United States: CFAA Clarity From 9th Circ. Password-Sharing Decisions

In two closely watched cybersecurity decisions, the Ninth Circuit Court of Appeals recently took steps to clarify the limits of the Computer Fraud and Abuse Act as it relates to what constitutes password sharing. Coming less than two weeks apart in July, the decisions in United States v. David Nosal and Facebook Inc. v. Power Ventures Inc. helped define the boundaries of permissible password-sharing under the CFAA. In Nosal, the Ninth Circuit found that it was a violation of the CFAA for a defendant to use the login credentials of a company's employees to access the company's computer network after the company had expressly withdrawn its consent from the defendant. In Power Ventures, the Ninth Circuit clarified that accessing a computer in violation of a company's terms of service without more, such as express revocation of permission, like a cease-and-desist letter, did not violate the CFAA. Together, these decisions provide some guidance (at least in the Ninth Circuit) concerning when password-sharing is permissible under the CFAA.

Computer Fraud And Abuse Act in Brief

The CFAA prohibits trespassing onto a computer system by parties who are either not authorized users or are exceeding authorized use. It criminalizes, among other things, "knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing] authorized access, and by means of such conduct further[ing] the intended fraud and obtain[ing] anything of value." 18 U.S.C. § 1030(a)(4). The CFAA broadly defines a "protected computer" as a computer "which is used in or affecting interstate or foreign commerce or communication, including a computer located outside the United States that is used in a manner that affects interstate or foreign commerce or communication in the United States." 18 U.S.C. § 1030(e)(2)(B). The CFAA also establishes a right of action for private parties who were injured by violations of its provisions. 18 U.S.C. § 1030(g).

Twists and Turns in the Nosal Case

In its most recent decision in Nosal, the Ninth Circuit affirmed the CFAA convictions of David Nosal, holding that the post-employment accessing of his former employer's confidential database by his former colleagues on his behalf were "without authorization" under the CFAA. Nosal, a former director at the global executive search firm Korn/Ferry International, set out to launch his own search firm with three former colleagues who were still employed at Korn/Ferry. Nosal convinced his colleagues to download source lists and other information from Korn/Ferry's confidential database, in violation of Korn/Ferry's computer use policy. Later, after two of Nosal's colleagues had resigned, they did not use their own credential to access the database but borrowed the credentials of the third colleague (who still worked at Korn/Ferry) to continue to download confidential information from Korn/Ferry's database.

In a prior decision in the Nosal case, the Ninth Circuit dismissed the CFAA counts in the indictment that the government had obtained against Nosal that were based on the accesses of the Korn/Ferry database by Nosal's three former colleagues who were all still employed by Korn/Ferry at the time of the accesses.1 In doing so, the Ninth Circuit expressly rejected the position that "every violation of a private computer use policy" could constitute a violation of the CFAA because such policies are often "lengthy, opaque, subject to change and seldom read," and that the CFAA should not transform whole categories of otherwise innocuous behavior into federal crimes simply because a computer is involved."2

"Unauthorized Use" vs. "Unauthorized Access"

In its most recent decision in the Nosal case, the Ninth Circuit refused to dismiss the CFAA claims against Nosal for the accesses by his two former colleagues that occurred after they terminated their employment with Korn/Ferry.3 The court held that accessing a protected computer "without authorization," is an "unambiguous, non-technical term that, given its plain and ordinary meaning, means accessing a protected computer without permission."4 It went on to conclude that once authorization or permission to access a protected computer had been revoked, as Korn/Ferry had clearly done, a former employee, such as Nosal, who accesses that computer through the login credentials of a current employee or other means to circumvent the revocation of access, was acting "without authorization," in violation of the CFAA. The Ninth Circuit distinguished its prior decision in Nosal as being based on "unauthorized use of information," while the present case was based solely on "unauthorized access — getting into the computer after categorically being barred from entry."5

Nosal created considerable uncertainty over the limits of the CFAA. On the one hand, Nosal solidified the protections under the CFAA for confidential and proprietary data stored on company computers against former employees and/or contractors who sought to circumvent the revocation of their access and current employees and/or contractors who seek to exceed the limits of their authorized access. On the other hand, Nosal created the risk of potential liability under the CFAA for those parties who use the login credentials of consenting account holders to access third party computers, even those that did so for legitimate purposes. Nosal gave third parties who have policies against the sharing of login credentials in their terms of service a stronger argument that access using shared credentials was unauthorized and a violation of the CFAA, despite the fact that the account holders consented to the use of their credentials and the accessing of their accounts.

Power Ventures Mitigates Risk of Potential Liability

Fortunately, the Ninth Circuit did not wait long to dispel the uncertainty from Nosal. In Facebook Inc. v. Power Ventures Inc., Power operated a now-defunct social networking website, Power.com. Power users could create an account that aggregated their information from other social networking websites and display all their contacts from different networking sites on a single page.

In December 2008, as part of a promotional campaign, Power placed an icon on its website, which asked whether the user wanted to share an event, photo, or status on Facebook, and included a button with the words "Yes, I do!" If a Power user clicked the "Yes, I do!" button, Power would create an event, photo, or status on the user's Facebook profile and cause a Facebook message to be transmitted to the user's Facebook contacts. In some instances, based on the user's settings, it would also generate an external email message, apparently from Facebook, to the user's contacts. For example, if a Power user clicked the "Yes, I do!" button about sharing an event and created an event, her contacts might have received an external email apparently from Facebook about the event. These emails were form emails automatically generated every time the Facebook user created an event.

On Dec. 1, 2008, Facebook learned about Power's promotional campaign and sent a cease-and-desist letter to Power. When Power would not terminate its campaign, Facebook blocked its internet protocol address to prevent Power from accessing the Facebook website. Power responded by switching its IP address to circumvent the IP address block. On Dec. 20, 2008, Facebook sued Power for violating the CFAA and other federal and state statutes. The district court granted summary judgment in favor of Facebook on all of its claims, including the CFAA one.

The Ninth Circuit affirmed the district court's grant of summary judgment with regard to Facebook's CFAA claim.6 In doing so, the Ninth Circuit held that "a defendant can run afoul of the CFAA when he or she has no permission to access a computer or when such permission has been revoked explicitly" but that "a violation of the terms of use of a website — without more — cannot be the basis for liability under the CFAA."7 Applying this rule, the court found that Power users arguably gave Power permission to access Facebook's computer when those users clicked on the "Yes, I do!" button; but, that Facebook openly and expressly rescinded that permission on Dec. 1, 2008, when it sent Power a cease-and-desist letter instructing Power to stop soliciting the information of Facebook users, using Facebook content, or otherwise interacting with Facebook through automated scripts.8 Facebook also blocked Power's IP address.9 The court noted that the record was clear that Power was aware that it was not authorized to access Facebook's computer, but still took steps to evade Facebook's IP address block to do so.10 By accessing Facebook's computer "without authorization," Power was liable under the CFAA.

When Revoking Permission, Put It in Writing

The Power case went a long way toward mitigating the risk of potential liability under the CFAA created by Nosal for those companies who use the login credentials of consenting account holders to access third-party computers for legitimate business purposes, such as data scraping. Nosal appeared to imply that accessing a third-party website through shared credentials was unauthorized, if the website had a policy against password sharing regardless of whether the account holder consented. The Power case clearly defined the limits of liability under the CFAA for such activity. Password sharing, even if done in violation of a website's terms of use, does not constitute a violation of the CFAA in the Ninth Circuit. However, once the third party explicitly revokes permission, continued access is likely to be considered "without authorization" or "exceed[ing] authorized access" under the CFAA. The Ninth Circuit did not elaborate on what constituted explicit revocation of permission. So, when revoking permission to access a website, computer system, or network, the revocation should be clear, unambiguous and, preferably, in writing.


1 United States v. Nosal, 676 F.3d 854 (2012) (en banc)

2 Id., at 859, 860.

3 United States v. Nosal (Nosal II), Nos. 14-10037, 10275 (9th Cir. July 5, 2016)

4 Id., at 4, 17-18, 20-23.

5 Id., at 17.

6 Facebook, Inc. v. Power Ventures, Inc. et. al., No. 13-17102 (9th Cir. July 12, 2016).

7 Id., at 16.

8 See id. at 16–17.

9 See id.

10 See id. at 18–19.

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