Who won this case: Ex-employee brings confidential data to a competitor
Filed under: Document retention, Employee computer use, In this week's e-newsletter, Latest News & Views
An employee leaves a company to go for a competitor. On his way out the door, he copies a boatload of confidential computer files and uses them in his new job. Can the original employee sue him? Read the facts and decide: Who won this case?
The facts: An employee quit a job at one company to go work for a competitor. Before he left, he copied a bunch of computer files, including a database of the company’s clients. At his new job, he used that information to turn some of those clients into customers for the competitor.
The employer said: Copying the database violated the Computer Fraud and Abuse Act (CFAA). The company lost business when the employee used information he was no longer authorized to access to help a competitor gain an unfair advantage.
Who won? The employee.
Why: The company had no basis for suing under CFAA, since that law requires a plaintiff to show it suffered a financial loss and that the violation caused actual damage to the company’s information system. It met the first requirement because of the customers it lost, but the computer system remained in tact, so the company had no claim.
(Note: The company can still try to sue in state court, because the employee broke a non-compete agreement he had signed. But the court in this case had no jurisdiction over that claim.)
While the human element will always be hard to control, IT departments can take steps to try and prevent these kinds of problems before a court visit becomes necessary. That includes:
- Limiting access to certain files to just those employees that really need them
- Disabling CD writers and USB ports, if employees have no business use for them, and
- Tightening those precautions once it’s known an employee is leaving the company
Comments
2 Comments on Who won this case: Ex-employee brings confidential data to a competitor
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debra on
Thu, 8th May 2008 7:01 pm
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Sam Narisi on
Fri, 9th May 2008 10:12 am
Then what good is a non-compete agreement?
Debra,
This company will still have a good chance of taking the employee to court for breaking the non-compete. This particular case involved a federal law (CFAA) in a federal court, whereas non-compete claims are handled usually in state courts.
So the non-compete can potentially do the company some good in this case.
