture servers for telecommunications networks, relying on third-party products such as the ones from American suppliers. However, Huawei is independent when it comes to the mobile phone market, as it owns all the components of these products (chips and software). The Chinese company is seeking to develop high-end technology to reduce its dependency on imported components. 

Publicado no portal Jurídico Migalhas Internacional em 21/05/2019 

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The United Kingdom discusses new rules to regulate online content to protect user safety

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The British government, through its Department for Digital, Culture, Media & Sport (DCMS) has presented measures to deal with online harms against users of digital platform services – the Online Harms White Paper. The measures were presented to the British Parliament. According to the document, the British Digital Economy needs a new regulation to improve the online security of citizens, given the online abuses that exist. The instrument mentions that self-regulation by global technology companies is not enough to prevent harms to users related to abuses and illegal online content. Thus, it recommends regulatory measure to establish the duty of care of digital platforms towards the protection of their users, for the purpose of inhibiting illegal and harmful content.

The regulation covers social media networks, websites, public discussion forums, messaging services, and search engines. It proposes that an independent regulatory authority should monitor the responsibility of the technology companies that mediate online content. Amongst the issues in debate are problems with abuse against children (cyberbullying), online disinformation campaigns, terrorist content shared on social media, pornography, hate crimes, inciting violence and crimes (there are online gangs that promote violence), encouragement to self-mutilation and suicide (protection of the mental health and wellbeing of youngster), drug trafficking, anonymous online intimidation, interference in legal procedures by disseminating online content, amongst other issues. Among the justifications for such regulation is online abuse of public figures; the example given are abuses committed against female journalists. Another matter under debate is online advertising and the regulatory asymmetry in dissemination of content in different services (for example: the regulation of broadcasting and the deregulation on content published on digital platforms: Youtube, Netflix, Prime Video, amongst others).

The document also speaks of the duty of care regarding interference in legal proceedings by disseminating online content throughout communities. According to the report, the technology companies must help users to report interference in legal proceedings, in the case of anonymous offenses. And as for online content that interferes with legal proceedings, the information on the occurrences must be updated in relation to the updating of the such information. Companies providing content distribution services must ensure immediate removal of illegal online content, as soon as determined by the proper authority.

Technology is part of the solution to promote education and digital awareness. The United Kingdom is seeking to build a new regulatory framework for online content, by holding technology companies accountable for the content they distribute and promoting the duty of care with regard to protecting the users of digital services. Amongst the sanctions stated in the regulation are fines, service blocking (geo-blocking of websites and applications), and the individual liability of the managers of the online content intermediary companies.

Artigo publicado no Portal Jurídico Migalhas Internacional em 15/04/2019

On March 12, 2019, the European Council and European Commission presented the joint strategic outlook of the European Union on China. This text is based on the main aspects of that official document, focusing on the matter of cybersecurity in the 5G networks. China is recognized as the EU’s second-biggest trading partner, behind only the United States. Hence, the challenges and opportunities presented by the relationship with China must be identified. China is a global player with leading technological power; however, this leads to greater responsibilities for upholding the international order, as well as greater reciprocity, non-discrimination, and openness of its system. It is a cooperative partner, but in some cases also a strong competitor. Thus, the need to find a balance between the political and commercial relationships. In a near future, China will no longer be seen as a developing country.

With regard to competitiveness and leveling the playing field, the document mentions measures to be adopted by the EU regarding the distortive effects of foreign state ownership and state financing of foreign companies on the EU internal market. It also mentions the need to build a strategy related to artificial intelligence to foster investments, with a human-centric and trustworthy approach, a key condition for acceptance of the use of technologies.

Another theme is strengthening the security of critical infrastructure and the technological base. There are concerns regarding the risks to the EU’s security represented by foreign investment in strategic sectors of the European economy through acquisitions of critical assets, technologies and infrastructure, as well as the supply of critical equipment. We highlight the matter of 5G digital infrastructure, used to provide mobile and wireless communication services. 5G has the potential to connect billions of objects and systems, including sensitive information and communication technology systems. Hence, the European Union has several legal instruments, such as the Network and Information Security Directive, the Cybersecurity Act, and the European Electronic Communications Code, for protection against cyberattacks. The EU will support multilateral efforts to promote free and secure data flows based on strong privacy protections for personal data.

On the other hand, the new Regulation for foreign investments will enter into force in April 2019 and fully apply from November 2020 Therefore, the Member States must apply the rules of such Regulation on foreign investment to control the security risks posed by foreign investment in critical assets, technologies and infrastructure. To avoid the distortions resulting from foreign state ownership and state financing of companies, the European Commission must identify such distortions by the end of 2019. Given the potential risks to the security of the digital infrastructure, there must be a strategy for the security of the 5G networks. Thus, the European Commission will issue a recommendation to be followed by the European Council. As for the security threats caused by foreign investments in critical assets, technologies and infrastructure, the Member States must ensure the effective implementation of the Regulation of direct foreign investments.

Artigo publicado no Portal Jurídico Migalhas em 05/04/2019

The company Huawei has filed a lawsuit against the United States government due to the legislative ban contained in the National Defense Authorization Act (NDAA), which forbids the company from supplying telecommunication equipment to federal agencies. The law also bars federal loans for the purchase of such products.

The case was filed before a federal district court in Texas, against the United States Government, the U.S. General Services Administration Administrator, the Secretary of Labor, the Secretary of Health and Human Services, the Secretary of Education, the Secretary of Agriculture, the Secretary of Veterans Affairs, and the Acting Secretary of the Interior.

According to the complaint filed, the 2019 NDAA, more specifically its Section 889, is unconstitutional as it directly forbids federal authorities from signing procurement agreements with Huawei to purchase telecommunication equipment or federal or granting federal loans for such purpose.

In short, Section 889 is not only contrary to the economic interests of the United States and its citizens, and ineffective at advancing U.S. security interests, it is also contrary to the Constitution of the United States.

Injuries to the U.S Constitution

The first injury to the U.S Constitution is the violation of the Bill of Attainder Clause, which prohibited that legislature impose punishment, without hearing the other party or trial.

The second unconstitutionality relates to the violation of the Due Process Clause, that prohibited legislation that would single out particular persons or deprivations of liberty. In this case, the legislative act affects business freedom.

The third unconstitutionality is the violation of the principle of the separation of powers, as Congress must not act as prosecutor, judge, and enforcer of the sanction of prohibition against the company, without any evidence of it having business connections with the Chinese government, as well as of threats to cybersecurity.

The company also claims that Section 889 of the National Defense Authorization Act bars Huawei from doing business with the federal government even as to agencies that have no significant connection to defense, information security, or national security.

It further argues that the U.S. law causes significant damages to Huawei’s business by creating unfair conditions amongst competitors.

Thus, the U.S federal government may purchase telecommunication equipment from Nokia, Ericsson, and other competitors, but cannot purchase products from Huawei.

Finally, Huawei requests that Section 889 of the 2019 National Defense Authorization Act be declared unconstitutional, as it violates the Bill of Attainder Clause, the Due Process Clause of the Constitution’s Fifth Amendment, and the Constitution’s Vesting Clause and resulting separation of powers.

Artigo publicado no portal jurídico Migalhas Internacional em 15/03/2019

The Internet of Things, known as IoT, is a market trend in internet applications.

IoT is the infrastructure of physical or virtual connection between objects, mediated by devices, based on information and communication technologies. This network allows the collection, processing, treatment, and sharing of data referent to physical and/or virtual objects.¹

This article presents the challenges for regulating this matter in Brazil, stressing the public consultation held by Anatel in September 2018 on IoT-related issues.

Such public consultation dealt with issues related to the rating of IoT applications, licensing and award rules, use of the spectrum frequencies, taxation, and others, to be examined further on.

IoT Applications

There are IoT applications in houses and buildings. IoT products for smart homes – controlling temperature, lights, security, and energy consumption, such as Alexa, a virtual assistant sold by Amazon². In buildings, IoT applications are used for security, such as biometric control of entrance, as well as vehicle control in the garage.

In the industry, there are IoT projects for digitalization and robotization of factories, manufacturing of self-driving cars, etc. The so-called 4.0 Industry uses sensors with wireless networks to improve productivity in factories, control inventory conditions, monitor product transportation, as well as the environmental conditions of factories.

In the trade sector, IoT applications are used to monitor vehicle fleets, track containers in ports and ships, among others, control inventory in logistics distribution center, among other uses.

In agriculture, it is present in smart irrigation, controlling agricultural equipment, tracking plantations with drones, and monitoring climate conditions. IoT is also used to monitor cattle grazing.

IoT is present in the health sector allowing for remote monitoring of chronic patients, tracking high-cost medication, sensors can control the temperature of equipment such as surgical drills used in hip-replacement surgery, among other applications.

In the public sector, with have IoT projects for smart cities: public lighting networks with smart sensors, traffic-based traffic lights, etc.

In the financial industry, one of the applications of the Internet of Things is machine to machine communication. For example, electronic payment companies, through mobile apps, on small devices.

New business models for IoT applications that perform financial services through machine to machine communication require knowledge of the sectoral regulation adopted by Anatel (the Brazilian Telecommunications Regulatory Agency). This is because the business may rely on a virtual network of a mobile communications operator, or not. The IoT application’s business model may or may not use frequencies of the spectrum.

In other words, IoT applications rely on the telecommunications infrastructure network. Hence the need to examine the IoT business model to know if it may require a permit as an added-value service of the telecommunications network or authorization to the frequencies of the spectrum. Hence the regulatory role by Anatel in clarifying the regulatory framework applicable to IoT applications.

IoT: Security and Privacy Risks

The Internet of Things has the potential to collect the personal data of millions of people. There are possible risks to the security of personal data and privacy, with the remote monitoring of people’s consumption patterns, their location, behavior, preferences, and others by the technological devices.

Society must be aware of the hypervigilance risks caused by IoT networks, as well as the possible risks to digital freedom. Then, legislators can define in the proper laws the limits to IoT applications.

IoT Applications and the Demand for Connectivity Using the Telecommunications Infrastructure Network.

The Internet of Things requires digital communications networks infrastructure. It needs high-speed data transportation networks and access networks.

The 5G internet network, a high-speed network (the average speed is 10 Gbps, in comparison to the current 100 Mbps) is vital for IoT. This 5G network requires mobile telephony antennas and fiber optics, and cloud-based software solutions.

Challenges to the Regulation of IoT Applications.

In Brazil, IoT is not yet regulated.

The law must regulate the matter, through laws and decrees, along with self-regulatory measures by the companies that offer IoT devices.

In addition to regulation, the government must also provide incentives for the private sector to make investments in IoT network infrastructures.³

In Brazil, the Internet of Things is only mentioned in Decree No. 9.319/2018, that institutes the national digital transformation system.

This Decree deals with matters such as internet access and data transportation networks by mobile and landline broadband, the digital transformation of the economy, professional education and training, data-based economy, new business models.

Decree No. 9.319/2018 only mentions the following: “by recognizing the transformative potential of the Internet of Things applications, actions and incentives must be set to allow for the continuous evolution and dissemination of such devices and the associated technologies.

Anatel: Public Consultation on the Regulation of IoT Applications

Anatel recently opened Public Consultation No. 31, of September 2018, to reexamine the regulation to expand IoT applications.

The regulatory agency presented the following themes for assessment of regulatory impact: a) granting of IoT services based on new business models; b) rules for providing IoT services; c) the matter of taxation and licensing of IoT services; d) numbering to meet the demand of IoT devices (used to address and identify these devices in any network in the world); e) the cyber security of IoT devices (certification and approval of IoT devices); f) the spectrum band available for IoT (and, also, non-monetary bids for new frequencies; g) broadband infrastructure to support IoT services; h) domestic roaming agreements, given the offering of IoT services based on global connectivity providers.

Anatel mentions the National IoT Plan, and the IoT Chamber, established in the form of Decree No. 8.234/2014, as one of the grounds used to open the matter to public consultation. This Decree regulates Article 38 of Law No. 12.715/2012, which deals with the taxation of machine to machine communications. According to that norm, the Ministry of Communications (currently, the Ministry of Science, Technology, innovation, and Communication) will create a chamber to manage and monitor the development of machine to machine communication systems. Under this Decree, Anatel will regulate and monitor compliance with its provisions.

According to Anatel, the purpose of the IoT Chamber is manage and monitor the development of machine to machine communication, to apply Article 38 of Law No 12.715/2012, which deals with the taxation of machine to machine applications. Note that the law refers solely to the issue of taxation of IoT applications.

Still, according to Anatel, some Iot/M2M (machine to machine communication) business models do not fit the typical features of telecommunications services, as per the current regulations. Hence the need to adjust the regulation of IoT/M2M services.

The regulatory agency also points out the lack of flexibility of the regulation for personal mobile services (SMP), through virtual networks for IoT applications.

According to Anatel, some IoT applications use as support personal mobile telecommunication services.

Telecommunication services are regulated based on the obligation burden of providing communication between people, hence the requirements of consumer protection and quality.

However, such consumer and quality obligations from telecom regulations do not make sense for IoT applications. Thus, one of the possible paths is establishing a differentiated scheme for IoT applications, with the possibility of the matter being defined in contract.

Also, the Mobile Network Operator (MNO) registration model requires being bound to a provider at the origin. However, this requirement does not make sense for IoT applications. Amongst the alternatives is establishing a differentiated scheme for IoT applications, through virtual networks, based on personal mobile services.⁴

Discussion on the Legal Qualification of IoT Applications

There is a discussion on the legal qualification of the Internet of Things.

The tendency is to qualify it as an added-value service of the telecommunications network. The concept of added-value service is in Article 61 of the General Telecommunications Act. However, it is distinguished from the concept of telecommunications services, which traditionally comprehends landline and personal mobile telephony services.

So, if the Internet of Things is qualified as an added-value service, it may be subject to the ISS municipal service tax.

However, if IoT is qualified as a telecommunications service, it will be subject to the ICMS State sales tax.

Bills for Tax Exemption of Machine to Machine Communication to Promote the Development of IoT and Application Business Models

There are some bills to remove taxation from IoT stations.⁵ Such is the case of Bill No. 7.656/2017.

The bill grants to Anatel the power to define the concept of machine to machine communication to apply the rule of tax exemption of the Contribution to Promote Public Radio Broadcasting and Contribution for Development of the Cinema Industry.⁶

It’s hard delegating to the regulatory agency the definition of the concept of machine to machine communication for taxation purposes. The law must define this concept. This is required under the principle of strict legality. Otherwise, this leads to legal uncertainty in the practical application of the concept within the regulation of the Internet of Things, with the risk of judicialization of the matter.

The public consultation held by Anatel registers the issue of the application of the licensing fees for stations (TF1 – fee for inspection of installation and TFF – fee for inspection of Operations) that may make the IoT/M2M business models unfeasible.

There is a discussion regarding the alternatives, in the sense of exempting or applying zero rates to the licensing fee of IoT/M2M terminals, waiving the licensing of such terminals or taxation based on a percentage of the revenue of the business and not by device.

The Issue of Net Neutrality

Another regulatory challenge is the issue of Net Neutrality, stated in the Internet Regulatory Framework. With the implementation of IoT networks, there will probably be a demand for flexibility of net neutrality. For example, the Internet of Things related to communication between vehicles, giving priority to ambulance services, is cited as one such demand for flexibility of net neutrality.

For example, in the United States, given the legal ambiguity of the Communication Act, there is a controversy regarding Internet neutrality. Initially, the Federal Communication Commission, during the Obama administration, qualified internet connection services as telecommunication services to guarantee the obligations regarding net neutrality. Later, in the Trump administration, the regulatory agency removed net neutrality.

In Brazil, however, the concept of net neutrality is defined in the Internet Regulatory Framework.

Frequencies of the Spectrum

Another issue related to the regulation of IoT applications is defining the range of the frequencies of the spectrum to be used, the licensed and unlicensed range, to be decided by Anatel. For example, the Internet of Things depends on wireless communication networks.

Privacy and Security Standards of IoT Applications

Another regulatory challenge of IoT is defining the privacy and security standards of the data collected through landline and mobile devices. Regulation is also vital to protect the personal data of users of IoT application.

In this regard, it must be highlighted that Brazil recently passed Law 13.709/2018 that deals with the protection of personal data, with rules for private companies and the public sector. There are also rules on the international transfer of personal data between companies.

If the IoT network’s architecture is not built correctly, there are severe risks to the security and privacy of the data transported by the networks. For security reasons, the digital identification of physical and virtual objects is essential.

International Scenario on Cyber Security and IoT

The matter of the Internet of Things is directly associated with the issue of cyber security.

In this regard, Anatel’s public consultation opened to the discussion on the issues of certification and approval of the IoT devices.

For example, the United States passed the Internet of Things (IoT) Cybersecurity Improvement Act of 2017.

This North American legislation holds the standards for IoT devices purchased by federal agencies. Thus, the suppliers and operators of IoT equipment (such as the design of the microchips used in machines and networks) for the USA government and its agencies must adjust to the cyber security guidelines.

Also, recently, California passed Senate Bill – SB 327 to protect the privacy of information in connected devices (IoT).

According to the California Bill, the manufacturer of connected devices must follow reasonable security standards, according to the following aspects: appropriate to the nature and function of the technological devices, appropriate to the information collected, stored, and transmitted; designed to protect the device and any information stored from unauthorized access, destruction, use, alteration or opening, among other rules. If the Governor of California sanctions the bill, it will come into effect in January 2020.

According to its critics, the bill is the first step, even if it contains superficial and incomplete definitions of security. The critics say that the bill does not indicate the security measures such as device certificate, code signature, and firmware safety audits, purchased from IoT suppliers that buy them from suppliers abroad. The bill also does not define liability in case of unauthorized access through coded encryption keys.⁷

Thus, the matter of the Internet of Things is directly associated with the issue of national cybersecurity in light of external threats. Cyber-attacks to public and private networks by hackers present challenges to national security.

Finally, in the United States, there are rules for IoT security set by the National Congress that must be followed by the industry. Over there, they are also debating whether there should be mandatory certification of IoT devices.

To better understand the context, the United States has adopted measures to prevent China from buying American technology companies (mobile phone and computer chip manufacturers). In addition to the issue of international competitiveness, there are allegations of risks to national security. The United States are concerned with the 5G network, specifically with it being dominated by foreign companies, overall Chinese companies. Hence the trade war between the United States and China in this cyber security realm.

The matter must be seen from the context of the big picture, as characterized by the trade war between the United States and China for technological leadership.

China has a program called Made in China 2025 with clear objectives to obtain its technological independence by manufacturing cell phone chips, robots, and the digitalization of its industry. Hence the international discussion around intellectual property, technology transfer, cyber security, etc.

Opportunities in IoT Applications

IoT holds tremendous opportunities for telecommunication companies, internet connection providers, and for the companies that explore this type of business. It creates demands for the creation of data centers and implementation for more networks of cellular antennas.⁸ There are even credit facilities for IoT startups through the Brazilian Development Bank – BNDES (via Finep).

IoT applications present challenges and opportunities for device manufacturers, network operators, and startups with new business models.

In sum, the regulation of the Internet of Things has significant repercussions in the present and near future.

_______________________

1 According to the International Telecommunications Union, the internet of things is: “a global infrastructure for the information society, enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interoperable information and communication technologies (ICT).

2 Problems have been reported regarding the security and privacy of people due to the use of technological devices that can record all conversations held close to the equipment. There are even cases of baby monitors that monitor children and homes being hacked. Hence, in the United States, consumers are demanding security and privacy measures for IoT products. The United States Senate, through its Committee on Commerce, Science, and Transportation, held a public hearing on the matter of guarantees to protect consumers’ privacy. It called representatives of the companies AT&T, Amazon, Google, Twitter, Apple, and Charter. In sum, the technology companies support a federal bill to protect the consumers’ right to privacy, to avoid having the North American States passing laws on the same matter. Amazon’s representative gave a statement on Alexa, a cloud-based voice service. According to him, when Alexa is activated, the consumer is informed that the cloud-based audio streaming service is in operation; also, that the device can be turned off through Echo/Alexa’s microphone button; and, finally, that the Echo hardware and Alexa’s service were designed to allow control by the consumer.

3 Google has announced that it will invest USD 140 million to expand its datacenter in Chile. It is the first Google datacenter in Latin America that will operate as infrastructure to offer cloud computing services. According to the press, Chile was chosen given the favorable environment for foreign investments, a clear regulatory framework, and renewable energy sources.
Brazil lost the opportunity to attract this type of investment from a global company, that would create jobs and generate income in the country. This fact attests to Brazil’s delay in establishing a policy to promote investments in datacenters in Brazilian territory and, accordingly, to compete in the international market.
India, in its turn, has recently passed a law requiring foreign technology companies to store their users’ personal data in Indian territory. The law has an impact on companies such as Facebook, PayPal, Mastercard, and others.

4 Anatel, in July 2018, authorized the company Safra Telecomunicações to operate as a Mobile Virtual Network Operator (MVNO).

5 Article 38. The value of the Fee for Inspection of the Installation of Mobile Stations of Personal Mobile Services, Cellular Mobile Services or any other telecommunication service, as per Law No. 5.070, as amended, that integrate machine to machine communication systems, as defined in the regulation to be issued by the Executive Branch, is set at BRL 5.68. (Regulation) Sole paragraph. The Fee for Inspection of Operations will be paid annually, by March 31st, and its value corresponds to thirty-three percent of the Fee for Inspection of the Installation.

6 In its turn, Decree No. 8.234/2014, which regulates Article 38, of Law No. 12.715/2012, defines the following: “Article. 1. For the purpose of the provided in Article 38, of Law No. 12.715, of September 17, 2012, machine to machine communication systems are deemed to be the devices that use telecommunication networks to transmit data to remote applications, without human intervention, with the purpose of monitoring, measuring, and controlling the device, the environment around it, or the data systems connected thereto through such networks”.

7 The press recently announced a security breach by Amazon that allegedly leaked the access code to the company’s system.

8 Thecountry was due to its political stability, the regulatory framework to attract private investments and economic stability press recently published that Google is expanding its data center in Chile. The choice to invest in that .

Artigo publicado no portal jurídico Migalhas Internacional em 09/10/2018.

Brazil has passed Law 13,709/18 on personal data protection.

It contains rules for both the public and private sectors regarding the collection, processing, treatment, and sharing of personal data.

However, recently, the President of the Republic indicated several vetoes to the bill passed by the National Congress. Among these vetoes: the creation of a regulatory agency for personal data protection (Articles 55 to 59), the rules of data sharing by the public sector and private companies (Articles 23, item II, 26, item II, paragraph 1, and Article 28), sanctions of complete or partial suspension of the operation of the database and suspension of the exercise of personal data processing activity, and partial or complete prohibition of exercising any activities related to data processing (article 52, items VII, VIII, and IX). We shall examine these vetoes further on in this text.

The law on the protection of personal data is adapted to the context of the evolution of the technologies based on digital platforms, big data, artificial intelligence, machine learning.

The legislative regulation of this matter is critical because corporate self-regulation is not enough to resolve the complex issues related to personal data protection.

As an illustration of the above, we have the scandal between Facebook and the company Cambridge Analityca regarding the improper collection of the data of millions of users of that social network, as well as third-party personal data.

In the United States, there was also news about a lawsuit against Google due to the illegal monitoring of millions of iPhone and Android users. According to such lawsuit, Google does not disable the user’s location history. This business practice violates the privacy laws of the State of California, according to the plaintiff. This is a typical case related to the protection of personal data and privacy.

Also, the media often reports on the invasion of personal databases and the leak of such data, under the responsibility of public authorities and private companies.

In Brazil, for example, a security breach was reported in the E-Health application of the Ministry of Health, with the exposure of the personal data of thousands of Brazilians that use the Unified Public Health System (“SUS”), with the display of the patient’s medical information, medication use history, and appointments in the public health service.

This theme is inserted in the context of the risks of cyber-attacks by hackers, with threats to personal data security and privacy. Therefore, the law is intended to prevent this kind of abuse against the rights to personal data protection.

Personal data is information on your private life (ID, image, location, and health, among others), financial life (existence of bank or credit cards debts, etc.), among other aspects.

Currently, personal databases are a source of economic value to private companies. For the public sector, they are essential to the implementation of public policy in several areas, such as public health.

According to the law mentioned above, in its Article 5, sensitive personal data are those related to ethnic or racial origin, religious beliefs, political opinions, affiliations to trade unions or religious organizations, health-related data, genetic or biometric data, sexual orientation.

The foundations of the Brazilian Data Protection Act are laid out in its Article 2: the respect to privacy, informative self-determination, the freedom of expression, information, communication, and opinion, the sanctity of privacy, honor, and image, economic and technological development and innovation, free enterprise, free competition, and consumer protection, human rights, the free development of personality, dignity, and the exercise of citizenship by individuals, among other things.

The law is applicable to personal data processing operations, regardless through what means, the country of the processor’s headquarters, or where the data is located, provided that the processing operation take place in Brazilian territory, the purpose of the data processing activity is the offering or provision of goods or services or the processing of data of individuals located in Brazilian territory, or the personal data being processed was collected in Brazilian territory (article 3, item II and III. Also, the personal data whose subject is in Brazilian territory at the time of their collection will be deemed as having been collected in Brazil (art. 3, paragraph 1).

This Personal Data Protection Act impacts several companies from industries such as telecommunications, internet applications, such as social networks, search engines, video sharing websites, financial institutions, e-payment companies, startups in the technologies and government sector (govtech), digital marketing companies, hospitals, among others.

For example, in the financial sector, there is a trend towards the opening of banking data (open banking) to increase competition in that sector. So, if the Brazilian Central Bank regulates the issue appropriately, the traditional banks will have to share the account-holders’ personal information with credit and financing companies, such as the startups known as fintechs.

In the business realm, the application of this law creates demands for the hiring of executive professionals for database management. It also creates a need for the creation of compliance rules with the companies and the respective bodies of enforcement.

This federal law also applies to the public sector, containing rules on the sharing of personal data in databases administered by government agencies. Example: the data from people registered in the public health system.

The law, however, does not apply to personal data processing performed by an individual for private and non-economic purposes, carried out exclusively for artistic and journalistic, or academic purposes, or held for the sole purpose of public safety, national defense, data security, criminal investigation and repression activities, article 4.

In the context of international regulation, Europe has the General Data Protection Regulation (GDPR). Each European country has an agency that regulates personal data protection.

There are questions as to the application of the European legislation. Online advertising companies that use personal data such as the location of the users of applications on mobile phones are concerned with the compliance rules to be adopted. On the other hand, media companies are seeking alternatives to address the dispute with technology companies, focused on digital advertising.

The United States, in its turn, does not have a general personal data protection law. There, the Federal Commerce Commission, the American regulatory agency responsible for enforcing loyal trade practices between businesses and consumers, regulates the issue of consumers’ personal data and applies sanctions against potential abuses committed against consumer rights. For example, the Federal Commerce Commission has entered into several settlements with Google and Facebook concerning consumer privacy protection.

The law referenced above holds the requirements for personal data processing, upon consent by the data subject. In other words, the permission of the owner of the personal data is a condition for its valid use, according to the law.

According to the law under examination, in its article 5, item X, personal data processing is the collection, production, reception, classification, use, access, reproduction, transmission, distribution, processing, filing, storage, elimination, information assessment or control, modification, communication, transfer, dissemination, or extraction of such data.

The principles of personal data processing activities laid down in Article 6 include: the purpose (identification of the legitimate and specific purpose informed to the owner), fitness (compatibility of the processing with the purposes informed to the subject), need (limiting the minimum processing required to achieve its purposes), free access (guarantees that the owners will have easy and free consults regarding the form and duration of the processing), data quality (assurance of precision, clarity, relevance, and updating of the data, as needed and to achieve the purpose of the processing), transparency (assurance of clear, precise, and accessible information to the owners on the performance of the processing, respecting business and industrial secrets”.

Personal data may be processed to comply with legal or regulatory obligations. For example, employees’ personal data, such as name, address, vacation periods, benefits, leaves, of mandatory registration before public authorities (known as e-social). Another example is the sharing of the personal data of users of telecommunications and internet services, between private companies and Anatel (the Brazilian Telecommunications Regulatory Agency) for the purpose of public policies on communications.

The public administration may also process personal data required to enforce public policies. Example: public taxation policies, by sharing the personal data of citizens for tax collection purposes.

Personal data processing is also allowed for credit protection. Example: the Brazilian Credit Protection System (Serasa and SPC), used in by the trade, industry, and service sectors.

Another permitted use is in the regular exercise of rights in lawsuits or administrative or arbitration proceedings. Given the current context of electronic proceedings, there is a demand for proper processing of personal data to protect rights before the Judiciary and/or the Public Administration.

Article 11 of the Law deals specifically with the processing of sensitive data.

For example, in this respect, the following rule is stated in Article 11, Paragraph 3: “The shared use or communication of sensitive personal data between controllers with the purpose of obtaining economic benefits may be subject to

prior authorization or regulation by national authorities, upon hearing the proper sectoral agencies.”

This legal provision may be applied, for example, by the Brazilian Agency of Supplementary Healthcare (“ANS”) to restrict the sharing of sensitive personal data, such as using personal data in medical records and clinical history that may be used by healthcare plans to check for pre-existing diseases.

The processing of the personal data of children and teenagers requires specific consent by one of their parents or legal guardians, as per Article 14, Paragraph 1. For example, children and teenagers will need one of their parent’s consent to have access to YouTube.

The data subject has the right to obtain confirmation of the existence of the processing of their data, access to their data, correction of incomplete, inaccurate and outdated data; and de-identification, blockage or erasure of unnecessary or excessive data, or of data processed in breach of the provisions of the law, portability of personal data to another product or service supplier, elimination of personal data treated with the data subject’s consent, as per article 9 of the law.

Regarding the processing of personal data by government, the law states that the shared use of personal data must be consistent with specific ends associated with the execution of public policies and duties by public bodies and entities, according to the personal data protection principles established in Article 6 of the law.

However, the government is forbidden from transferring personal data stored in databases under their management, or to which such entities may have access to private entities, except in those cases in which processing is outsourced to private entities, as per Article 6, Paragraph 1, item I. Sharing is also authorized in the case of legal provision and when the transfer of personal data is based on contracts, agreements or similar instruments.

But, according to the presidential veto, the cumulative requirement (legal and contractual provision) hinders Public Administration, because “several procedures related to the transfer of personal data are detailed in normative acts, such as the processing of the public servants’ payroll by private financial institutions, the collection of fees and taxes, and payment of social security benefits, among others”.

Also, in the event of public access to personal data, sharing is possible, within the limits of the law.

According to Law No. 13.709/18, in its article 5, item XVI, shared use of data is the disclosure, dissemination, international transfer, interconnection or shared processing of a database by public bodies or entities, when in fulfillment of their obligations, or among public agencies or entities and private entities, with specific authorization, for one or more classes of processing assigned by such public entities, or between private entities.

According to the presidential veto, the prohibition of sharing information identifying the personal data of the subject applying to have access to information hinders the functioning of the Public Administration.

The veto cites, as an example, the sharing of the Social Security database and the National Registry of Social Information. The veto claims the hindering of activities related to the administrative power of police, such as investigations within the National Financial System.

The disclosure and shared use of personal data between public entities and private entities require the data subject’s consent, except for the legal waivers of consent in the cases of shared data use, with extensive publicity, as per article 27 of the law.

However, according to the presidential veto, unrestricted communication or advertising of shared personal data use among government agencies can make hinder the regular exercise of some public actions of surveillance, control, and administrative police.

Under the law, the processing of personal data by notarial registry services must follow the rules applicable to the public sector. The bill also provides that these notarial and registry services must provide access the public administration with access to such data, by electronic means.

State-owned companies and quasi-public corporations which operate in a free competition environment will be bound by the same rules as those enjoyed by private entities. For example, public banks must follow the provisions of the law under examination.

There is a specific chapter on the international transfer of personal data, starting with Article 33. The international transfer of personal data will only be allowed to countries that afford a level of personal data protection equivalent to that of the law.

The international transfer is also allowed when the data controller offers sufficient guarantees of compliance with the general principles of protection and with the rights of the data subjects, presented on contractual clauses approved for a specific transfer. Likewise, when the international transfer of data is necessary for international judicial cooperation between public intelligence and investigation agencies, under international rules and laws. Or when the transfer of data is required for the protection of life or the physical safety of the data subject or a third party.

In the specific chapter on security and best practices for protecting data confidentiality, there is a provision on security incidents, in which case the data controller shall notify the competent public body within a reasonable term. If necessary, the relevant public body may order a broad disclosure of the fact in the media and/or measures to revert or mitigate the consequences of the damage.

There are also legal provisions on the liability and compensation for damages caused by personal data controllers and/or processors. The data controller and data processor are jointly and several liable for damages caused to the data subject and the cases of waiver of such legal liability, according to Article 42 of the law.

As for the supervision of the personal data processing activities, Article 52 provides several administrative sanctions to be imposed by the competent public body: warning, simple or daily fine up to 2% of the billing of the private legal entity, limited to BRL 50,000,000.00; publication of the violation after it has been adequately verified and confirmed; blockage of the personal data subject of the breach until its regularization; erasure of the personal data subject of the breach; total or partial suspension of operating databases, for a period not exceeding 6 months; suspension of personal data processing operations, for a period not exceeding 6 months; total or partial prohibition of data processing related activity.

The President of the Republic vetoed the sanctions of complete or partial suspension of the operation of the database, suspension of the exercise of personal data processing activity, and partial or complete prohibition of exercising any activities related to data processing.

According to the veto, these administrative penalties of suspension or prohibition of the operation/exercise of data processing activities can lead to “uncertainty for those responsible for this information, as well as make it impossible to use and process databases essential to various activities, such as those used by financial institutions, among others, which may jeopardize the stability of the National Financial System.”

The law creates the National Data Protection Authority, a federal agency bound to the Ministry of Justice.

There is undoubtedly a need for an independent regulatory agency specialized in personal data protection. The specialization of the matter requires the creation of a regulatory agency. By the way, this is the European model, where each country has a regulatory agency for personal data protection.

However, the President of the Republic vetoed this provision that creates the regulatory agency for personal data protection, on the grounds of formal unconstitutionality, given a flaw of initiative in the matter, which is reserved for the Head of the Executive Branch.

According to media reports, the President of the Republic will submit a new bill or even a provisional measure to create of the National Data Protection Agency.

Note that the lack of regulatory agency undermines the effectiveness of the law and its enforcement.

It is clear that the absence of an independent authority to supervise the law will leave personal data unprotected.

Also, the law provides for the Personal Data and Privacy Protection Council (Articles 58 and 69).

However, these legal provisions have been vetoed by the President of the Republic.

Finally, Law N. 13.709/18 alters the Internet Regulatory Framework in two aspects.

On the one hand, it provides for the right of permanent deletion of the personal data provided by users to a particular internet application at the end of the relationship between the parties, except when the law requires mandatory storage of records.

On the other hand, there is the right to permanent deletion of personal data that are excessive in relation to the purpose for which consent was given by the data subject, notwithstanding the legal caveats.

“Law N. 13.709/18 will come into force in 2020, 18 months after its official publication” (Article 65). Therefore, there is a reasonable time for adjustment to the legal regulations.

In conclusion, there are several challenges for the effectiveness of the Brazilian Personal Data Protection Act. Among them, the veto to the creation of the National Agency for Personal Data Protection. The international best practices, as set out in the European model, is in the sense of the existence of independent and efficient regulatory agencies, committed to public interest. Hence the urgency in solving this severe problem regarding the lack of a regulatory agency for Personal Data Protection.

Publicado no portal jurídico Migalhas Internacional em 03/09/2018.

The Supreme Court of the United States ruled, in June, in the case Carpenter v. the United States, by majority vote, that government entities must obtain a warrant to access the data/information on the location and movement of suspects of crimes in FBI investigations, on cellphone networks.

The ruling that accepted to try this case before the Supreme Court, in the Certiorari to the United States Court of Appeals for the Sixth Circuit, presented the following issue:

“Whether the warrantless seizure and search of historical cell phone records revealing the location and movements of the cell phone user over the course of 127 days is permitted by the Fourth Amendment.”

Judge Robert cast the winning opinion, which was followed by Ginsburg, Breyer, Sotomayor, and Kagan. Justices Kennedy, Thomas, Alito, and Gorsuch cast the dissenting and defeated opinions.

The Court’s decision mentioned the fact that in the United States there are 396 million cellphone services accounts, within a universe of 326 million people.

The discussion revolved around the interpretation of the Fourth Amendment of the U.S. Constitution.

The American constitutional debate consists of examining whether the search and seizure of data/information on the physical movement of an individual through cell phone networks, requested by the authorities, require a warrant or not.

The issue is whether a third party (in this case, the cell phone companies), has the right to oppose the search of personal data/information.

It also involves the expectation of privacy before third parties (cellphone companies).

The majority opinion pointed out that technological innovations allow for the mass surveillance of the population. Hence the risks of technologies concerning the expectations of privacy of citizens, in violation of the fourth amendment.

By majority vote, the Supreme Court of the United States ruled that there is the expectation of privacy before third parties, namely the cellphone companies.

The U.S. Government invoked the Third-party Doctrine. According to this doctrine, the person has reduced expectation of privacy when information is shared with third parties.

As mentioned, the core issue is the expectation of privacy regarding the historical records on the location of an individual, by the recording of the movement of the respective users by the cellphone companies.

The majority opinion of the Supreme Court presented important considerations. According to the decision:

“The case before us involves the Government’s acquisition of wireless carrier cell-site records revealing the location of Carpenter’s cell phone whenever it made or received calls. This sort of digital data – personal location information maintained by a third party – does not fit neatly under existing precedents. Instead, requests for cell-site records lie at the intersection of two line of cases, both of which inform our understanding of the privacy interests at stake”.

The decision of the Supreme Court of the United States continues:

“Significantly, the Court reserved the question whether ‘different constitutional principles may be applicable’ if ‘twenty-four hour surveillance of any citizen of this country (were) possible.”

The decision also provides considerations on the issue of monitoring via GPS devices installed in vehicles, informing the whereabouts of people.

In this line, the majority opinion of the Court reads:

“A person does not surrender all Fourth Amendment protection by venturing into the public sphere. To the contrary, ‘what (one) seeks to preserve as private, even in an area accessible to the public, may be constitutionally protected.

(…)

For that reason, ‘society’s expectation has been that law enforcement agents and others would not – and indeed, in the main, simply could not – secretly monitor and catalog every single movement of an individual’s car for a very long period.

Allowing government access to cell-site records contravenes that expectation. Although such records are generated for commercial purposes, that distinction does not negate Carpenter’s anticipation of privacy in his physical location over the course of 127 days provides an all-encompassing record of the holder’s whereabouts. As with GPS information, the time-stamped data provides an intimate window into a person’s life, revealing not only his particular movements, but through them is ‘familial, political, professional, religious, and sexual associations.’

(…)

Accordingly, when the government tracks the location of a cell phone, it achieves near-perfect surveillance, as if it had attached an ankle monitor to the phone’s user.”

(…)

Moreover, the retrospective quality of the data here gives police access to a category of information otherwise unknowable. In the past, attempts to reconstruct a person’s movements were limited by a dearth of records and the frailties of recollection. With access to CSLI, the Government can now travel back in time to retrace a person’s whereabouts, subject only to the retention policies of the wireless carriers, which currently maintain records for up to five years. Critically, because location information is continually logged for all the 400 million persons in the United States – not just those belonging to persons who might happen to come under investigation – this newfound tracking capacity runs against everyone”.

On the other hand, in the dissenting opinions, which were defeated, the Justices felt that cell phone companies have the right to the property of the users’ historical records.

According to Justice Kennedy’s opinion, the recordings obtained by the government belong to the cell phone companies. Still, according to him, the information on the movement history of the user’s mobile device is not private.

In his dissent, Justice Thomas claimed that the Telecommunications Act is insufficient, and does not grant to the plaintiff the right of ownership of the cell phone networks’ recordings.

Another dissenting opinion highlighted that the Fourth Amendment does not regulate all the methods through which the government can obtain evidence, for criminal investigation.

In sum, the core theme debated by the Supreme Court refers to the reasonable expectation of privacy concerning the data stored by third parties (cell phone companies).

The majority decision was based on a constitutional interpretation of the Fourth Amendment of the American Constitution concerning its purpose, extending the requirement for a warrant to obtain personal information, protecting the person’s expectation of privacy (information on the records of their personal location).

The dissenting opinion, which was defeated, was grounded on a more restrictive and literal interpretation of the Fourth Amendment.

Another issue discussed refers to the right of ownership of the data stored by the cell phone companies.

There are substantial interests at stake, such as the right to include, exclude, and control the use of personal data.

Thus, who owns the data stored through cell phone networks: the users or the phone companies?

According to one of the dissenting opinions, the Telecommunication Act refers solely to the user’s right to privacy of their confidential information concerning the phone company. Thus, the company has a duty to respect the right to privacy of the user’s personal information.

In his vote, Justice Thomas states that the American telephone law does not recognize the right of property of the users concerning the data stored by the telephone companies.

As for the discussion on the interpretation of the Stored Communications Act (the American law applicable to electronic communications), the investigative authority has to show that the information on the personal location obtained through cell phone networks is relevant to the ongoing investigation for it to be admitted as evidence in a criminal case. However, according to the winning decision, this statute is not the proper mechanism for obtaining access to the recordings of cell phones’ location history.

On the other hand, according to the dissenting opinion, the Stored Communication Act authorizes Courts to order that the recorded history be handed over, provided that the government show specific and substantiated facts that such evidence (the recordings) is relevant to the ongoing investigation.

This United States Supreme Court case is relevant from the point of view of the constitutional interpretation of the right to privacy, especially concerning the treatment of data collected, processed, and stored by private companies.

Note that the matter is broader than the case tried by the USA Supreme Court, which was related to the telephony industry (cell phone companies). The issue of the privacy of personal information also has repercussions on financial institutions, credit card companies, digital payment services, e-commerce, and others. Hence the relevance of the theme, with effects to millions of people.

Artigo publicado no portal jurídico Migalhas Internacional em 18/07/2018.

The case of the data leak of Facebook’s platform, in the episode with the company Cambridge Analytica, with global impact in several countries, including Brazil, poses interesting questions in the context of comparative law, from an economic (the company’s economic value), political (elections), and legal (applicable regulation) perspective, examined below.

From an economic perspective, there is the impact on Facebook’s market value, which lost billions of dollars (through the devaluation of their shares) due to the illegal capture of data from users and non-users of the internet application. This fact also reflects on their business model, as well as the privacy policy and the degree to which the platform is open to application developers (Apps). In other words, the access to personal data on the Facebook platform by third-party companies that collect data through internet applications.

In the electoral realm, the case is related to the influence of Facebook’s digital platform on the elections in several countries, especially in the United States. The core issue is the possibility of manipulating public opinion, as well as the electorate’s vote, through social media campaign’s, including by spreading fake news. Thus, the matter is directly related to the risks of democracy, through campaigns to mislead the public’s opinion, as well as taking the truth out of context.

From a legal perspective, the case has implications on the regulatory model most appropriate to internet applications, such as Facebook, which is controlled by a technology company. The discussion revolves around the extent of state regulation, along with self-regulatory measures by the internet application provider itself.

Another legal aspect relates to the domestic laws of each country, examined below. In particular, the sectoral regulatory model for internet applications, as well as self-regulatory measures.

Thus, it is important to consider the greater context of the current regulations around the world on the protection of personal data, as well as the right of access to personal information by national authorities and foreign governments, in the cases allowed by law.

In February 2018, the United States passed the Cloud Act, which holds rules for the use of data collected overseas.

The United Kingdom, in its turn, passed the Data Protection Bill in January past, which legislates on the protection of personal data, with rules on the international transfer of data to other countries, as well as rules on data access by intelligence services.

This upcoming May, in the European Union, the Regulation of the European Parliament and Council on the protection of people and treatment of personal data will come into effect.

In Brazil, the Public Prosecutor’s Office of the Federal District has opened an investigation to verify if the personal data of Brazilians was unduly captured in the Facebook and Cambridge Analytica episode.

Brazil, however, unlike other countries, does not have a specific law on the protection of personal data; there is not even an agency to regulate this matter.

We will now examine the Facebook case (illegal collection of personal data), as well as it repercussion in different countries.

Artigo publicado no portal jurídico Migalhas Internacional em 11/04/2018.

This article presents a comparative analysis between jurisdiction in Brazil and in the USA in two relevant cases given their impact on internet application and technology companies.

On one hand, in Brazil, the technology companies that provide internet application services (such as Google, Facebook, Youtube, etc.) and have headquarters abroad, face issues regarding the interpretation of the Brazilian laws, especially as to the compliance with court orders to submit the contents of private communications stored in their servers.

On the other hand, in the USA, North American technology companies also face issues such as the requisitioning of email content from these service providers, whereas the content of the private communications are stored in servers abroad.

In Brazil, a Direct Motion of Unconstitutionality was filed before the Brazilian Supreme Court under number 51/2017, for the constitutional review of Decree No. 3810/2001 that enacted the Mutual Legal Assistance Treaty between Brazil and the United States, examined below.

In the USA, there is the case United States versus Microsoft, in progress before the USA Supreme Court. The case debates whether email services providers, which have the control over their users personal data, have the legal obligation to disclose the content of electronic communication, even if the material is stored in servers located outside of the USA.

The Federation of the Associations of Information Technology Companies (“ASSESPRO NACIONAL”) filed a declaratory motion of constitutionality (Adcon No. 51/2017 to have Federal Decree No. 3.810/2001 declared constitutional. This Federal Decree enacted the Mutual Legal Assistance Treaty in Criminal Procedures between Brazil and the United States of America.  Under this legal statute, a letter of request must be issued in cooperation processes between Brazilian and USA authorities in matters of criminal investigation, prosecution, and crime prevention.

According to the technology company association that filed the motion, many Brazilian courts are not applying the said Decree. That is why the Association filed the direct motion of constitutionality, as it is the proper legal instrument to review the constitutionality of the decree and, thus, its practical application by the Brazilian Courts. The only case in which the Decree should not apply is if it is found to be unconstitutional, which has not yet been declared by the Brazilian courts.

What is happening is that the technology companies with headquarters in the USA that provide internet application services (such as email, social media, digital advertising, etc.) in Brazil are being mandated by the courts to submit the contents of private communications between their users. If they fail to comply with such court orders, the internet application providers are held civilly liable, with the application of severe fines, and criminally liable for the crime of contempt of court.

They argue that internet application providers headquartered in the United States are subject to the laws of that country. In this regard, the laws of the USA impose strict limits to the delivery by internet application providers of the contents of private communications between their users (such as emails).

The argument presented in the case ADCON No. 51 is that, by failing to apply Decree No. 3810/2001, the Brazilian courts are violating the constitutional principles of sovereignty, confidentiality of private communication, the due process of law, equality, and free enterprise.

The Plaintiff also claims that the Brazilian Internet Regulatory Framework does not exclude the application of international treaties to which Brazil is party to. In the present case, the Mutual Legal Assistance Treaty, in the form of Decree No. 3810/2001, is deemed to be a formal law, as it has been received by the Brazilian legal system.

Facebook joined the action as amicus curiae (ADCON No. 51).  It claims that its activities are subject to the Electronic Communications Privacy Act.  This North American law forbids the disclosure of the content of private communications stored by the electronic communications services providers, notwithstanding the exceptions set in the law itself.

According to the company Facebook Brasil, it does not have managerial control over the data of the company Facebook Inc., based in the United States. Facebook Brasil only voluntarily provides information to Brazilian authorities in case of emergency (risk of death and/or severe bodily harm to a person). Therefore, Facebook Inc. is governed by the United States laws, as is headquartered in that country.

It also claims that the contents of private communications cannot be directly provided to Brazilian authorities, except with a court warrant issued by a U.S Court. According to the company, U.S law does not allow internet application providers to disclose the content of private communications directly due to a Brazilian court order, otherwise the company may be held liable for violation of the U.S law.

Another question is if it is possible to extend the application of Brazilian laws and the Brazilian jurisdiction to companies with headquarters abroad and, respectively, given the sovereignty of the foreign State.

In sum, the case portrayed in ADCON No. 51 is interesting as it deals with the constitutional principles of sovereignty, independence of States, international cooperation, principle of territoriality of jurisdiction, due process of law, and the rights to communication and to privacy of communication.

As for the United States of America, the case of United States V. Microsoft Corporation  is in progress before the American Supreme Court. This case regards the possibility of the United States government obtaining, through court orders, the contents of private communications, such as emails, stored in computers/servers/datacenters located outside of that country.

The original case refers to a drug-trafficking criminal investigation, in which the Government requested an order for Microsoft to disclose email information. Microsoft refused to deliver the content of the email, claiming that it changed the email storage location to Ireland, and that the Stored Communications Act cannot be applied outside of U.S territory.

Here is an excerpt from the original brief filed by Microsoft before the U.S Supreme Court: “Whether a United States provider of email services must comply with a probable-cause based warrant issued under 18 U.S.C 2703 by making disclosure in the United States of electronic communications within that provider’s control, even if the provider has decided to store that material abroad”. According to the U.S government, grounded on 18 US.C 2703, authorities from that county may require electronic communication providers to disclose the content of communications.

In contrast, Microsoft claims that the American law on electronic communications is applicable only to acts committed within U.S territory. It argues that the Stored Communication Act focuses on protecting the safety of private communications, hence the trust that users have that the electronic communications providers safely store the content of their communications in electronic servers.  It also claims that it offers services such as MSN, Hotmail, and Outlook, storing thousands of user emails in data centers located in over 40 countries.

According to Microsoft, the U.S. Congress did not signal that the Stored Communications Act should be applied outside of U.S territory. Thus, a order to copy and import communications stored in foreign territory is an illegal and extraterritorial application of the Stored Communications Act.

Also, according to Microsoft, the Stored Communications Act comprehends solely communications stored in the United States, as the focus of the statute is to protect electronic communications stored and avoid the disclosure of private communications. So, the focus on the disclosure of electronic communications is contrary to the original intent of the American legislators.

The conclusion: “For now, the presumption against extraterritoriality limits the SCA, and the warrant issued under it, to communications stored on U.S. soil”. Moreover, the U.S Congress may update the Stored Communications Act, considering the conflict between the application of the law and international relations with other countries, the privacy of citizens, and the competitiveness of the technological industry.

The European Union, the United Kingdom, New Zealand and Ireland have requested participation in the case United States x Microsoft by filing an amicus curiae brief.

So, as an illustration of the above, the European Union claims that the proper procedure would be to consider the internal laws of the European Community in relation to the protection of personal data, especially in relation to data stored in its territory. The European regulation contains specific rules on the transfer of personal data between countries, especially in relation to non-European countries.

The Brazilian NGO InternetLab, connected to Fundação Getúlio Vargas, filed a petition as amicus curiae in the United States v. Microsoft Corporation case . It claims that Brazil is one of the largest internet markets. U.S. technology companies such as Facebook, Youtube, Google, and Microsoft have millions of users in Brazil. It also claims that the Brazilian laws related to internet application providers is strictly enforced, despite the American electronic communications law that forbids the delivery of private communications content by electronic communications providers.

The NGO also alleged that the Mutual Legal Assistance Treaty between Brazil and the United States, in the form of Decree No. 3810/2011, is the best legal alternative to solve the conflict between the Brazilian and American laws and jurisdictions, and to apply the laws most appropriate to the case, respecting the sovereignty of each country, the due process of law, and the privacy of the users of internet applications.

Another argument presented by InternetLab is that the Internet Regulatory Framework prevents the disclosure of private communications, guaranteeing the users’ right to privacy. Thus, U.S technology companies cannot be forced to directly provide the contents of private communications without a court order from a U.S court.  The brief claims that the Brazilian Internet Regulatory Framework offers protection similar to the one purported by the United States Stored Communication Act.

Further, it claims that in the case of the Stored Communications Act (SCA), there is a conflict between two jurisdictions, so the court order has extraterritorial application.

Hence the question posed by InternetLab to the United States Supreme Court, as amicus curiae: “Whether a United States provider of email services must comply with a probable-cause-based warrant issued under 18 U.S.C § 2703 by making disclosure in the United States of electronic communications within that provider’s control, even if the provider has decided to store that material abroad”.

In this case, the application of two laws on electronic communications puts the internet application provider in a situation of conflict in light of different obligations in each jurisdiction: the United States and Brazil. Hence the need for a solution that grants legal certainty in the application of the law, given the conflict between international laws and jurisdictions, within the realm of the internet.

The conclusion: “This Court should affirm the judgment of the Second Circuit of Appeals and hold that the warrant issued to Microsoft in this matter was an improper extraterritorial application of 18 U.S.C §2703 (b) (1) (A)”.

It must be said that the importance of this case lies in the fact that the ruling by the United States Supreme Court may have repercussions in Brazil, specifically on internet application providers that operate herein, even if headquartered abroad.

It is our opinion that Brazil, within the realm of international cooperation between jurisdictions in a case relevant to internet applications, should also participate in the United States x Microsoft soft case as amicus curiae, such as the European Union, Ireland, and New Zealand have done, given the possible repercussion of the ruling of the United States Supreme Court on the interpretation of its law that will impact technology companies that operate globally.

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1 See STF (Brazilian Supreme Court), case Adcon 51, Plaintiff: Federação das Associações das Empresas Brasileiras de Tecnologia da Informação.

2 This is provided in the U.S Stored Communications Act (“SCA”), which forbids electronic communication providers operating under USA jurisdiction to disclose the communications of their respective users, notwithstanding the legal exceptions.

3 Supreme Court of the United States. United States of America v. Microsoft Corporation. On writ of certiorari to the second circuit Court of Appeals. Brief of InternetLab Law and Technology Center as amicus curiae in support of respondent.

4 See: 18 U.S. Code § 2703 – Required disclosure of customer communications or records. A governmental entity may require the disclosure by a provider of electronic communication service of the contents of a wire or electronic communication, that is in electronic storage in an electronic communications system for on hundred and eighty days or less, only pursuant to a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State Court), issued using State warrant procedures) by a court of competent jurisdiction. A governmental entity may require the disclosure by a provider of electronic communications services of the contents of a wire or electronic communication that has been in a electronic storage in an electronic communications system for more on hundred and eighty days by the means available under subsection (b) of this section”.

5 Supreme Court of the United States. United States of America v. Microsoft Corporation. On writ of certiorari to the second circuit Court of Appeals. Brief of InternetLab Law and Technology Center as amicus curiae in support of respondent.

6 Under this aspect of the U.S electronic communications statute, Google was sentenced to pay a fine of USD 8,5 million in a class action filed by users, under the argument that the provider violated the users’ right to privacy, before third parties.

Publicado no Portal Jurídico Migalhas em 02/02/2018

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