UPDATE: As discussed in this blog post, a panel of the U.S. Court of Appeals for the Ninth Circuit overruled the district court in United States v. Nosal (9th Cir. Apr. 28, 2011).

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The debate over the applicability of the Computer Fraud and Abuse Act in cases of alleged employee disloyalty has yielded quite a few rulings over the last several years, and generated a circuit split last September with the Ninth Circuit decision in LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009). In that civil action alleging employee theft and misappropriation of trade secrets, the appeals court rejected an expansive interpretation of the CFAA, concluding that an employee’s authorization to access an employer’s computer network is not automatically revoked when the employee is acting in a manner that is disloyal to the employer’s interest. The Ninth Circuit explicitly rejected the contrary reasoning of the Seventh Circuit in International Airport Centers, LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006). In the Citrin case, Judge Posner authored a panel ruling that under common law agency principles, an employee who breaches the duty of loyalty to an employer thereby lacks authorization within the meaning of the CFAA.

The battleground in those two cases was whether a former employer could bring a civil action under the CFAA against former employees who accessed the employer’s computer network, while still employed, for disloyal purposes. The prize in these and many other such cases is the opportunity for the employer to pursue what what would have otherwise likely been largely a matter of state law in federal court. But the CFAA is primarily a criminal statute, and expansive interpretation could (and has) resulted in federal criminal prosecutions in what have been typically state law cases.

However, the Ninth Circuit’s narrower construction in LVRC v. Brekka ruling has now been applied in  one of those criminal cases, resulting in the dismissal of some but not all of the CFAA charges against one defendant in United States v. Nosal, 3:08-cr-00237-MHP(N.D. Cal. Jan. 6, 2009)