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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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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