Consulting Firm Levels Computer Fraud, Trade Secret Claims at Ex-Partner

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SAN FRANCISCO—A Bay Area consulting firm has slapped a former partner with a civil suit claiming he hacked into a company computer account and stole trade secrets after quitting to work at a competing venture.

SOAProjects Inc. on Thursday sued Jayaraman Swaminathan, who according to the complaint had made partner at the firm just five months before leaving in May to work at AppWrap LLC, a competing company he and his wife founded in October.

The complaint, filed by Harmeet Dhillon of Dhillon Law Group, claims Swaminathan violated the newly enacted federal Defend Trade Secret Act and the Computer Fraud and Abuse Act, the federal anti-hacking law which was the subject of two major, recent Ninth Circuit rulings.

“No one is begrudging this guy going out and making a living,” Dhillon said in a phone interview Friday morning. “It’s not competition that’s barred. It’s competition using stolen information,” she said.

Reached by text message Friday morning, Swaminathan said he was unaware of the lawsuit. After he was sent a copy, Swaminathan said in a brief phone interview that he was in a meeting and not immediately available for comment.

According to the complaint, after Swaminathan left Mountain View-based SOAProjects in May, the company deactivated all accounts he had access to while working for the company. About three weeks after his resignation, the company claims he used a password recovery tool he knew as a former partner to generate a new password into a SOAProjects cloud account.

Swaminathan allegedly used the new account to access data about SOAProjects clients, its leads for new clients, and client payment history. The complaint claims that Swaminathan has approached multiple SOAProjects employees about supplying him with proprietary information, including software code developed for clients.

The suit against Swaminathan comes on the heels of two major decisions from the Ninth Circuit weighing in on the Computer Fraud and Abuse Act, or CFAA. On July 5, the court upheld the conviction of former Korn/Ferry International executive recruiter David Nosal. Nosal accessed information in a company database “without authorization,” the court found, when his associates used a password belonging to a secretary who was still with the company. On Tuesday the court found that defunct social-media aggregator Power.com violated the law by scraping Facebook servers for user data after receiving a cease-and-desist letter from the social-media company.

Dhillon said the timing of the complaint, coming after appellate decisions bolstering the CFAA, is “coincidental, because I don’t think this is even a close case.”

The suit marks the first time she’s brought a claim under the new federal trade secret law, enacted in May. “There is no interpretation of the statute out there as of yet, so that’s going to be interesting as the case proceeds,” she said. “But we are pleased to have this additional tool in our arsenal for fighting these cases,” she said.

Article by Ross Todd, As Published on Law.com

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