October 14, 2019

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European Court of Justice: Dynamic IP Addresses May Qualify as Personal Data

In a key decision, the European Court of Justice has ruled that dynamic IP addresses may qualify as personal data in certain circumstances—ending years of uncertainty about whether such fundamental building blocks of the internet qualify for protection under EU data protection laws.

The case of Patrick Breyer v. Bundesrepublik Deutschland started its life in the German courts. Mr. Breyer sought an injunction against websites operated by German federal ministries to stop them from registering and storing his Internet Protocol (IP) address. An IP address is a number assigned to each computer or other addressable device on the internet. Websites for the German ministries register and store the “dynamic” IP addresses of visitors to those sites for the purpose of preventing cyberattacks and to make it possible to bring criminal proceedings against individuals responsible for such attacks. A “dynamic” IP address is one that changes over time, sometimes changing with each individual session. Mr. Breyer's concern in bringing the case was that the German authorities would build up a picture of his interests, using his IP addresses to map his visits to the sites. The German Federal Court of Justice suspended the proceedings and referred the two following questions to the European Court of Justice (ECJ): (1) whether a dynamic IP address is personal data within the meaning of the EU Data Protection Directive, and (2) whether the German Telemedia Act was contrary to the EU Data Protection Directive because it did not allow the website operators to justify their legitimate interests in processing Mr. Breyer’s personal data.

The ECJ’s Decision

The principal ruling of the ECJ is that a dynamic IP address qualifies as personal data to the extent that the user's Internet Service Provider (ISP) has (and may provide) additional data that, together with the IP address, would enable the user to be identified. Crucially, the court found that the IP address constituted personal data on the grounds that a person could be indirectly identified from such IP address. Unlike “static” IP addresses, dynamic IP addresses do not enable a direct link to be established, by means of files accessible to the public, between a specific computer and the physical connection used by the ISP.

The ECJ also ruled that Sec. 15 of the German Telemedia Act was too restrictive, as it did not allow for a balancing of the website operator’s rights against the user’s rights and did not permit processing of the data to be justified by the legitimate interests of the website provider. The court decided that the German authorities might have a legitimate interest in ensuring the continued functioning of their websites and thus in storing personal data to protect themselves against cyberattacks.

The German Federal Data Protection Commissioner applauded the ECJ’s decision, stating that it removes years of uncertainty over dynamic IP addresses and creates clarity in light of the forthcoming General Data Protection Regulation (GDPR). She further stated that the German Telemedia Act will now need to be revised.

Implications

The ECJ did not state that dynamic IP addresses are automatically personal data processed by a website operator (an online media service provider), but could be deemed as such only if “. . . the latter has the legal means which enable it to identify the data subject with additional data which the internet service provider has about that person.” In many cases, the operator will want to maintain the possibility of checking the dynamic IP address against a list of malware or IP addresses of cyber attackers. In addition, the ruling may implicate the use of IP addresses for aggregate marketing analytics common on many ecommerce platforms where there is an ability to identify the data subject—even when a company is not currently using IP addresses in this manner. Accordingly, all businesses with websites in Europe will need to assess whether they collect and analyse the dynamic IP addresses of users. If they do, they will need to consider whether they are able to indirectly identify those users through legal channels. If so, then those businesses should consider what steps they need to take to comply with EU data protection law and balance the interest of the data subject with the interests of the provider to store the personal data (such as for the purposes of crime prevention).

The ECJ’s decision should be considered along with the European Commission’s new GDPR. The GDPR was adopted to strengthen and unify data protection for data subjects within the European Union, and it will come into effect on 25 May 2018. The concept of personal data under the GDPR expressly includes a person who can be identified by reference to an “online identifier”. As recital 30 of the GDPR states that such online identifiers include IP addresses, it was already suspected that IP addresses would generally qualify as personal data where they can be traced back to an individual. This decision puts the issue beyond doubt and therefore increases the urgency for businesses in preparing for the GDPR.

If businesses can avoid holding IP addresses, or restrict them in some way (such as by removing the final octet from the IP address and breaking the link to the user’s ISP), this may help them comply with the security requirements under the GDPR.

Copyright © 2019 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

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Pulina Whitaker, Morgan Lewis, labor and employment lawyer
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Pulina Whitaker’s practice encompasses both labor and employment matters as well as data privacy and cybersecurity. She manages employment and data privacy issues in sales and acquisitions, commercial outsourcings, and restructurings. Pulina provides day-to-day advisory support for multinationals on all employment issues, including the UK’s Modern Slavery Act and gender pay reporting requirements. She also advises on the full spectrum of data privacy issues, including preparing for the General Data Protection Regulation. Pulina has deep experience managing international...

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Matthew Howse, Employment law attorney, Morgan Lewis
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As practice group leader for Morgan Lewis’s labor and employment practice in London, Matthew Howse represents clients in the financial services, media, legal, and insurance industries in High Court and employment tribunal litigation. His experience includes employment law as well as privacy and cybersecurity law. In addition to litigating both contentious and noncontentious issues, Matthew provides strategic employment law advice and counsels clients on the employment law aspects of transactions.

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Lee Harding, employment and cybersecurity attorney, Morgan Lewis
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Lee Harding advises on employment and cybersecurity matters across a variety of sectors, with an emphasis in the financial services and technology industries, including FinTech. Lee regularly counsels clients in high-stakes crisis litigation and investigations, including in relation to complex disciplinary matters, cybersecurity breaches, class actions, and cases before the High Court of Justice in London that involve business competition issues. Lee’s practice also focuses on the cross-over between employment and regulatory issues under the UK’s Senior Managers and...

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