Friday, June 18, 2010, 6/18/2010 10:02:00 AM

Hilton's Motion to Dismiss Starwood's Federal Trade Secrets and Computer Theft Case Denied

By Todd

The news wires are abuzz with reports that Hilton's motion to dismiss filed 26 February 2010 has been denied. U.S. District Court Judge Stephen C. Robinson said there was plausible reason to continue the legal action, instead of submitting it to arbitration, and he also concluded there was federal question jurisdiction under the federal Computer Fraud and Abuse Act. For non-lawyers out there in trade secret land, this motion was likely filed with Hilton's full expectation that it would not be granted.

Judge Robinson was forced to address the CFAA and the judicial dialogue that seems to follow this federal law - whether an employee with authority to enter databases containing secret information violated the CFAA when they use that authority for purposes of theft. Judge Robinson concluded that employees do violate the Act when they exceed their authority in accessing the data.

Judge Robinson wrote “… this is the case of the ‘corporate spy,’ a company employee who essentially perpetrates a fraud against the company by obtaining the employer’s information under false pretenses,” Robinson said in the document. “In this scenario, the employee has lawful access to the employer’s information—but has obtained this access through trickery and deceit.”

We'll continue to keep an eye on this Starwood v. Hilton trade secret case for you.


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