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Appeals Court Upholds FTC’s Cybersecurity Oversight

August 27, 2015
David F. Katz

From Corporate Counsel, Aug. 26, 2015 

Atlanta partner David Katz was quoted in an article published in Corporate Counsel on Aug. 26, 2015, discussing this week’s case brought by Wyndham Worldwide Corp and its subsidiaries regarding the FTC’s ability to investigate companies that allegedly fail to sufficiently secure their networks against data breaches. The Third Circuit stopped the case, signaling that in-house counsel could still have the FTC’s oversight and potential liability to consider when it comes to data security. For corporate counsel, Katz points out that, “ …  there was a time when there may have been some sort of grace period, but the clock has run out on that,” as it relates to the FTC’s position on cybersecurity matters. “I think you have to be able to make a credible argument that the controls you have in place are consistent with best practices and consistent with nationally and internationally recognized data security standards,” Mr. Katz told the publication. He also pointed out that this case raises another issue for companies that may not have been considered previously: “the relationship between a franchisor and franchisee in the event of a cyber breach.” Katz notes that not all franchise agreements consider the possibility of a breach and advises that in-house counsel carefully review their existing agreements to evaluate potential liabilities. Subscribers to Corporate Counsel may read the complete article online here.