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28 fidential user name and password, is an impairment whether federal legislation preempts state law. How- that states a claim under the CFAA.326 ever, in Bansal v. Russ,330 a federal court in Pennsyl- vania held that the Federal SCA did not preempt Penn- Guidance Number 15 sylvania's Wiretapping and Electronic Surveillance The ECPA, although a criminal statute, also creates a Control Act that prohibits unlawful access to stored cause of action for damages and other relief against communications.331 electronic trespassers. The ECPA through the federal Claims under state law also may be challenged on Wiretap Act and the SCA seeks to protect against unau- the basis of the "dormant commerce clause" doctrine. As thorized electronic intercepts of communications or the explained in one article, "[t]he dormant Commerce accessing of stored communications and records. The Clause is preoccupied with state economic protection- SCA prohibits unauthorized access to information, not ism. ...[T]he Supreme Court has applied a virtually the misappropriation or disclosure of the information. fatal form of strict scrutiny to state laws that discrimi- Information stored in a server and conveyed from a pri- nate against interstate commerce and a more forgiving vate Web site to users is subject to the SCA. The CFAA balancing test that practically rubber-stamps other applies, inter alia, to damage caused by unauthorized laws that only incidentally affect interstate com- access or access in excess of authorization to a computer merce."332 However, usually dormant commerce clause system when the conduct involves an interstate or for- challenges are made to state legislation rather than eign communication. Violations of a license with respect state common law claims.333 to an online database or of a subscription agreement In Crowley v. Cybersource Corporation,334 in which may subject a violator to a claim under the CFAA. the plaintiff brought a class action pursuant to the Fed- eral Wiretap Act and the ECPA, the court held that C. State Legislation Applicable to Electronic state law claims for unjust enrichment, invasion of pri- Communications or Stored Data vacy, fraud by concealment, and breach of contract were Depending on the circumstances, there may be not in violation of the Constitution on the theory "that remedies under state legislation when an unauthorized only Congress may enact legislation regarding the person intercepts electronic communications such as Internet. ...Amazon cites no cases removing commercial real-time data or obtains access to archived data. In- activity from the reach of state tort law on dormant deed, one source argues that "[s]tate statutes presently commerce clause grounds.... Indeed, the Third Circuit serve a more important role than federal law in prohib- has expressed doubt as to whether state common law 335 iting illegal behavior with computers because many claims could violate the dormant commerce clause." state legislatures have enacted laws with broader pro- tection than provided at the federal level."327 For exam- Guidance Number 16 ple, by statute in California a plaintiff may sue for State law may provide remedies if an unauthorized damages328 when someone party obtains access to, copies, and/or distributes an agency's real-time data or exceeds its authorization or (2) [k]nowingly accesses and without permission takes, copies, or makes use of any data from a computer, com- license for access to and/or use of an agency's data. puter system, or computer network, or takes or copies any These are causes of action that may not be preempted supporting documentation, whether existing or residing necessarily by federal statutes. internal or external a computer, computer system, or computer network[;] D. Whether Real-Time Data Constitutes a Trade Secret (3) [k]nowingly and without permission uses or causes to be used computer services[;] ... According to the Restatement (Third) of Unfair Com- petition, "[a] trade secret is any information that can be (6) [k]nowingly and without permission provides or as- used in the operation of a business or other enterprise sists in providing a means of accessing a computer, com- puter system, or computer network[;] 330 (7) [k]nowingly and without permission accesses or causes 513 F. Supp. 2d 264 (E.D. Pa. 2007). 331 to be accessed any computer, computer system, or com- Id. at 28283. See also In re Nat'l Security Agency Tele- 329 puter network. communications Records Litigation, 483 F. Supp. 2d 934, 939 (N.D. Cal. 2007) (holding that the SCA did not completely pre- An issue that may arise with state legislation is empt state law privacy claims against telephone companies for alleged disclosure of subscriber calling records to the govern- 326 Therapeutic Research Faculty v. NBTY, Inc., 488 F. ment). 332 Supp. 2d 991, 997 (E.D. Cal. 2007). Norman R. Williams, The Dormant Commerce Clause: 327 Charles Victor Lang, Note: Stolen Bytes: Business Can Why Gibbons v. Ogden Should be Restored to the Canon, 49 ST. Bite Back, 1986 COLUM. BUS. L. REV. 251, 259 (1986) (footnotes LOUIS L.J. 817 (2005). 333 omitted) (stating also that "[t]hirty-six states presently have Crowley, 166 F. Supp. 2d at 1272 (citing Camden County computer crime statutes, a number which is bound to increase Bd. of Chosen Freeholders v. Beretta U.S.A. Corp., 123 F. in the future"). Supp. 2d 245, 254 (D.N.J. 2000)). 328 334 CAL. PENAL CODE 502(e) (2009). 166 F. Supp. 2d 1263 (N.D. Cal. 2001). 329 335 Id. 502(c)(2), (3), (6), (7) (2009). Id. at 1272 (citations omitted).

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29 and that is sufficiently valuable and secret to afford an amended counterclaim stated a claim.347 (See discussion actual or potential economic advantage over others."336 of cases in Section VII.B.3, infra, holding that certain Forty-five states, the District of Columbia, and the U.S. records were not subject to disclosure under public dis- Virgin Islands have adopted some version of the Uni- closure laws because they were exempt as trade se- form Trade Secrets Act (UTSA), a model law defining crets.) 337 rights and remedies regarding trade secrets. Not addressed in the Sherman case is the question of Pursuant to the UTSA, "any information" may con- whether the Copyright Act preempts a state claim for stitute a trade secret.338 The UTSA defines a trade secret misappropriation of a trade secret. As one article notes, to mean as "the line between trade secret and copyright protec- information, including a formula, pattern, compilation, tion becomes blurred...the possibility of preemption program device, method, technique, or process, that: (i) increases." 348 Whether there is preemption depends on derives independent economic value, actual or potential, whether the essence of the claim for a violation of a from not being generally known to, and not being readily state's trade secrets law is merely for unauthorized ascertainable by proper means by other persons who can copying of data or software. obtain economic value from its disclosure or use, and (ii) In Huckshold v. HSSL, LLC,349 the plaintiff had en- is the subject of efforts that are reasonable under the cir- tered into an agreement to develop software for the 339 cumstances to maintain its secrecy. tracking and maintenance of a customer database for To preserve a trade secret, the owner must be careful 350 the defendant HSSL. Another defendant, The Miller "to limit access to the information, and such informa- Group, Inc., allegedly copied the software from one of 340 tion should only be disclosed in confidence." HSSL's computers in violation of the agreement be- A claim may be available for misappropriation of tween the plaintiff and HSSL. The court noted that a trade secrets either under the UTSA341 or at common claim for misappropriation of trade secrets is preempted law. Although a misappropriation of trade secrets is when the claim is based solely on copying, because the unlawful, "trade secret law does not create a right in claim would be "qualitatively equivalent" to a claim for 342 the information itself." Thus, an owner "has no pro- 351 copyright infringement. On the other hand, "claims of prietary interest in the information," and "`the public at misappropriation of trade secrets that are based upon large remains free to discover and exploit the trade se- breach of an independent duty of trust or confidence to cret through reverse engineering...or by independent the plaintiff are qualitatively different than claims for creation.'"343 copyright infringement and are not preempted."352 The For example, as the court observed in Sherman & court held that the plaintiff's claim for misappropriation Co. v. Salton Maxim Housewares, Inc.,344 under the of trade secrets was not preempted, because the plain- Michigan statute345 a claimant would have to establish tiff would "have to prove that the software was a trade among other things whether the data in question secret that was misappropriated by Miller from HSSL amounted to trade secrets and whether the party and that HSSL was under a duty to maintain the secret against whom the claim is made had express or implied and limit its use. These are elements in addition to the 346 consent to disclose or use the data. In Sherman, be- copying required for a copyright infringement claim."353 cause Salton alleged that "Sherman took sales data Likewise, in Therapeutic Research Faculty, the court constituting trade secrets and/or proprietary informa- held that the alleged misappropriation by the sub- tion under MCL 445.1902(b)(ii)(A) and gave it to Sal- scriber of its username and password for the defen- ton's competitor...without Salton's consent," Salton's dants' benefit was a violation of the UTSA adopted by California.354 Moreover, the court held that the plaintiff 336 Restatement (Third) of Unfair Competition, 39 cmt. d could prevail on its claim by showing damage because of 355 (1995). the misappropriation or unjust enrichment. 337 Smith, supra note 22, at 722 n.138. There also may be an issue of whether a state's trade 338 Uniform Trade Secrets Act 1, available at: http://euro. secret law preempts other claims at common law. Sec-, last 347 accessed on Jan. 8, 2010. See also State of Washington, Trade Id. at 822. Secrets Act, WASH. REV. CODE 19.108, et seq., available at 348 Carole P. Sadler, Comment: Federal Copyright Protection, last ac- and State Trade Secret Protection: The Case for Partial Pre- cessed on Jan. 8, 2010. emption, 33 AM. U.L. REV. 667, 668 (1984) (footnote omitted). 339 Uniform Trade Secrets Act 1(4). 349 344 F. Supp. 2d 1203 (E.D. Mo. 2004). 340 Smith, supra note 22, at 724; Restatement (Third) of Un- 350 Id. at 1205. fair Competition, 39 cmt. g (1995). 351 Id. at 1209 (citation omitted). 341 See Uniform Trade Secrets Act 1(2). 352 Id. (citations omitted). 342 Smith, supra note 22, at 729 (citing Restatement (Third) 353 Id. of Unfair Competition, 39 cmt. c (1995)). 354 343 Therapeutic Research Faculty, 488 F. Supp. 2d at 999 Id. at 730 (footnote omitted). (quoting Fas Techs. Ltd. v. Dainippon Screen MFG., Co., Ltd., 344 94 F. Supp. 2d 817 (E.D. Mich. 2000). 2001 U.S. Dist. LEXIS 7503 (N.D. Cal. May 31, 2001) and cit- 345 MICH. COMP. LAWS 445.1902(b)(ii)(A). ing CAL. CIV. CODE 3426.2, 3426.3)). 346 355 Sherman, 94 F. Supp. 2d at 821. Id. at 1000 (citations omitted).