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United States v. Nosal - 844 F.3d 1024 (9th Cir. 2016)

Rule:

The Computer Fraud and Abuse Act imposes criminal penalties on whoever knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value. 18 U.S.C.S. § 1030(a)(4)

Facts:

Nosal was a high-level regional director at the global executive search firm Korn/Ferry International. Korn/Ferry's bread and butter was identifying and recommending potential candidates for corporate positions. In 2004, after being passed over for a promotion, Nosal announced his intention to leave Korn/Ferry. Negotiations ensued and Nosal agreed to stay on for an additional year as a contractor to finish a handful of open searches, subject to a blanket non-competition agreement. During this interim period, Nosal was very busy, secretly launching his own search firm along with other Korn/Ferry employees, including Christian, Jacobson and FH. The start-up company was missing Korn/Ferry's core asset: "Searcher," an internal database of information on over one million executives, including contact information, employment history, salaries, biographies and resumes, all compiled since 1995. Searcher was central to Korn/Ferry's work for clients. Searcher was hosted on the company's internal computer network and was considered confidential and for use only in Korn/Ferry business. Nosal and his compatriots downloaded information and source lists from Searcher in preparation to launch the new competitor. Before leaving Korn/Ferry, they used their own usernames and passwords, compiling proprietary Korn/Ferry data in violation of Korn/Ferry's computer use policy. In March 2005, Korn/Ferry received an email from an unidentified person advising that Nosal was conducting his own business in violation of his non-compete agreement. The company launched an investigation and, in July 2005, contacted government authorities.

Issue:

Was Nosal's Computer Fraud and Abuse Act conviction proper?

Answer:

Yes

Conclusion:

The Court of Appeals for the Ninth Circuit held that Nosal's Computer Fraud and Abuse Act conviction was proper because a jury was properly told using a victim's employee's credentials to access computers was "without authorization," under 18 U.S.C.S. § 1030(a)(4), and he knew co-conspirators did this. His Economic Espionage Act conviction under 18 U.S.C.S. § 1832(a) was proper because a database that Nosal accessed was a trade secret despite its public information, he knew it was a trade secret and stealing it would harm the victim, and an instruction not requiring trade secret proof did not constructively amend the indictment. A restitution order erred because, while it did not have to match the sum used for U.S. Sentencing Guidelines Manual § 2B1.1(b), as 18 U.S.C.S. § 3663A(a)(1) mandated restitution despite other laws, a victim's attorneys' fee award was excessive, as too much arose from answering inquiries.

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