United States: Guilty Verdict In Critical Computer Fraud And Abuse Act Trial

After a two-week trial before United States District Court Judge Edward Chen of the Northern District of California, David Nosal—the named defendant in the seminal Ninth Circuit case, United States v. Nosal—was convicted of three counts of violating the Computer Fraud and Abuse Act ("CFAA").1 Mr. Nosal's conviction demonstrates that, despite the Ninth Circuit's narrow interpretation of the "exceeds unauthorized access" element of the CFAA, the CFAA is still a useful tool to prevent trade secret misuse.

CFAA Allegations Against Nosal

Mr. Nosal's road to trial neatly illustrates the shifting scope of the CFAA. The CFAA imposes both criminal and civil liability on a person who "intentionally accesses a computer without authorization" or "exceeds authorized access" in using a computer, thereby obtaining "information" from a computer that is "used in or affecting interstate or foreign commerce."2 The CFAA is often used in civil litigation as a tool in combination with state law trade secret claims to prevent the misuse of trade secrets and to obtain federal court jurisdiction over such a dispute.

In 2004, Mr. Nosal left the executive search firm Korn/Ferry International and was found to have persuaded current and former employees of the firm to download confidential information from the company's computers and transfer the information to Mr. Nosal to help him start a competing business. After an investigation of Mr. Nosal's conduct that stemmed from an email from Mr. Nosal intercepted by the FBI, he and some of the employees who assisted him in the transfer of information were indicted. The indictment against Mr. Nosal alleged two categories of CFAA violations. Counts 2 and 4-7 alleged that current employees of Korn/Ferry accessed the company's internal database and disclosed competitively sensitive information to Mr. Nosal (the "Insider Counts"). Counts 3 and 8-9 alleged that former employees of Korn/Ferry, including Becky Christian, used a current employee's password to access Korn/Ferry's "Searcher" database and provide Mr. Nosal with confidential source lists (the "Outsider Counts"). The government brought a total of eight criminal counts against Mr. Nosal under the CFAA, accusing him of "aiding and abetting the Korn/Ferry employees in 'exceed[ing] authorized access with intent to defraud.'"3

The Long Road to Trial

The case against Mr. Nosal was filed in the United States District Court for the Northern District of California in 2008. In 2009, in LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009), the Ninth Circuit limited the scope of the CFAA and held that the term "exceeds authorized access" does not apply to an employee who is authorized to access a computer, but uses the computer in a manner contrary to his employer's interests.

After the Ninth Circuit's ruling in Brekka, Mr. Nosal moved to dismiss the CFAA violations. In 2010, the district court dismissed the Insider Counts, finding that, because current employees had accessed their employer's information "with authorization," they did not "exceed authorized access."4 However, the district court declined to dismiss the Outsider Counts, recognizing that those counts "presented more complicated questions" because the indictment alleged that former employees, who no longer had access to the database, obtained access to the database and misused confidential information.5

The government appealed the dismissal of the Insider Counts. Initially, a three-judge panel on the Ninth Circuit reinstated those counts, but after the Ninth Circuit heard the decision en banc in 2012, the district court's dismissal of the five Insider Counts was affirmed. There, the Ninth Circuit held that the phrase "exceeds authorized access" in the CFAA is "limited to violations of restrictions on access to information, and not restrictions on its use."6 The court expressed concern about transforming the CFAA into an "expansive misappropriation statute," finding that the purpose of the statute was to "punish hacking—the circumvention of technological access barriers—not misappropriation of trade secrets." Id.

District Court Proceedings on the Outsider Counts

On remand, the government argued that, unlike the current Korn/Ferry employees in the Insider Counts, who were authorized to access the Korn/Ferry computers, the former employees in the Outsider Counts were not authorized to access the Korn/Ferry computers. Consequently, unlike the dismissed counts, the Outsider Counts alleged unauthorized access, not merely unauthorized use.7

Mr. Nosal moved to dismiss these counts, focusing on the Ninth Circuit's narrowing of the statute and arguing that there were no allegations that Mr. Nosal or his co-conspirators engaged in hacking, or the "circumvention of technological barriers."8 Earlier this year, the court denied the motion to dismiss, finding that the CFAA would "be rendered toothless" if it did not apply when a current, authorized employee shared his or her password with an unauthorized user, or sold it to that user. This was a key issue in the case because the government alleged Mr. Nosal, after leaving Korn/Ferry, had instructed an assistant to access Korn/Ferry's database using a Korn/Ferry employee's password. The court reasoned that, "[s]urely, Congress could not have intended such a result."9

At trial, the defense team argued that Mr. Nosal did not exceed his "authorized access" to his former employer's computers. After he resigned from Korn/Ferry, Mr. Nosal agreed to work as an independent contractor for Korn/Ferry and complete unfinished search assignments for $25,000 per month. As part of his separation agreement, Mr. Nosal pledged not to compete against Korn/Ferry. According to the defense, because Mr. Nosal still had authorized access to the Korn/Ferry database as an independent contractor, his misappropriation of confidential information did not "exceed authorized access." In response, the government argued that, even if Mr. Nosal was authorized to access the information in the company's database, he violated the CFAA by instructing others, including his assistant at the time, to breach the system using a borrowed password.10 This allegation was confirmed by the testimony of Mr. Nosal's assistant.11

After less than two days of deliberation, the jury found Mr. Nosal guilty of all counts, including the three CFAA violations. The defense has announced it intends to appeal the verdict to the Ninth Circuit, who will be asked to address the scope of the CFAA yet again.


Mr. Nosal's conviction provides the Ninth Circuit, and likely the United States Supreme Court, the opportunity to further demarcate the boundaries of the CFAA. Critics of the CFAA argue that Congress intended the statute to be an anti-hacking statute only, and not another tool to prosecute run-of-the-mill trade secret misappropriation cases. Employers seeking to protect their confidential information stored electronically, and prosecutors looking to punish the theft of valuable property, counter that the broad language of the statute covers a wide array of unauthorized actions involving computer systems, and that further narrowing the CFAA will hamstring companies' ability to protect their vital trade secrets.

The verdict in Nosal is critical to the future of the CFAA because Mr. Nosal's conduct was neither current employee misuse nor "hacking" by an outsider. Instead, this case presented a classic example of a former employee using deceitful means in an attempt to obtain access to information that he could use effectively in a competitive endeavor. Such a scenario is frequently in the news, and the civil and criminal features of the CFAA have generally been strong weapons against such conduct. Mr. Nosal's conviction shows that, even in the shadow of restrictive Ninth Circuit precedent, particularly precedent developed in that very case before trial, the CFAA remains a valuable tool in the fight against trade secret theft.


1. United States v. Nosal, 676 F.3d 854, 864 (9th Cir. 2012)

2. 18 U.S.C. § 1030(a)(2)(C). The CFAA provides for a private cause of action carrying a two-year statute-of-limitations. See 18 U.S.C. § 1030(g).

3. Id. at 857.

4. United States v. Nosal, C 08-0237 MHP, 2010 WL 934257, at *8 (N.D. Cal. Jan. 6, 2010) rev'd, 642 F.3d 781 (9th Cir. 2011) on reh'g en banc, 676 F.3d 854 (9th Cir. 2012) and aff'd, 676 F.3d 854 (9th Cir. 2012).

5. Id.

6. United States v. Nosal, 676 F.3d 854, 864 (9th Cir. 2012).

7. United States v. Nosal, CR-08-0237 EMC, 2013 WL 978226, at*6 (N.D. Cal. Mar. 12, 2013).

8. Id. at *8.

9. Id. at *9.

10. Vanessa Blum, Amid Calls for Reform, a Rare Trial of Hacking Law, The Recorder (Apr. 5, 2013), http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202595052519&slreturn=20130325102617.

11. Vanessa Blum, Prosecutors Get Key Testimony from Ex-Love in Hacking Trial, The Record (Apr. 15, 2013), http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202596146617.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions