Computer Fraud Suit Based On Real estate Records Fails – Illinois Northern District

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The Northern District of Illinois (Fidlar Technologies v. LPS Real Estate Data Solutions, 2015 WL 1059007 (N.D.Ill. 2015) granted summary judgment for a defendant real estate analytics firm in a computer fraud case filed by a software firm who makes paper real estate records available on-line for various county recorders offices across the country.

The plaintiff developed a program called “Laredo” that computerized real estate records and made them available to viewers for a fee.  The plaintiff sued when it found out that the defendant was using a web harvester to bypass plaintiff’s software controls and capture the electronic records.  The defendant’s harvester allowed it to disguise the amount of time it was spending on-line and so avoid paying print fees associated with the electronic data. 

The Computer Fraud And Abuse Act Claim

On its Computer Fraud and Abuse Act, 18 U.S.C. s. 1030 (“CFAA”) claim, the Court found there was a lack of evidence of defendant’s intent to defraud based on defendant evading the printing fees.  The CFAA defines an intent to defraud as acting “willfully and with specific intent to deceive or cheat, usually for the purpose of getting financial gain for one’s self or causing financial loss to another.”

The court noted that defendant offered sworn testimony that printing real estate records was a minor part of its business and that it did pay the various counties the maximum monthly access fee for the real estate data.  The defendant also produced evidence that it used its “client” program (which could avoid the time tracking and printing charges) not only in fee-charging counties, but also in those that didn’t charge at all.  This bolstered its argument that the harvester’s fee-avoidance was an unintended consequence of the defendant’s program.

Siding with the defendant, the court applied the CFAA restrictively.  It found that the Act’s aim is to punish those who access computers with the intention of deleting, destroying, or disabling information they find.

Attempting to avoid paying for minutes and printing fees – the “damage” alleged to have been done by the defendant here – wasn’t the type of damage contemplated by the CFAA.  The mere copying of electronic information from a computer system isn’t enough to satisfy the CFAA’s damage requirement.  18 U.S.C. § 1030(e)(8).

Trespass to Chattels

The plaintiff’s trespass to chattels claim was also rejected.  Trespass to chattel is an archaic legal doctrine aimed at protecting the integrity of someone’s personal property.  To successfully claim trespass to chattels, a plaintiff i must show “direct physical interference.”

The plaintiff’s claim that the defendant’s web harvester commands “physically touched” plaintiff’s computers and “substantially interfered” with plaintiff’s computer network wasn’t supported by the evidence.

The court noted that any interference was plaintiff’s claimed loss of subscription revenue and loss of goodwill.  These losses didn’t equal a physical threat to the proper functioning of plaintiff’s servers.

Afterwords:

Fidlar represents a court narrowly applying the CFAA so that it doesn’t cover the type of economic loss (e.g. subscription fees, etc.) claimed here by the plaintiff.  The case also amply illustrates that a successful CFAA claimant must show that its computer equipment or system was physically damaged or its data destroyed.  Otherwise, the proper remedy lies in a breach of contract or trade secrets violation.

 

 

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.