9th Circuit Rules For Employers In Protecting Trade Secrets

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More often than not when a management law firm informs its clients of recent case developments, the news is not good. This is an exception.

The U.S. Court of Appeals for the 9th Circuit recently decided a case which offers significant assistance to employers’ efforts to protect their valuable trade secrets and confidential and proprietary company information from theft or misuse by employees, so long as employers do it correctly. U.S. v. Nosal.

Background

David Nosal was a former employee of Korn/Ferry, an executive search firm. Nosal resigned his employment and convinced certain employees who were still employed by Korn/Ferry to provide him with information from the company’s confidential Searcher database – considered by Korn/Ferry to be one of the most comprehensive databases of executive candidates in the world. Nosal was not authorized to access the Korn/Ferry database, and he did not do so. The currently employed individuals engaged by Nosal were authorized to access the Searcher database as part of their jobs, and they passed Searcher database information to Nosal.

An indictment followed, with the government claiming Nosal and his co-conspirators were criminally liable for violation of the Computer Fraud and Abuse Act (CFAA) which subjects to punishment under criminal statutes anyone who “knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value.” Note that CFAA also authorizes civil penalties for violations of its provisions.

Please see full alert below for more information.

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