I imagine its not much of a surprise given the current environment in the states (as well as, to some extent, similar past rulings in the US). Wired reports arbitrary searches of electronics are OK:

Federal agents at the border do not need any reason to search through travelers’ laptops, cell phones or digital cameras for evidence of crimes, a federal appeals court ruled Monday, extending the government’s power to look through belongings like suitcases at the border to electronics.

Needless to say, consideration should be given to taking some steps to protect confidential or sensitive records that you would not want to be seized. And no, I don’t mean nudie pictures or the like, but things such as confidential information of your business, or that of third parties who have entrusted you with confidential information, or personal information. That being said, Wired also made this observation:

The 9th’s ruling did not, however, clarify whether a traveler has to help the government search his computer, by providing the login information, or what would happen when the government decided to search a laptop with encrypted data on the drive. The defendant in the case can appeal the decision to the U.S. Supreme Court, but the Court is unlikely to take up an issue that two separate appeals courts have agreed upon.

Alternatively, better to leave all sensitive data at the office and, if required, connect through a VPN, retrieve, then erase before crossing.

Well, at least we can thank our stars that the ruling doesn’t apply to “highly intrusive searches of the person”. Yet.

Update: The EFF has published an article on possible ways to minimize the risk of laptop searches. They point out that encryption might not be all that handy:

If, however, you don’t respond to CBP’s demands, the agency does have the authority to search, detain, and even prohibit you from entering the county. CBP has more authority to turn non-citizens away than it does to exclude U.S. persons from entering the country, but we don’t know how the agents are allowed to use this authority to execute searches or get access to password protected information. CBP also has the authority to seize your property at the border. Agents cannot seize anything they like (for example, your wedding ring), but we do not know what standards agents are told to follow to determine whether they can and should take your laptop but let you by.

Elaborating on my suggested approach, they point out the following:

Another option is to bring a clean laptop and get the information you need over the internet once you arrive at your destination, send your work product back, and then delete the data before returning to the United States. Historically, the Foreign Intelligence Surveillance Act (FISA) generally prohibited warrantless interception of this information exchange. However, the Protect America Act amended FISA so that surveillance of people reasonably believed to be located outside the United States no longer requires a warrant. Your email or telnet session can now be intercepted without a warrant. If all you are concerned about is keeping border agents from rummaging through your revealing vacation photos, you may not care. If you are dealing with trade secrets or confidential client data, an encrypted VPN is a better solution.

Anyway, worth a read if you do cross the border with sensitive information.

Another update: More advice from Bruce Schneier on how to deal with customs (both in the US and elsewhere) and also safeguard sensitive information. I particularly like this suggestion (which he offers after also suggesting the VPN approach that I mentioned above) though it does require a little white lie:

If you can’t [use a clean laptop and download via secure VPN], consider putting your sensitive data on a USB drive or even a camera memory card: even 16GB cards are reasonably priced these days. Encrypt it, of course, because it’s easy to lose something that small. Slip it in your pocket, and it’s likely to remain unnoticed even if the customs agent pokes through your laptop. If someone does discover it, you can try saying: “I don’t know what’s on there. My boss told me to give it to the head of the New York office.” If you’ve chosen a strong encryption password, you won’t care if he confiscates it.

Further update: US customs, presumably emboldened by the court’s decision, have published their official policy (PDF) describing arbitrary search. The good news is that the reaction, at least in some corners, is somewhat less than favourable. From a recent article in the Washington Post:

“The policies . . . are truly alarming,” said Sen. Russell Feingold (D-Wis.), who is probing the government’s border search practices. He said he intends to introduce legislation soon that would require reasonable suspicion for border searches, as well as prohibit profiling on race, religion or national origin.

There’s also some description of what the good folks at Customs would do, including treatment of privileged materials, etc. If you frequently travel to the US with sensitive business materials, you would do well to review the policy. I may post a summary at some point…

Also, another less than enthusiastic op-ed piece in USA Today.