Mass Law Blog

Massachusetts Federal Judge Applies the CFAA Narrowly in AMD v. Feldstein

This week’s internal report by MIT on its handling of the Aaron Swartz case may be an appropriate time to note that the sound and fury over the Computer Fraud and Abuse Act (the “CFAA”) is not limited to its use in criminal cases like the Swartz prosecution. The controversy extends to the use of this law in civil cases as well.*

*The CFAA may be used as either a civil or a criminal law. However, the words of the statute must mean the same thing in each context. As the court noted in the case discussed in this post, “it is not possible to define authorization narrowly for some CFAA violations and broadly for others.”

In my July 2nd post on AMD v. Feldstein I noted that the case had given rise to two note-worthy decisions.  The May 15, 2013 decision, discussed in that post, involved the legalities of the former-AMD employees’ alleged solicitation of current AMD employees in violation of  non-solicitation agreements. However, Massachusetts Federal District Court Judge Timothy Hillman issued a second opinion in the case on June 10, 2013, ruling on the defendant-employees’ motion to dismiss  claims of civil liability under the CFAA.

Judge Hillman’s June 10th opinion reflects the struggle within the federal courts nationally over how to apply the CFAA.  The controversy focuses on the section of the law that imposes criminal and civil penalties on –

whoever … intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains …  information from any protected computer. 18 U.S.C. § 1030(a)(2)(C).*

   *As Judge Hillman observed, “The breadth of this provision is difficult to understate.”

I discussed the courts’ varied interpretations of this provision in some detail in an August 2012 post. As I stated there, “the issue, on which the federal courts cannot agree, is whether an employee who has authorized access to a computer, but uses that access for an illegal purpose — typically to take confidential information in anticipation of resigning to start a competing company or join one — violates the CFAA.” In that post I discussed several of the conflicting decisions over this issue, including the Ninth Circuit’s influential en banc holding in U.S. v. Nosal.

In considering how to apply the CFAA in this case Judge Hillman described the two possible interpretations of the CFAA. The first, a “technological model of authorization,” requires that an employee violate a technologically implemented barrier in order for his actions to give rise to a violation. Under this model, which the court described as the “narrow interpretation,” the employee would have to (for example) use someone else’s login credentials to access his employer’s  computer, or break into (hack) the computer. Another way to view the “narrow interpretation” of the CFAA is that the phrase “without authorization” in the statute is limited to outsiders who do not have permission to access the employer’s computer in the first place.

Under the second model, described as the “broader interpretation,” the employee would be liable under the CFAA if he used a valid password to access information for an improper purpose, for example, obtaining confidential or trade secret information that will be provided to the employee’s new employer, or to a competitor of the current employer.

As Judge Hillman noted, the only First Circuit case to address the scope of the CFAA –  EF Cultural Travel BV v. Explorica, Inc. – only created uncertainty over how to apply the statute.  At least one Massachusetts district court judge has viewed EF Cultural as an endorsement of the broader interpretation. Guest-Tek Interactive Entm’t, Inc. v. Pullen (Gorton, J. 2009).

Judge Hillman, however, disagreed, distinguishing EF Cultural and concluding that the facts in that case shift it into the realm of “access that exceeds authorization” rather than permitted access for an unauthorized purpose. In what seems to be a clear nod to the Ninth Circuit in Nosal, he held that “as between a broad definition that pulls trivial contractual violations into the realm of federal criminal penalties, and a narrow one that forces the victims of misappropriation and/or breach of contract to seek justice under state, rather than federal, law, the prudent choice is clearly the narrower definition.”*

*A recent case from the district of New Hampshire appears to have reached the same conclusion. Wentworth-Douglas Hospital v. Young & Novis Prof. Assoc.  (June 29, 2012).

This is the conclusion that the former AMD employee-defendants wanted the court to reach on their motion to dismiss the CFAA count. However, it turned out to be somewhat of a pyrrhic victory for them.

Although the judge found that “the narrower interpretation” of the CFAA “is preferable” and  found that AMD’s “allegations are  … insufficient to sustain a CFAA claim under a narrow interpretation of the CFAA,” he declined to dismiss the CFAA claims against the defendants, noting that “this is an unsettled area of federal law, and one where the courts have yet to establish a clear pleading standard.” Instead, he deferred action on this claim until the factual record is complete, meaning the conclusion of discovery.

And, if it was the defendants’ hope to dismiss the federal CFAA claim in order to force the case into state court (which is unclear, since AMD also pleaded diversity jurisdiction), not only did they fail to accomplish this by means of this motion, but the court went so far as to note that “even if the CFAA claims are dismissed at a later date, the pendant state law claims need not be remanded to state courts. … It would be extremely inefficient to remand this case to state court given the quantity of evidence already presented to this Court.”

Bottom line: the defendants won their central legal argument, but did not get their reward. And, this section of the CFAA remains in limbo in the First Circuit, pending final word from the First Circuit Court of Appeals on its proper interpretation.

 Advanced Micro Devices, Inc.v. Feldstein

California Court Refuses to Dismiss Craiglist’s Data Scraping Case Against 3Taps

Yet another “data scraping” case is percolating in the Northern District of  California. Craigslist has sued the online aggregator 3Taps, Inc. (and others), claiming that they illegally copied Craigslist’s classified apartment listings. In effect, 3Taps was attempting to disintermediate Craigslist—to insert itself between Craigslist and its users.

3Taps filed a motion to dismiss the multiple claims asserted in the suit, most of which was denied in the decision linked below.

Of particular interest is the court’s refusal to dismiss Craigslist’s claim that 3Taps violated the Computer Fraud and Abuse Act (CFAA), a controversial federal “anti-hacker” statute that has been interpreted in conflicting ways by the federal courts (see an earlier post on this topic here), and which was the law Aaron Schwartz was accused of violating (contributing, many believe, to his suicide earlier this year).

The CFAA permits a civil cause of action against any person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from any protected computer.” 18 U.S.C. § 1030(a)(c).  Craigslist has alleged that 3Taps’ use of Craigslist’s listings violated a cease and desist letter Craigslist sent to 3Tap prohibiting it from republishing the listings. The court found that 3Taps’ continued use was a potential violation of the CFAA as the Ninth Circuit has interpreted that statute, and denied 3Taps’ motion to dismiss that claim.

This ruling is consistent with decisions in the First Circuit, the federal circuit which includes Massachusetts. (See, e.g., EFF Cultural Travel v. Explorica, 1st Cir. 2001).

Although the California district court denied 3Tap’s motion to dismiss the CFAA claim, it  expressed its concerns around the policy issues raised by Craigslist’s CFAA claim in this case.  Quoting from the opinion:

The parties have not addressed a threshold question of whether the CFAA applies where the owner of an otherwise publicly available website takes steps to restrict access by specific entities, such as the owner’s competitors. “Some commentators have noted that suits under anti-hacking laws have gone beyond the intended scope of such laws and are increasingly being used as a tactical tool to gain business or litigation advantages.” … The CFAA was passed in 1986, well before the development of the modern internet, and originally only covered certain computers operated by the federal government or financial institutions. … Although courts in this district have held that the CFAA may apply to unauthorized access to websites, the parties have not cited a case from this district or the Ninth Circuit addressing its application to information that is generally available to the public. … Applying the CFAA to publicly available website information presents uncomfortable possibilities. Any corporation could subject its competitors to civil and criminal liability for visiting its otherwise publicly available home page; in theory, a major news outlet could seek criminal charges against competing journalists for reading articles on its website.

These comments are a reflection of the Ninth Circuit’s concerns about the application of this statute, as described in the Ninth Circuit’s high-profile 2012 en banc decision in U.S. v. Nosal.

Last year (when this suit was filed) Professor Eric Goldman provided a trenchant analysis of the business issues facing Craigslist which motivated it to bring this lawsuit. He concluded, “even though it might look like Craigslist is making bizarre moves, I think its moves are quite rational. They’re exactly the kind of moves you’d expect from a panicked company realizing its uncomfortably precarious marketplace position.”

Craigslist v. 3Taps (N. D. Cal. April 29, 2013)

Sloppy Online Agreements Costs Plaintiff Its Breach of Contract and CFAA Claims

Sloppy Online Agreements Costs Plaintiff Its Breach of Contract and CFAA Claims

Last month I wrote a post titled “Online Agreements – Easy To Get Right, Easy To Get Wrong.” In that post I discussed two cases in which the plaintiff had failed to take appropriate steps to necessary to impose terms and conditions on its customers.

A recent case decided by the federal district court for the District of Pennsylvania provides yet another example of how sloppy online contracting can doom a claim based on an online agreement.

The case,  CollegeSource, Inc. v. AcademyOne, Inc., (E.D. Pa. October 25, 2012), involves the practice colloquially referred to as “screen scraping” — that is, copying information from displayed webpages, usually in large quantities for commercial use. See, e.g., Ef Cultural Travel Bv v. Explorica , 274 F.3d 577 (1st Cir. 2001) (describing screen scraping).

It’s easy — legally and technically — to prevent this by prohibiting it in the site’s online terms and conditions. Doing so allows the site owner to assert not only state-law breach of contract, but the potentially more advantageous federal Computer Fraud and Abuse Act (“CFAA”). However, the site user must agree to the terms and conditions.

Unfortunately for CollegeSource, it didn’t get this quite right. Specifically, CollegeSource offered three services.  Two of the services required that the user accept a “browsewrap” subscription agreement that expressly prohibited scraping (“you agree not to . . . scrape or display data from the Content for use on another web site or service”). However, the third service did not require users to agree to this restriction. Think of this as two doors locked, one open. CollegeSource’s contract-based argument that the subscription agreement applied to the third service failed to persuade the district court judge. The result: no breach of contract and no violation of the CFAA.

CollegeSource, Inc. v. AcademyOne, Inc.


Fourth Circuit Weighes in on Computer Fraud and Abuse Act, Sides With Ninth Circuit

Yet another federal appeals court has attempted to parse the Computer Fraud and Abuse Act’s (“CFAA”) ambiguous statutory language.  The issue, on which the federal courts cannot agree, is whether an employee who has authorized access to a computer, but uses that access for an illegal purpose — typically to take confidential information in anticipation of resigning to start a competing company or join one — violates the CFAA.

The controversy is focused on the words “without authorization” and “exceeds authorized access” in the law:

[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 … shall be punished. 18 U.S.C. § 1030(a)(4).

Late last year, in a widely noted decision, the 9th Circuit adopted the “narrow” view of the CFAA, holding the law does not extend to an employee who has authorized access but uses that access to make unauthorized useU.S. v. Nosal (en banc).

In late July the Fourth Circuit issued a decision in WEC Carolina Energy Solutions v. Miller, agreeing with Nosal and holding that conduct by an employee that violates the employer’s “use policy” (typically contained in an employee manual, handbook or “computer use policy”) does not give rise to a violation of the CFAA.  As Fourth Circuit stated, “we reject an interpretation of the CFAA that imposes liability on employees who violate a use policy, choosing instead to limit such liability to individuals who access computers without authorization or who obtain or alter information beyond the bounds of their authorized access.”

Under the Fourth Circuit’s interpretation of the statute, (1) without authorization refers to a situation where someone is not authorized to access a computer and accesses it, and (2) exceeds authorized access applies when someone has “approval to access a computer, but uses his access to obtain or alter information that falls outside the bounds of his approved access.”

Under the “broad” view of the CFAA, which has been rejected by the Ninth and Fourth Circuits, employees who have authorized access to a computer, but who exceed the scope of that access, are subject to liability under the statute. The First Circuit, where I practice, has adopted this view of the law.  EF Cultural Travel v. Explorica (2001).

There is now a clear circuit conflict over the interpretation of this law. The Ninth and Fourth Circuits read it narrowly, and several other circuits (including the First), apply it broadly. Often, a circuit split over the meaning of a federal statute provides a basis for the Supreme Court to grant review and break the tie. The betting is that this will occur here.

Why does any of this matter?  Because in a civil case it enables a plaintiff to get a case that typically rests on state claims, such as conversion, misappropriation of trade secrets or breach of fiduciary duty, into federal court, a venue often preferred by plaintiffs.

Update: The government will not appeal the 9th Circuit decision in the Nosal case.  Link to Motion for Issuance of Mandate here.

Slides From Copyright/Trademark CLE

I’ve posted the slides from a CLE talk I gave on Wednesday, April 25th.  Hopefully, the  slides are informative standing alone.  They address the very recent DMCA decisions by the 9th Circuit (Veoh) and 2nd Circuit (Youtube), the copyright “first sale” doctrine as applied to digital files in the Redigi case pending in SDNY, and recent trademark “keyword advertising” cases decided in the 4th and 9th Circuits (Rosetta Stone in the 4th Circuit, Network Automation and Louis Vuitton in the 9th).  There are also some slides devoted to the CFAA, including the 9th Circuit’s en banc decision in the Nosal case.

If the embedded Scribd document doesn’t appear on your computer directly below, click here to go directly to Scribd

Copyright and Trademark Issues on the Internet

Runescape Copyright and CFAA Case Fails at Preliminary Injunction Stage, But Runescape is Not Down for the Count: Jagex v. Impulse Software

Runescape Copyright and CFAA Case Fails at Preliminary Injunction Stage, But Runescape is Not Down for the Count: Jagex v. Impulse Software

A decision in Jagex v. Impulse Software, issued by Massachusetts U.S. District Court Judge Gorton in August, has some interesting (albeit not nonobvious) lessons for software developers seeking to protect their websites from copying or reverse engineering.  The decision arises in the context of a preliminary injunction – a request by Jagex to provide it with legal relief at the outset of the case, before discovery or trial – so Jagex may yet prevail in this case, particularly since most of the reasons the court denied it relief that this stage can be corrected before the case progresses much further.

The plaintiff, Jagex operates an online role-playing game called “Runescape.”  Runescape is a “massively multiplayer online role-playing game” (MMORPG for short, but we’ll just call it “the game”).

Impulse offers online cheat tools – software that lets users advance through the levels of the game without actually playing the game.  Moving to higher and more challenging levels is the goal of the game, and the Impulse software allows users to reach those hallowed grounds without investing the time and effort the game expects users to endure.  And, it is possible to invest a great deal of time and effort with this game – Judge Gorton noted that the top three Runescape players averaged about 20,000 hours of playing time.


Cyberbullying, Website Terms of Use and the CFAA: the Lori Drew Case

Suffice it to say, very few people realize that violating the “terms of use”  (aka the small print that no one reads) on a web site may constitute violation of a federal law that has both criminal and civil penalties.  Yet, this was the basis for the prosecution of Lori Drew,  the woman who allegedly created a MySpace account under the name of “Josh Evans.”   Using this account, Drew developed an online relationship with Megan Meier, a 13-year-old girl.  “Josh Evans” said hurtful things to Megan, who took her own life.

Pamela Jones lays out the legal issues in this case on Groklaw, here, where she links to many key documents, and embeds the EFF’s amicus brief, in its entirety.

I was trying to figure out how to explain to you all that is involved in the case of the U.S. v. Lori Drew, the cyberbullying case that so many lawyers are expressing concerns about. I felt I needed a lawyer to explain it, but where would I find one who felt like doing some unpaid work, and over the Thanksgiving holiday to boot?

Then I had a brainstorm. I could show you the amicus brief [PDF] submitted in the case by the Electronic Frontier Foundation, the Center for Democracy and Technology, and Public Citizen, which was also signed by “14 individual faculty members listed in Appendix A who research, teach and write scholarly articles and books about internet law, cybercrime, criminal law and related topics at law schools nationwide”. Appendix A is at the very end. If you look at the list, you’ll see that it’s some of the finest and most knowledgeable lawyers and law professors specializing in cyberlaw. The brief was written by Jennifer Granick of EFF and Philip R. Malone of Harvard Law School’s Berkman Center for Internet and Society’s Cyberlaw Clinic.

I think when you read it, it will turn your hair white.  Continue reading ….