Third Circuit: Absent Hacking, Violating Employer's Computer-Use Policy Cannot Support A Claim Under The Computer Fraud And Abuse Act

At a Glance

• The Third Circuit's decision means employers pursuing claims in Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands cannot premise claims under the Computer Fraud and Abuse Act solely on a violation of a computer-use policy, absent evidence the employee engaged in code-based hacking.
• The Third Circuit also concluded passwords to the employer's syste
• ms were not trade secrets under state and federal law because there was no evidence the passwords were the product of any specific formula or algorithm and, therefore, did not have independent economic value.
• Although employers now have one less cause of action to pursue against employees for conduct that violates an employer's computer-use policy, well-crafted confidentiality provisions and strong internal protocol can provide valuable protection when employers face similar circumstances.