In the recent case of United States v. Nosal, the United States Court of Appeals for the Ninth Circuit confirmed the applicability of both the Computer Fraud and Abuse Act and the Economic Espionage Act as safeguards against theft of trade secrets by departed former employees. Importantly, Nosal applied such laws to convict a former employee in a case involving domestic businesses and personnel without any alleged overseas connections. Because of civil enforcement provisions in the CFAA itself and the recently enacted Defend Trade Secrets Act, Nosal represents a possible guide to employers seeking to … Continue Reading
On March 20, 2015, a California federal court rejected an expansive reading of the Computer Fraud and Abuse Act (“CFAA”) urged by two plaintiff corporations that sought to hold a competitor and two of its directors liable under the CFAA, under an agency theory, for the actions of a former employee who allegedly downloaded and stole the corporations’ confidential trade secrets.
The plaintiffs, Koninklijke Philips N.V. and Philips Lumileds Lighting Company (“Lumileds”) are engaged in the business of Light Emitting Diode (“LED”) technology. They alleged that Dr. Gangyi Chen, while employed, downloaded Lumileds’ trade secrets and confidential business information onto … Continue Reading
On November 13, 2013, my partner Jim Goodman and I presented a national webinar discussing recent developments in Trade Secrets and Non-Competes. In that webinar, I discussed the split in the Circuits’ interpretation of the Computer Fraud and Abuse Act (CFAA). (Access to the recording and presentation is by request only.) I have also blogged on the most recent case that had been decided in the District of Massachusetts dealing with the interpretation of the CFAA, Advanced Micro Devices, Inc. v. Robert Feldstein, C.A. No. 13-40007-TSH, 2013 U.S. Dist. LEXIS 81206 (D. Mass. Jun. 10, 2013).
The … Continue Reading
A California legislator recently introduced two bills in Congress which, if passed, could have profound effects for companies seeking to pursue claims relating to trade secrets and confidential information – one bill would create a new private right of action under federal law for trade secret theft, while the other bill would appear to limit plaintiffs’ abilities to pursue existing remedies for computer fraud and abuse.
In its current form, the Economic Espionage Act allows only federal prosecutors to bring criminal trade secrets charges against persons who have stolen trade secrets. On June 20, 2013, however, Representative Zoe Lofgren (a … Continue Reading
In a recent case, the United States District Court for the District of Massachusetts issued the latest opinion regarding whether former employees violated the Computer Fraud and Abuse Act (“CFAA” or the “Act”) before they joined a competitor by downloading electronic information without authorized access. The CFAA, 18 U.S.C. §1030, makes it unlawful to take information from a protected computer of an employer by unlawful means.
In Advanced Micro Devices, Inc. v. Robert Feldstein, et al., USDC (D.Mass.), Civil Action No. 13-40007-TSH, decided on June 10, 2013, the Court adopted the “narrow view” in interpreting the CFAA, ruling that … Continue Reading
Practitioners in the area of trade secret protection and employee mobility law are still trying to sort out the impact of a federal court jury verdict in San Francisco last month finding former Korn Ferry executive David Nosal guilty of two criminal counts stemming from his alleged misappropriation of the Company’s proprietary information after his departure. The long-running legal saga of Mr. Nosal, whose name is undoubtedly destined to become synonymous with several critical issues related to computer law, has been the subject of a previous post on our Trade Secret and Non-Compete blog. In short, following a script … Continue Reading
Common scenario: Employee plans to resign from employer and join competitor. Prior to resigning, employee uses his company computer to access confidential and proprietary information and then sends the information to his personal e-mail account to use for the benefit of his new employer. Employer sues former employee for misappropriation and other state law claims, and seeks federal jurisdiction by asserting a claim under the Computer Fraud and Abuse Act (“CFAA”).
Dilemma: Does CFAA state a claim when the employee had permission to “access” the computer and company documents, but not “use” it for an improper purpose such … Continue Reading
Earlier this year, Aon Risk Services Northeast Inc. (“Aon”) brought suit in the United States District Court for the Southern District of New York against Marsh USA Inc., Marsh & McLennan Companies, Inc. (together, “Marsh”), and three former employees. In its Amended Complaint, Aon asserted that the defendants transferred a “pre-packaged book of business” to Marsh, primarily by the former employees’ “illegal downloading of Aon proprietary trade secret information.” Aon asserted a claim under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. §1030, against the three former employees, and asserted nine common law claims, including misappropriation of trade … Continue Reading
On January 14, 2010, Berkeley HeartLab, Inc. filed suit against Health Diagnostic Laboratory, Inc., and several former employees for trade secret violations and breach of contract. The suit was filed two weeks after a mass departure in which five sales representatives resigned from Berkeley.
Berkeley claims that in October 2008 a former Senior Vice President founded Health Diagnostic in Richmond, Virginia with the alleged intent to compete with Berkeley by providing diagnostic clinical tests that target cardiovascular disease and disease management similar to Berkeley’s clinical programs. On January 1, 2010, five sales representatives resigned from Berkeley within thirty minutes of … Continue Reading
This week the Ninth Circuit Court of Appeals issued a published opinion rejecting an employer’s argument that its former employee violated the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, when he emailed company client lists and financial data to himself for personal use. LVRC Holdings LLC v. Brekka, ___ F.3d ___, 2009 WL 2928952 (9th Cir. 2009).
The Seventh Circuit reached the opposite conclusion in International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006), reasoning that when an employee breaches his duty of loyalty to the employer, the agency relationship terminates and the employee … Continue Reading
Employers looking to protect their intellectual property and proprietary information, and wondering whether they can punish the departing employees that ignore demands to return laptops and other transportable electronic devices that hold such data, may now have a newly invigorated weapon at their disposal — the Computer Fraud and Abuse Act. A recent federal district court decision found that an employer establishes the required “loss” and “damage” elements of a CFAA claim against a former employee by showing that such employees “refused to return their computers” when requested, that such employees “deleted information from their computers,” and that the employer … Continue Reading