New MD Ruling: Federal Act Ineffectual to Combat Employee Data Theft

Posted by Jeanine Gagliardi on Thu, 04/03/2014 - 04:00

What can an employer do when an employee takes data he is authorized to have for his job and misuses it for another purpose - maybe his own or someone else's business? We previously posted about a split in the law concerning the scope of a federal law intended to combat hackers - the Computer Fraud and Abuse Act (“CFAA”). The CFAA, primarily a criminal statute, also creates a civil cause of action against a person who accesses a computer system without proper authorization.

The split concerns how courts define "unauthorized access." Some courts interpret it to mean hacking into a computer system. Others allow that it includes misusing data from a computer system, even if the offender was technically authorized to access the data. Employers have tried to use the act to combat employees who take and then misuse company trade secrets. A new ruling from the Court of Appeals for the 4th Circuit, which includes Maryland and Virginia, establishes the law in those jurisdictions.

Maryland employers should be aware that the U.S. Court of Appeals for the 4th Circuit has taken the more narrow view. The court held that an employee’s misappropriation and misuse of data, which the employee was technically authorized to access, did not give rise to a claim under the CFAA. The court’s opinion is available online and, until the Supreme Court or Congress resolve the split, it states the law in Maryland and the rest of the 4th Circuit.

The 4th Circuit court’s decision does not mean that Maryland employees will be free from all liability for data theft and misuse. Traditional, state law claims are still available against the employee and, potentially, others who attempt to benefit from the data. For many of these claims, employee policies that govern access to, acquisition of, and use of company data are essential. That means assuring the company manual includes terms covering the disposition of data and trade secrets.

Our firm advises businesses in the creation of company policy and the investigation and prosecution of data theft claims. If you have any question about this or a related matter, please give us a call.

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