Hawaii Legislature 2014 — Summary of Proposed Computer Tech Legislation

Posted by on Jan 31, 2014 in Data Security, Employment and Labor, Privacy, Schools, Social Media, Trademark

It’s time to roundup the bills related to computer technology that the Hawai‘i legislature is considering in its 2014 regular session.  Click here for a chart summarizing the proposed legislation.  Here are the highlights:

Social Media and Internet Account Passwords:  Several bills to prohibit improper requests for access to personal social media accounts of employees and students were introduced in the 2013 session.  None of the them passed.  This year, HB2415 renews the effort to outlaw improper social media password requests.

Internet Sales Tax:  HB1651 would require online companies with arrangements with Hawaii merchants for referral of business  to collect use taxes on sales made in Hawaii.  This bill would affect online retailers like Amazon, who allows local merchants to sell their products through Amazon Marketplace.

Restrictive Covenants:  In an effort to encourage the development of technology business in Hawai‘i, a state with a relatively small geographic area, two bills (HB2617 and SB3126) would prohibit technology businesses from requiring employees to enter into noncompete agreements and restrictive covenants.  “Technology business” is defined as “a trade or business that relies on software development, information technology, or both.”

Cybersquatting: SB2958 would put the burden on a cybersquatter to prove that it did not register a domain name in bad faith or with intent to use it in an unlawful manner, provided that the person claiming cybersquatting can demonstrate the potential of immediate and irreparable harm through misuse of the domain name.

Cybersecurity Council: SB2474 would establish the Hawai‘i cybersecurity, economic, education, anfrastructure security council.

Mobile Devices: Three bills (HB1509HB1896, and SB2729) would make it a State offense to use a mobile electronic device while operating a motor vehicle.  Certain counties already have similar laws.

3D Printing: In response to the rising availability of 3D printers, HB1802 would make it a crime to create, possess, sell, trade, or give another person a firearm made with digital manufacturing technology.

Computer crimes: A series of bills criminalizes various kinds of computer activity, including unauthorized access to a computer or network and damage to a “critical infrastructure computer” (HB1640); theft of a computer (HB1644);  or personal electronic device for storing or retrieving personal information (HB2080); and revenge porn (SB2319).

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Bring It: Preparing for the BYOD Movement at Your Workplace

Posted by on Aug 20, 2013 in Data Security, Employment and Labor

No, it’s not an acronym advising you to come to dinner with your favorite vintage of pinot noir.  BYOD stands for Bring Your Own Device, a movement that’s changing the landscape of information technology at workplaces across the globe.  In the “old days,” companies issued electronic equipment to employees for work use.  Today, employees want to use the latest electronics of their own choice for both work and play.  Surveys consistently show that companies are giving in to such requests, citing the benefits of increased productivity and morale, as well as cost savings from not having to buy the equipment themselves.  However, BYOD programs also create legal risks for companies, including:

  • Violation of labor laws like the Fair Labor Standards Act due to the ability of workers to rack up overtime by doing work on personal devices practically anywhere and at any time, whether or not such overtime is authorized by management
  • Violation of laws prohibiting disclosure of the private information of customers, clients, or patients, such as the Health Insurance Portability and Accountability Act and the Gramm-Leach-Bliley Act
  • Inadvertent disclosure of proprietary company information, which jeopardizes their confidentiality, and as a result, their status as protected trade secrets
  • Complicating the e-discovery process, because electronic data that fall within the scope of a discovery request may reside on devices besides those under the direct control of the company

In light of these risks, the knee-jerk response of management might be to forbid BYOD entirely, but that is not necessarily the best approach.  BYOD is more prevalent than one might think.  A form of BYOD is in play whenever someone stores work data on a personal cloud storage account, uses a personal laptop to draft a memo for work, or forwards work-related word processing files to a private email account for easy access from home.  A company need not officially adopt a BYOD program to have one, which is all the reason why management should be proactive about putting BYOD policies in place.

Learn about the specific risks that a BYOD program creates for your company.  Develop guidelines on acceptable and unacceptable use of personal devices for work-related purposes.  Notify employees of the policies in writing and provide training.  Don’t wait until it’s too late!

Want more tips on BYOD?  Come to the Advanced Employment Issues Symposium in Las Vegas from November 13-15, where I’ll be giving a presentation on “BYOD Challenges: When Employees Bring Their Own Devices to Work.”  Registration information is available at www.aeisonline.com.

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The Electronic Wake Employees Leave Behind

Posted by on May 21, 2013 in Data Security, Employment and Labor

Employer sues ex-employee for not updating his LinkedIn profileJefferson Audio Visual Systems, Inc. v. Light, 2013 WL 1947625 (W.D. Ky. May 9, 2013).

What would you do if your ex-employee told everybody he still works for you?  One company’s response was to sue.  In the first case of its kind, the company decided to sue its former employee for fraud for not updating his LinkedIn profile.

Jefferson Audio Visual Systems, Inc. (JAVS) fired its sales director, Gunnar Light, after he mishandled a potentially lucrative deal and made defamatory statements about JAVS to a prospective customer.  Shortly afterwards, JAVS filed a lawsuit against Light alleging various claims, including fraud.  JAVS argued that Light was fraudulent in failing to update his LinkedIn profile to reflect that he was no longer a JAVS employee.  A Kentucky federal court dismissed the fraud claim because JAVS failed to show that it was defrauded by Light’s LinkedIn profile.  At most, JAVS alleged that the profile tricked others.  Under Kentucky law, a party claiming fraud must itself have relied on the fraudulent statements.

LegalTXTS Lesson: JAVS’ actions against its ex-employee might have been rather extreme, but the case is a reminder that ex-employees can leave behind an electronic wake that is damaging.  Because computer technology is an integral part of work life, management needs to be intentional in disengaging ex-employees from the electronic systems and online persona of the organization.  Each organization must determine for itself what measures for dealing with such post-termination issues are feasible, effective, and consistent with its objectives, but here are some suggestions:

1.  Promptly update the organization’s website, social media profiles, and any other official online presence to reflect that the former employee no longer works for the organization.

2.  Specify who owns Internet accounts handled by the ex-employee for the organization’s  benefit and the information stored in the accounts.  This includes social media accounts and cloud storage accounts (e.g., DropBox, Google Drive, SkyDrive) to the extent they contain proprietary data.  As part of this measure, be sure to obtain the information needed to access the accounts, including any updates to login credentials.

3.  Restrict the amount of access to which former employees, as well as current employees whose departure is imminent, have to workstations, databases, and networks of the organization.  Limiting access helps to prevent theft of trade secrets and proprietary information.  Many CFAA lawsuits have been spawned by a failure to take this precaution.

4.  Check if the employee left behind anything that would enable him or her to gain unauthorized access to company systems, like malware, viruses, or “back doors.”

5.  Enable systems that allow of erasure of the organization’s data from electronic devices used by the ex-employee to remotely access the work network, such as smartphones, laptops, and tablet computers.

6.  Establish guidelines on employee use of the company’s intellectual property on personal internet profiles (e.g., Facebook, Twitter, LinkedIn), including trademarks and trade names.
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A Hack By Any Other Name

Posted by on May 8, 2013 in Data Security, Employment and Labor

The Computer Fraud and Abuse Act (CFAA) criminalizes forms of “hacking” other than actually breaking into a computer system — United States v. Nosal, 2013 WL 978226 (N.D .Cal. Mar. 12, 2013)

Nosal is back.  This is the case that spawned a Ninth Circuit decision narrowing the reach of the CFAA to hacking activity.  The case returned to the trial court after the Ninth Circuit decision.  The trial court recently convicted the defendant (David Nosal) of violating the CFAA.  But before analyzing the decision, let’s take a brief look at the background.

Nosal is a former employee of Korn/Ferry, an executive search and recruiting firm.  After leaving Korn/Ferry, Nosal obtained access to Korn/Ferry’s confidential and proprietary data with help from others.  In some instances, Nosal got Korn/Ferry employees to give their passwords to outsiders to enable them to access the firm’s computer systems.  In another instance, a Korn/Ferry employee logged onto the firm’s computer system using her password and then allowed a non-employee to use the system.  Nosal used the stolen data to start his own executive search business.  Nosal and his co-conspirators were indicted for violating the CFAA by exceeding authorized access to Korn/Ferry’s computers “knowingly and with intent to defraud.”

An en banc panel of the Ninth Circuit held that the CFAA’s prohibition on accessing computers “without authorization” or “exceeding authorized access” is limited to violations of restrictions on access to information, not restrictions on its use.  The Ninth Circuit reasoned that the CFAA primarily targets hacking rather than misappropriation of information.  The Ninth Circuit returned the case to the trial court to determine if Nosal violated the CFAA under its interpretation of the statute.

Nosal tried to persuade the trial court to push the Ninth Circuit’s rationale one step further.  Nosal argued that, since the CFAA is an anti-hacking statute, it is violated only when someone circumvents technological barriers to access to a computer.  Under this narrow interpretation, not every form of unauthorized access to a computer necessarily violates the CFAA.  The trial court disagreed with Nosal’s interpretation because the Ninth Circuit did not base CFAA liability on the manner in which access is restricted.  Moreover, password protection is a form of a technological access barrier, and Nosal and his co-conspirators clearly bypassed password restrictions.

Nosal next argued that his co-conspirators did not act “without authorization” because they used a valid password issued to a Korn/Ferry employee.  The court wasn’t enamored with this argument either.  Whether an act is authorized must be viewed from the perspective of the employer who maintains the computer system.  Clearly, an employer would not authorize an employee to allow another person to use his or her password.  Nosal attempted to analogize consensual use of an employee’s computer password to consensual use of an employee’s key to gain physical access to a building, a situation that Nosal argued would not violate trespass law.  The court also rejected this argumen.

Finally, Nosal argued that the Korn/Ferry employee who engaged in “shoulder surfing” (i.e., logging into the firm’s computer system and then letting another person use the system) did not engage in unauthorized “access.”   The court found no difference between an employee who gives her password to an outsider and an employee who logs into the firm’s computer system with her password and then lets an outsider use the system.  Both situations qualify as “access” under the CFAA.

LegalTXT Lesson: The CFAA targets hacking instead of misappropriation (so the Ninth Circuit says), but hacking could take various forms.  According to the latest Nosal decision, the CFAA criminalizes at least these forms: (a) breaking into a computer system; (b) letting an outsider use your password to access a system; (c) logging into a system with your password and then letting an outsider use the system.

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Court Says Sharing a Video on Vimeo Doesn’t Fit the SCA

Posted by on Mar 1, 2013 in Data Security, Litigation

Sharing a link to unauthorized video capture of proprietary information is not a violation of Stored Communications ActCastle Megastore Group, Inc. v. Wilson, 2013 WL 672895 (D. Ariz. Feb. 25, 2013)

In closing arguments to the jury at the O.J. Simpson murder trial, defense attorney Johnnie Cochran famously quipped, “If it doesn’t fit, you must acquit.”  Plaintiff’s attorneys looking to add a Stored Communications Act (SCA) claim to their complaint would do well to heed Cochran’s advice.  There have been a rash of cases dismissing ill-fitted SCA claims (see my recent posts here and here).  Castle Megastore Group, Inc. v. Wilson is the latest.

Castle Megastore Group, Inc. (CMG) sued its former employees for allegedly sharing confidential company information with other companies while they were still employed at CMG.  CMG claimed that Flynn, who was employed by CMG as its “Social Media Specialist,” violated the SCA by posting a video of a confidential CMG managers meeting on Vimeo, a third party website, and sending co-workers the link to the video and the password to his personal Vimeo account.

This scenario didn’t fit into within the prohibitions of the SCA, the court said.  CMG argued that Vimeo was an “electronic communication service” within the meaning of the SCA, that the defendants knew the video contained confidential content before accessing it, and that Flynn lacked authority to give others access to the video.  The court agreed that Vimeo is an electronic communication service, but Vimeo is where Flynn shared the video, not where he obtained it.  The CMG did not allege that Flynn obtained the video through unauthorized access to a CMG-owned electronic communication service.  Flynn was authorized to grant access to his personal Vimeo account.  Sharing a link and password to that account did not violate the SCA, the court ruled.

LegalTXTS Lesson:  Read the SCA carefully before making a claim under it.  Understand how the various concepts in the statute (like “access,” “without authorization,” “facility,” and “electronic communication service”) fit together.  Just because one or more of the concepts is present in a given situation doesn’t mean you’ve a viable SCA claim.

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