Court decision raises issues about sharing passwords

A former employee had accessed company records using a password shared by a current staffer

An appeals court has ruled that a former employee of a company, whose computer access credentials were revoked, had acted “without authorization” in violation of the Computer Fraud and Abuse Act, when he and other former employees used the login credentials of a current employee to gain access to data on the employer’s computers.

The opinion of the court is likely to be controversial as it is expected to have implications on commonplace sharing of passwords by husbands, co-workers and friends even for innocuous purposes.

One of the three judges, Stephen Reinhardt, for example, dissented from the majority opinion, stating that “people frequently share their passwords, notwithstanding the fact that websites and employers have policies prohibiting it.”

The CFAA in his view “does not make the millions of people who engage in this ubiquitous, useful, and generally harmless conduct into unwitting federal criminals.” Whatever other liability, criminal or civil, the former employee may have incurred in his improper attempt to compete with his former employer, he has not violated the CFAA, Judge Reinhardt wrote.

David Nosal, a former employee at executive search firm Korn/Ferry International, had used a password shared with him by his former executive assistant, Jacqueline Froehlich-L’Heureaux, who remained at the company at Nosal’s request. Nosal set up his own competing firm and he and two other former employees accessed the Korn/Ferry database to download confidential information using the credentials of Froehlich-L’Heureaux. Their access credentials to the company computers had already been revoked when they left the company.

Before leaving their employment at Korn/Ferry, Nosal’s colleagues began downloading confidential information from a Korn/Ferry database to use at their new business. Although they were authorized to access the database as current Korn/Ferry employees, their downloads on behalf of Nosal violated Korn/Ferry’s confidentiality and computer use policies, the U.S. Court of Appeals for the Ninth Circuit said in its opinion on Tuesday.

“Nosal knowingly and with intent to defraud Korn/Ferry blatantly circumvented the affirmative revocation of his computer system access,” according to the opinion, which said that the access falls squarely within the CFAA’s prohibition on access “without authorization.” Password sharing was prohibited by a confidentiality agreement that Korn/Ferry required each new employee to sign, the court said.

A district court earlier sentenced Nosal to a one-year prison sentence and approximately US$828,000 in restitution to Korn/Ferry for violation of the CFAA and Economic Espionage Act.

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