Wednesday, September 14, 2011

Computer Fraud and Abuse Act claim alleged with sufficient particularity

MOBILE MARK, INC. v. PAKOSZ, Dist. Court, ND Illinois 2011

Procedure: Defendant's Motion to Dismiss Plaintiff's Computer Fraud and Abuse Claim is denied

Background: Plaintiff, a designer and seller of commercial antenna products, sued one of its former engineers, Defendants, for violation of the federal Computer Fraud and Abuse Act ("CFAA") and other statutes (this blog focuses on federal internet law).In brief, the amended complaint alleges that, before leaving Plaintiff to work for Hascall-Denke, Pakosz accessed Plaintiff's computer system and copied proprietary information to a laptop that Plaintiff had loaned him. Pakosz allegedly transferred the proprietary data to a number of external storage devices, and then installed and repeatedly ran a "Window Washer" program on the laptop to delete files and other data in order to conceal his activities. According to Plaintiff, Pakosz turned its trade secrets over to Hascall-Denke, which used the information to manufacture knock-off versions of Plaintiff's antennas.
Rule: "To state a civil claim for violation of the CFAA, a plaintiff must allege: 1) dama ge or loss; 2) caused by; 3) a violation of one of the substantive provisions set forth in § 1030(a); and 4) conduct involving one of the factors in § 1030(c)(4)(A)(i)(I)-(V)." Cassetica Software, Inc. v. Computer Sciences Corp., No. 09 C 0003, 2009 WL 1703015, at *3 (N.D. Ill. June 18, 2009)

First, defendants object that "Mobile Mark has not alleged any particular file or document that Pakosz allegedly accessed without authorization." They also argue that Mobile Mark has failed to allege that Pakosz lacked permission to copy or transfer files to his Mobile-Mark laptop Defendants are incorrect in assuming that Plaintiff's CFAA claim must be set forth with such particularity. The complaint provides defendants with ample notice of the basis for Mobile Mark's CFAA claim.
Defendants also argue that Count II must be dismissed because Mobile Mark has failed to allege that the files on which the claim is based "involved interstate commerce."  The portion of the CFAA on which Plaintiff relies simply does not require any showing that the files at issue had anything to do with interstate commerce
Finally, Defendant argues that Plaintiffs fails to allege that it suffered any loss in connection with Pakosz's alleged activity.  Plaintiff asserts that it was forced to perform a forensic computer analysis in order to investigate Pakosz's alleged wrongdoing, and that it lost more than $5,000 due to Pakosz's improper use of its data. Further, Plaintiff alleges that, as a result of defendants' actions, it has suffered a loss of "customers, goodwill, sales, and business opportunities." In short, the allegations in Mobile Mark's complaint are not deficient in any of the respects asserted by defendants.
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