©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 353 under the CFAA for conspiring with other former employees to use the password of a current company employee (Nosal’s former secretary) to access his former employer’s computers. The Ninth Circuit affirmed the conviction, finding that the statutory definition of “without authorization” was unambiguous, and that “[u]nequivocal revocation of computer access closes both the front door and the back door” to protected computers, thus making use of a password shared by an authorized system user to circumvent the revocation of the former employee’s access a crime.71 12.7 California Penal Code Section 502: An Alternative to the CFAA In 2015, the Ninth Circuit, while remaining hostile to CFAA claims against employees who have “exceeded authorized access” to employer computers, identified an alternative to the CFAA. In United States v. Christensen,72 six individuals, convicted of computer fraud, bribery, racketeering, wiretapping, and identity theft, got their CFAA convictions vacated on the ground that the CFAA addresses restrictions on access to information, not restrictions on use. But Christensen also analyzed Penal Code section 502, essentially the state law equivalent to the CFAA. The Ninth Circuit noted that section 502 “does not require unauthorized access. It merely requires knowing access.”73 The Ninth Circuit noted that “the term access … includes logging into a database with a valid password and subsequently taking, copying, or using the information in the database improperly.”74 Like the CFAA, Penal Code section 502 provides for a civil remedy.75 1 Bus. & Prof. Code § 16600. The narrow statutory exceptions pertains to limited transactions described in Business & Profession Code sections 16601 (sale of a business), 16602 (departure of a partner from a partnership), and 16602.5 (termination of interest in a limited liability company). 2 Bus. & Prof. Code § 16600 (b)(1). 3 Bus. & Prof. Code § 16600.1 (b)(1). 4 Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008) (invalidating provision in employer’s proposed separation agreement that would have prohibited former employee from performing services for certain clients, because that restraint—even though narrow and leaving a substantial portion of the market open to the former employee—exceeded statutory protections for trade secrets, and rejecting “narrow restraint” exception articulated by Ninth Circuit as a misreading of California law). 5 Bus. & Prof. Code §§ 16601 (corporations), 16602 (partnerships), 16602.5 (limited liability corporations). 6 Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal. 5th 1130 (2020). 7 Twentieth Century Fox Film Corp. v. Netflix, Inc. No. B304022, 2021 WL 5711822 (Cal. App. 5th Dec. 2, 2021) (unpolished and not citable in California courts). 8 Id. 9 Kolani v. Gluska, 64 Cal. App. 4th 402 (1998) (broad covenant not to compete cannot be saved from illegality by giving it a narrowed construction). 10 Dowell v. Biosense Webster, Inc., 179 Cal. App. 4th 564 (2009). 11 The Retirement Grp. v. Galante, 176 Cal. App. 4th 1226, 1238 (2009) (relying on Bus. & Prof. Code § 16600). 12 Id. 13 Application Grp. Inc. v. Hunter Grp. Inc., 61 Cal. App. 4th 881, 885 (1998) (permitting employee signing covenant in Maryland to challenge the covenant upon moving to California while working for same employer, because California’s strong policy in protecting movement of employees invalidates noncompete covenant even though it was valid under Maryland law). 14 See Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal. 4th 697 (2002) (former employee moved to California to work for California employer and sued in California court one day before former employer sued in Minnesota). 15 Application Grp., Inc. v. Hunter Grp., Inc., 61 Cal. App. 4th 881 (1998) (California and Maryland litigants disputing whether noncompete covenant was valid). 16 See, e.g., Harstein v. Rembrandt IP Sols., 2012 WL 3075084 (N.D. Cal. 2012) (granting defendant’s motion to dismiss for improper venue, even if the Pennsylvania forum called for in the employment agreement could cause a different legal outcome in the plaintiff’s action for declaratory relief to invalidate a covenant to compete); AJZN, Inc. v. Yu, 2013 WL 97916 (N.D. Cal. 2013). 17 Meras Eng’g, Inc., v. CH20, Inc., 2013 WL 146341 (N.D. Cal. 2013) (locating the forum in the state of Washington would not dictate that Washington’s substantive law would apply).
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