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Data Sharing Agreement

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A data sharing agreement (DSA) is a lawfully binding contract between two or more companies that oversees data use, sharing, and protection. In addition, the agreement summarizes the terms and conditions of how data will be gathered, stored, transmitted, and deleted. It also determines the parties involved, the types of data to be transferred, and the objective for which the data will be used.

Key Elements of a Data Processing Agreement

A data processing agreement (DPA) is an additional document often appended to the main contract between a data controller and a service provider. While each data processing agreement must comply with applicable regulations, it generally incorporates common elements as follows:

  • Limitations on Data Nature and Usage

    Data processing agreements incorporate accountability, responsibility, and consent principles into all data processing operations. Data processing agreements safeguard personal data by establishing a legal framework for data processors to follow. The framework covers data subjects, including end-users, customers, employees, contractors, or vendors.

    Additionally, data processing agreements require transparency regarding the data's subject matter, processing nature, and duration. Data processing agreements narrow down the categories of personal or customer data that may be processed, such as contact information, addresses, or necessary data. Furthermore, data subjects have the right to request their stored data, which data processors must address promptly and sincerely.

  • Data Privacy Measures

    Privacy is a delicate issue; people may unintentionally breach it while working with personal data. A good DPA must clearly define privacy protection expectations for all stakeholders. Attention to detail is significant in a data processing agreement. In cases where personal data processing poses high risks to natural persons' rights, GDPR mandates that data controllers conduct a data protection impact assessment.

    They must consult data protection officers and supervisory authorities. Data processing agreements ensure that data processors and sub-processors provide adequate assistance during assessments and consultations.

  • Data Security Measures

    Data processing agreements must translate legal requirements into concrete actions by defining the organizational and security measures controllers, processors, and sub-processors and must implement and monitor them. Organizational measures include defining roles and responsibilities, reporting hierarchy, and appointing a data protection officer or equivalent.

    Data processing agreements recommend information security measures such as data anonymisation, strong authentication and authorisation policies, data encryption, maintaining processing activity records, and conducting regular risk assessments. Data processing agreements also require processors and sub-processors to hold general and industry-specific certifications.

  • Data Retention Policies

    Negligence is a common cause of data breaches. Personal data can accumulate over time without proper storage and monitoring policies, risking exposure to malicious actors. Data processing agreements preempt this by outlining storage, retention, deletion, and monitoring policies. GDPR grants data subjects the right to request the deletion of their data, which Data processing agreements ensure data processors comply with.

  • Data Breach Reporting

    A personal data breach is a security breach that results in unauthorized access, loss, alteration, or disclosure of personal data. Data processing agreements ensure that affected data processors notify the data controller promptly, who, in turn, informs the affected data subjects and data protection authorities.

  • Data Transfer and Residency Policies

    Data transfers and residency have become contentious issues in many countries due to citizens' rights protection, geopolitical strategies, and national security goals. Data processing agreements provide a legal basis for data flows between data exporters and importers, ensuring compliance with residency and transfer laws. For instance, GDPR's standard contractual clauses protect personal data sent outside the European Economic Area to the same extent as GDPR within the EEA.

  • Non-Compliance Penalties

    Data processing agreements specify penalties, fines, compensations, and legal remedies for data processors or sub-processors that fail to comply with data privacy and protection laws. For example, GDPR authorizes supervisory authorities to impose fines of up to 20 million euros or 4% of an entity's annual turnover. Data processing agreements define penalties according to an entity's responsibilities to avoid or forward them to responsible sub-processors.

Importance of Data Sharing Agreements

There are various reasons why data sharing agreements are important:

  • Risk Management: Defining the terms and conditions of data sharing in the agreement can help organizations manage risks associated with data misuse, mishandling, unauthorized access, accidental loss or destruction, and breaches of confidentiality.
  • Legal Compliance: Organizations may need to comply with legal requirements like the General Data Protection Regulation (GDPR) or the Health Insurance Portability and Accountability Act (HIPAA) based on the shared data type. Data sharing agreements guarantee compliance with such regulations.
  • Trust and Transparency: Data sharing agreements promote trust and transparency between organizations by outlining how data will be used and protected, building trust with customers and stakeholders.
  • Operational Efficiency: A well-crafted Data sharing agreement can enhance the efficiency of the Data sharing process between organizations, saving time, reducing costs, and improving overall operational efficiency.
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How to Create a Data Sharing Agreement

Drafting a Data sharing agreement requires careful planning and consideration. Here are some important steps to follow:

  1. Identify the Parties Involved: The first step is to identify the organizations involved in the Data sharing agreement, including any third-party organizations involved in the collection, storage, or processing of data.
  2. Define the Purpose and Scope: Clearly define the purpose and scope of the data sharing agreement, identifying the types of data to be shared, the intended purpose, and any limitations or restrictions on data usage.
  3. Define the Data: Clearly define the types of data to be shared, including personal or sensitive data and data subject to legal or regulatory requirements.
  4. Outline Data Protection Measures: The agreement should outline the measures taken to protect the data, such as technical and organizational measures like encryption, access controls, and employee training.
  5. Define Data Retention and Destruction Policies: Clearly define the policies for data retention and destruction, including how long the data will be retained, who will be responsible for its destruction, and how it will be securely destroyed.
  6. Establish Accountability: The agreement should establish clear lines of accountability for data protection and compliance, identifying each organization's roles and responsibilities.
  7. Review and Update: Regularly update Data sharing agreements to remain current and effective.

Key Terms for Data Sharing Agreements

  • Purpose: The reason why data is being shared between the Data Provider and the Data Recipient.
  • Data Processing: Any operation or set of operations performed on personal data, such as collection, recording, storage, adaptation, or alteration.
  • Data Retention: The duration during which the Data Recipient stores personal data.
  • Data Protection: Measures taken to ensure personal data's confidentiality, integrity, and availability.

Final Thoughts on Data Sharing Agreements

A data sharing agreement is an important document that outlines the terms and conditions of sharing data between parties. This agreement provides a clear understanding of the data being shared, the objective for which it will be used, and the restrictions of its use. It also establishes data privacy and protection guidelines, such as access controls, encryption, and data anonymization.

In addition, data sharing agreements are essential for promoting innovation and collaboration in different fields, including healthcare, research, and business. By transferring data, parties can accelerate scientific discoveries, develop new services and products, and improve the quality of care for patients. However, it is significant to guarantee that data sharing is performed ethically and legally and that the rights and privacy of people are respected.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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