Company's computer trespass claim against former employee is allowed to proceed

A North Carolina trial court recently denied a request to dismiss a company's computer trespass claim against its former employee and his new employer. The company alleged he accessed and used, without authorization, information contained on its cloud-based computer server using his previously provided username and password after his employment ended in order to compete with it on behalf of his new employer.

According to the court, further information was needed to determine whether the former employee was "authorized" to access the server following his resignation. In light of this case, employers should make absolutely clear to departing employees they are not authorized to access the company's confidential information—whether stored on a server or elsewhere—following their termination.

Facts

Encompass Services provides land surveying services for oil and gas transmission pipelines. To obtain business, it submits bids to customers. The bids are prepared using cost data for prior projects, maps, and drawings. The company considers such information confidential and stores it on a cloud-based computer server, to which only certain authorized employees are allowed access. Authorized employees are given a username and password, and their access is controlled and monitored by a third-party information technology provider called CMIT.