Federal Court Rejects Employer's Trade Secret And Computer Fraud And Abuse Act Claims

An ex-employee's former employer sued him for alleged violations of the Kansas Uniform Trade Secrets Act (KUTSA) and the federal Computer Fraud and Abuse Act (CFAA). The first claim was based on the company's hunch that he had misappropriated trade secrets and thereby breached his non-disclosure agreement. Two forensic experts were paid $38,000 to examine the computers and flash drives he had used, looking for evidence that he had used or disclosed confidential information. The second claim centered on his admission that, shortly before resigning from the company, he had read a top-secret file which was, but should not have been, accessible to employees. He moved for summary judgment on both claims. The court granted the motion, holding that (a) payments to the experts did not satisfy the KUTSA requirement of showing an "actual loss caused by misappropriation" (K.S.A. 60-3322(a)), and (b) he was authorized to access the company's shared files and, therefore, he did not violate the CFAA. Tank Connection, LLC v. Haight, No. 6:13-cv-01392-JTM (D. Kan., Feb. 5, 2016) (Marten, C.J.).

Summary of the case. Haight was International Sales Manager of Tank Connection, a manufacturer of large storage tanks. He signed a confidentiality agreement (but not a non-compete). With the company's consent, he downloaded confidential information onto the laptop and flash drives provided to him by the company. However, he also downloaded company data onto his own flash drives. Further, he reviewed — but did not copy — the company's president's confidential computer file. Following his resignation, he returned the company's laptop and what he asserted were all of its flash drives. Further, he insisted that he had neither disclosed the company's secrets to his new employer nor used the information, and that he had deleted all of Tank Connection's data from his personal flash drives. Concluding that Tank Connection had produced no evidence contrary to his disavowal of trade secret misappropriation, and that reading the shared file was not a violation of the CFAA, the court entered judgment for Haight.

Why the claim of trade secret misappropriation failed.

Tank Connection's expert witnesses determined that, shortly before Haight's resignation, he accessed the company's server and transferred to the company's laptop and flash drives, and to his own flash drives, a lot of confidential information. The company contended that "harvesting" of that data circumstantially...