Stealing a trade secret (reprehensible though this may be) has generally not attracted federal criminal liability. Yet in the recent prosecution of David Nosal, the Justice Department applied a computer hacking statute to convict a departing employee for a rather run-of-the-mill trade secret theft: the unauthorized taking of customer lists. Many if not most trade secrets -- like the customer lists involved in Nosal -- are stored on computers. As such, aggressive use of the federal Computer Fraud and Abuse Act could convert many trade secret misappropriations -- traditionally civil offenses and a state law matter - into federal crimes. And this policy shift -- criminalizing and federalizing -- results from the determinations of prosecutors and judges, and not from Congress.
David Nosal worked for the executive search firm Korn/Ferry International until 2004 when he left to form a rival firm. Upon departure, he signed a standard non-compete agreement, but also recruited 3 fellow Korn/Ferry employees to join his new firm. Before those employees left, they downloaded proprietary customer information from the Korn/Ferry network and provided the confidential data to Nosal.
The Justice Department charged Nosal with 22 counts under the Computer Fraud and Abuse Act, 18 U.S.C. §1030, which prohibits, inter alia, unauthorized access to computer systems for fraudulent purposes. The fraudulent purpose in this case was theft of trade secrets.