A Threat to or Protection of Agency Relationships? the Impact of the Computer Fraud and Abuse Act on Businesses

By Milanowski, Jessica | American University Business Law Review, January 3, 2015 | Go to article overview

A Threat to or Protection of Agency Relationships? the Impact of the Computer Fraud and Abuse Act on Businesses


Milanowski, Jessica, American University Business Law Review


INTRODUCTION

The Computer Fraud and Abuse Act of 1986 ("CFAA") criminalizes unauthorized access to confidential information stored on computers,1 and it is often applied to employer-employee trade secret disputes.2 However, today, the Seventh and Ninth Circuits are split concerning the proper interpretation for the terms "authorization" and "exceeds authorized access" as it pertains to employee use of an employer-provided computer within the context of the CFAA.3 The Seventh Circuit adopted a broad interpretation of the statute in International Airport Centers, LLC v. Citrin. The Court held that when the employee decided to quit in violation of his employment contract, he violated his fiduciary duty of loyalty, and therefore he no longer had authorization to use his work laptop.4

The Ninth Circuit and the Fourth Circuit have developed a correspondingly narrow reading in determining whether the CFAA applies only when an employee improperly accesses business information or also when an employee uses that information in pursuit of his own business and to the detriment of his employer.5 In United States v. Nosal, the Ninth Circuit upheld the employee's misuse of confidential information from the search firm's computer system as lawful.6 Similarly, the Fourth Circuit, in WEC Carolina Energy Solutions, LLC v. Miller, held that an employee does, not violate the CFAA when he downloads information to a personal computer, violates company policy, and subsequently uses that information to develop a competing business.7

This Comment will conduct a thorough exploration of the history of the CFAA, detailing the rationales of the opposing circuits, and addressing the theory of agency law and its application to the CFAA and cases concerning the statute.8 This Comment will then delve into a hypothetical scenario of an employee who searches through his employer's confidential files and trade secrets to build a competing business. It will subsequently apply each circuit's different rationales and approaches to the issue, which will result in different outcomes in what actions the employer can bring over her stolen information.9 The first result will be more employee-friendly, while the second result will be more employer-friendly. Finally, this Comment will recommend that the United States Supreme Court adopt the Ninth Circuit's broader interpretation of the CFAA. In the alternative, Congress could revamp the statute for clarification in the modem world or instead create a whole new piece of legislation that specifically addresses this technological issue, particularly in the employment context.

I. A Thorough exploration of the History of the CFAA and the Opposing Circuit Rationales

A. The Computer Fraud and Abuse Act

The CFAA criminalizes unauthorized access to information stored on computers, and it allows for those damaged by such unauthorized access to bring a civil suit against the abuser.10 The CFAA prohibits a person from "intentionally accessing] a computer without authorization" or "exceeding] authorized access," thereby obtaining "information" from a computer that is "used in or affecting interstate or foreign commerce."11 The CFAA's definition of "exceeds authorized access" is "to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser [s/c] is not entitled so to obtain or alter,"12 which is distinguished from the term, "without authorization."13 The CFAA provides that whoever knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization to a protected computer violates the Act.14 If one is found to have "exceeded authorized access" and violated the Act, the CFAA allows for the enforcement of criminal sanctions when additional aggravating factors are met,15 and it permits private parties who suffer "damage or loss by reason of a violation" to bring a claim for damages. …

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