Shrinking Prospects for Private Trade Secret Actions Under the CFAA

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The Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030, was enacted in 1984 as a criminal statute, but was subsequently amended in the 1990s to allow for private causes of action for damage to a “protected computer.” As confidential information today is largely stored electronically, companies have increasingly turned to the CFAA in litigating the misappropriation of proprietary information.

For a variety of reasons, a CFAA claim may be a desirable supplement or even alternative to a trade secret action. Trade secret actions arise under state law, so absent diversity, a plaintiff is confined to state court. The CFAA, however, confers federal subject matter jurisdiction, enabling the suit to proceed in federal court. And, the complained-of conduct may not qualify for a trade secret action, which typically requires that misappropriated information be confidential and well-guarded. The CFAA, in contrast, merely specifies the taking of “information,” an easier hurdle to clear for a plaintiff that may not be able to show strict confidentiality. However, while the CFAA has historically been a fruitful course for many trade secret plaintiffs, courts are increasingly limiting its application in trade secret cases.

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