Tuesday, March 16, 2010

Traverse Internet Law Federal Court Report: January 2010 Hacking Lawsuits

The facts are unproven allegations of the Plaintiff and all commentary is based upon the allegations, the truthfulness and accuracy of which are likely in dispute.

FILED: 1/26/2010

Disputes about the ownership of domain names are nothing new. If you are an employee of a company or a partner with someone, make sure you have a clear understanding as to who actually owns a domain name. All because your name is on the account as a registrant contact, or even as the individual registrant, means very little if you acquired it while employed by, and for the benefit of, your employer or other business enterprise.

The Plaintiff is one of the largest special events, party and game rental sources in the country. The Defendants are former employees who allegedly acquired access to the Plaintiff’s domain name registrant account at Go Daddy before they left to start a competing business and transferred control of the Plaintiff’s website to themselves hidden behind the “domains-by-proxy” service.

The lawsuit alleges intentional and bad faith misappropriation of trade secrets, breach of contract, common law unfair competition, violation of California Business and Professional Code 17200 and 17500, conversion, fraud, intentional interference with economic relationships, intentional interference with prospective business advantage, federal unfair competition, violation of the Computer Fraud and Abuse Act, copyright infringement, breach of duty of loyalty, and civil conspiracy. The claim for relief includes a request for declaratory relief and extensive injunctive relief as well as restitution, disgorgement of profits related to Plaintiffs’ trade secrets, actual damages, compensatory damages, consequential damages, punitive damages, statutory double damages, costs, pre- and post-judgment interest, and reasonable attorneys’ fees. Traverse Internet Law Cross-Reference Number 1391.

FILED: 1/08/2010

“Hacking” is the unauthorized access of computers. In order to be prosecuted criminally you generally have to damage the computer or business in a very serious way. In order to be sued civilly federal law requires at least $5,000 in economic damages. Some state laws permit prosecution or a civil action with no damages. Unknown to most people is the fact that signing up for a website contrary to the specific provisions of the user agreement can be considered “hacking” and get you in a lot of trouble. Can you legally use an alias or a pseudonym to sign-up for a website when the user agreement requires you to use your real name? It is an unsettled area of law, but as we see in this case, you can certainly be sued for doing so.

The Plaintiff owns and operates a highly successful website where independent writers and publishers can submit original articles on a wide variety of topics in a range of formats. The Defendant is alleged to have obtained unauthorized and fraudulent accounts that gave him access to the Associated Content website. Plaintiff then alleges that Defendant authored a “How To” guide that provides detailed instructions on how to defraud Associated Content.

The lawsuit alleges violations of the Computer Fraud and Abuse Act, breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, federal copyright infringement, federal trademark infringement, federal trademark dilution, and unjust enrichment. Prayer for Relief requests injunctive relief against the Defendant as well as actual damages, exemplary damages, and attorneys’ fees and costs. Traverse Internet Law Cross-Reference Number 1392.

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