• Are Lost Profits Recoverable Under the Computer Fraud And Abuse Act?
  • September 16, 2011 | Author: Kathryn L. Ossian
  • Law Firm: Miller, Canfield, Paddock and Stone, P.L.C. - Detroit Office
  • If a former employee accesses proprietary data on your organization's network, are your potential lost sales considered a "loss" under the federal Computer Fraud and Abuse Act (CFAA)?  According to a recent decision by the U.S. District Court for the Eastern District of Michigan, the answer may be "no."

    General Scientific Corporation is engaged in the surgical products market.  In the fall of 2010, General Scientific filed a lawsuit against its former employee, Thomas Caouette, Jr. and Sheervision, Inc., a competitor of General Scientific and Mr. Caouette's new employer.  The six count complaint alleged, among other claims, that Mr. Caouette apparently accessed General Scientific's network to obtain various customer and sales data and, according to General Scientific in asserting a CFAA claim, the company "believes it will incur in excess of $5000 in costs to address and remedy the harm caused by the unauthorized access of its computers."

    On defendants' motion to dismiss, the court held that "lost sales and profits per se are not the measure of loss under the CFAA" and that such losses are "limited to costs incurred and profits lost as a direct result of interrupted computer service."  The court granted defendants' motion with respect to the CFAA claim, however, other claims remain pending in the lawsuit.