3rd Circuit rules company can seek injunction for ex-employee's hacking of computers

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Author: Lawyers Weekly USA Staff

Story Type: News

A company could pursue injunctive relief against a former employee who allegedly violated a federal criminal statute by accessing company computers in order to set up a competing business, the 3rd Circuit has ruled.

The plaintiff operated a chain of discount stores that sold party goods. The defendants, two of the plaintiff's former employees, started a competing chain of stores. The plaintiff alleged that one of the defendants, both before and after leaving the company, accessed the plaintiff's computers from home in order to obtain customer and marketing information helpful to the startup of his new business.

The plaintiff sued under Sect. 1030(a)(4) of the federal Computer Fraud and Abuse Act. The statute generally makes it a crime for a person to access another's computer without authorization in furtherance of a scheme to defraud. The plaintiff sought an injunction prohibiting the operation of the defendants' stores and the use of the plaintiff's proprietary information.

The defendants contended that the Act did not authorize the injunctive relief sought by the plaintiff.

But the court disagreed, relying on Sect. 1030(g) of the Act, which states: "Any person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief."

The court explained that "[a]lthough we acknowledge the criminal thrust of the section in general, as it is found in Title 18, there is ample authority for permitting civil actions to proceed based on violations of the section pursuant to the language of Sect. 1030(g)."

It noted similar decisions from the 9th Circuit and a U.S. District Court in New York.

The court nonetheless upheld a judgment in favor of the defendants, finding that the plaintiff had failed to show a violation of the Act in that there was no evidence that the defendants had actually obtained inappropriate information through unauthorized accessing of the plaintiff's computers.

P.C. Yonkers, Inc. v. Celebrations the Party and Seasonal Superstore, LLC (Lawyers Weekly USA No. 9932027) U.S. Court of Appeals, 3rd Circuit No. 04-4254. Nov. 7, 2005.

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