Noncompete News: Ninth Circuit Holds Employee Data Theft is Not Punishable Under the CFAA After All

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Executive Summary: In its much anticipated en banc decision, the Ninth Circuit refused to extend the Computer Fraud and Abuse Act ("CFAA") to employee data theft in United States v. Nosal. The Court declined to "transform the CFAA from an anti-hacking statute into an expansive misappropriation statute." This 9-2 decision reverses an earlier 3-judge panel decision and is at odds with other circuits (including the Fifth, Seventh, and Eleventh Circuits).

Background: The case involves former employee David Nosal who worked for Korn/Ferry, an executive search firm. He was charged with 20 criminal counts including trade secret theft, mail fraud, and violations of the CFAA. In the CFAA counts, the Government alleged that Nosal aided and abetted other Korn/Ferry employees to improperly download a confidential database and wrongfully transfer the information to Nosal so he could start a competing business.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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