Articles Posted in Trade Secrets

  • A former employee will violate the computer fraud and abuse act only by having unauthorized access to data, not by using data for an unauthorized purpose.

  • Former owners or employees that access computer systems after termination may be liable under the Computer Fraud and Abuse Act.

  • A federal claim based on the unauthorized use of data will likely no longer support a federal claim in a business divorce litigation.


So much impact from such a little word.  The U.S. Supreme Court, resolving a split among the circuit courts, imposed significant limits on the reach of the Computer Fraud and Abuse Act (CFAA), severely restricting its usefulness as a tool to pursue unfaithful former employees and owners.cyberspace-2784907_1920-1024x683

The significance of the decision– which as discussed below turned on the construction of the work “so” in the statute’s definitions – in business divorce cases is that it will limit the ability of litigants to employ the statute as redress for some types of conduct and deprive a plaintiff in some cases of access to federal courts.  (For the linquists and grammarians, the parsing of “so” is in the opinion, here.) Continue reading

  • An executive with national responsibilities may be subjected to a broad geographic restriction in an employment restrictive covenant.

  • Courts can and will enjoin a former executive from working for a competitor to prevent irreparable harm to the executive’s former employer when the restriction is reasonable.

  • Misappropriation and use of a company’s trade secrets by a former employee may also prevent an employee who has copied information from working for a competitor


A federal district court judge in New Jersey imposed a preliminary injunction that will prohibit a former executive from working for a competitor for at least a year.  The decision was based on both the existence of a restrictive covenant and the departing executive’s having copied data from his prior employer at the time of his departure.sunbelt

Resignation by Executive to Work for Competitor

The case,  Sunbelt Rentals, Inc. v. Love (opinion here) is particularly notable as a lesson in how not to resign a high-level position.  Because even if the trial judge had not enforced the restrictive covenant in the executive’s employment contract, the fact that he copied proprietary information by emailing customer lists and other data to his brother before his resignation doomed any defense to the preliminary injunction. Continue reading

Contact Information