It’s Easier for Employers to Sue for Data Theft

Two new developments this past year have made it easier for employers to sue employees in federal court for stealing data from company computers. The most recent is the U.S. Court of Appeals for the Ninth Circuit’s July decision in U.S. v. Nosal interpreting what it means to access a company computer “without authorization” under the Computer Fraud and Abuse Act (CFAA), the federal computer criminal statute. 18 U.S.C. 1030. The other development is the May amendment to the Economic Espionage Act (EEA), the federal criminal trade secrets act, permitting companies to file a federal civil action against individuals who steal the company’s competitively sensitive data. 18 U.S.C. 1831, et. seq.

‘Cannibal Cop’ Decision Restrains Employers

In December, a divided panel of the U.S. Court of Appeals for the Second Circuit in U.S. v. Valle interpreted the Computer Fraud and Abuse Act to exclude employees who access their employer’s computers. The upshot is that if you are an employee in the Second Circuit and steal data from your employer to commit identity theft or to provide it to a competitor, you cannot be prosecuted by the Department of Justice or sued by your employer under the CFAA.

Time Is Precious with Computer-Hacking Claims

A recent ruling shows that plaintiffs must act fast when using a federal criminal statute for a civil suit.

The U.S. Court of Appeals for the Second Circuit in August addressed the proper application of the statute of limitations to a civil action—in the context of allegations of malicious statements made on the Internet over a broken romance and sexual misconduct—brought under the federal computer crime statute, the Computer Fraud and Abuse Act (CFAA). The case was Sewell v. Bernardin.

How To Make Computer Fraud Claims Stick

The recent decision in Allied Portables v. Youmans from the U.S. District Court for the Middle District of Florida underscores the need for businesses to establish explicit, well-advertised written policies identifying the scope of permissible employee access to company computers. Absent such policies, employers may be precluded from using the civil remedy in the federal computer crime statute, the Computer Fraud and Abuse Act, to sue employees who steal or destroy data from a company computers.

Allied properly recognized that for a CFAA claim to succeed, the plaintiff employer must be able to show the critical element that the defendant employee accessed a company computer by exceeding the authorized access to the computer.

Common Flaws in Computer Fraud Class Actions: Lawsuits claiming unauthorized use of smartphone tracking technology are lacking key elements.

A number of class actions have recently been filed in federal district courts, predicated, in part, on alleged violations of the federal computer crime statute, the Computer Fraud and Abuse Act, complaining of tracking software placed on iPhone and Android devices and unwanted text messages. Decisions in these cases have implications for filing a valid CFAA civil action.

A Weapon Against Hackers on the Home Front

Although headlines have focused on foreign cyberattacks, plenty are U.S.-based—and can be remedied. Over the past year the national press has repeatedly reported on the vulner­ability of our  intellectual property to nation-state hackers like China, which have reportedly accessed and stolen highly con­fidential data by entering computer systems through public websites. Lost in the headlines… Read More

The Conflicting Rulings on Employee Data Theft

In all jurisdictions the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. 1030, the federal computer crime statute, applies to former employees who steal data from the company computer, but in two federal circuits it does not apply when the theft occurs during employment. The difference in jurisdictions is significant to employers because the CFAA provides a civil remedy for damages and injunctive relief for a company that “suffers damage or loss” by reason of a violation of the CFAA. 18 U.S.C. 1030(g).
Last year the U.S. Court of Appeals for the Ninth Circuit in U.S. v. Nosal, 676 F.3d 854 (9th Cir. 2012), disagreed with certain of its sister circuits and narrowly interpret-ed what it means to access the company computer “without authorization,” effec-tively eliminating a company’s ability in that jurisdiction to use the CFAA against current employees. This column will review the conflicting interpretations of the CFAA that distinguishes between current and former employees and the strategies and options companies can employ to navigate this conflict.

The 9th Circuit: Employees Are Free to Steal from the Company Computers

Yesterday the 9th Circuit Court of Appeals issued an opinion holding that limiting an employee’s access to the company computers solely for business purposes, i.e. not stealing the data for a competitor, cannot be the predicate for a violation of the federal computer crime statute, the Computer Fraud and Abuse Act (“CFAA”), Title 18, U.S. C. § 1030. U.S. v. Nosal, 2012 WL 1176119 (9th Cir. April 10, 2012). The CFAA makes it a crime in various instances to access a computer “without authorization” or to have “exceeded authorized access” to obtain information from the computer and permits those, including companies, who are victims of violations of the statute to bring a civil action against the perpetrators. Acknowledging that its decision conflicts with the 5th, 7th and 11th Circuits, there is a good chance the Supreme Court will have the final say on this issue if the Department of Justice decides to appeal. As the dissent pointed out, this decision is counter to the common sense notion that a “bank teller is entitled to access a bank’s money for legitimate purposes, but not to take the bank’s money for himself.”

How To Prove “Loss” for Computer Fraud and Abuse Act

To bring a civil action based on the federal Computer Fraud and Abuse Act (“CFAA”) a plaintiff must show that the alleged violation “caused . . . loss . . . aggregating at least $5,000 in value.” 18 U.S. C. Section 1030(c)(4)(A)(i). “Loss” is defined by the CFAA as “any reasonable cost to any victim,… Read More