http://www.lawnewsnetwork.com/stories/feb/e022299ad.html Injunction Issued for Hacking Away Competitor's Customer Base Judge: Conduct violates federal Wiretap Act By Shannon P. Duffy The Legal Intelligencer Monday, February 22, 1999 Hacking into a competing company's computers to get the names of its customers from e-mail files violates the Federal Wiretap Act, a Pittsburgh federal judge has ruled. In her four-page order in Labwerks Inc. v. Sladekutter Ltd., U.S. District Judge Donetta W. Ambrose enjoined an Internet Website development company from making any future attempts to hack into its competitor's system and ordered it to return the e-mails it stole. Ambrose also ordered Sladekutter to contact the customers whose names it accessed -- and whose business it tried to steal -- and inform them of the court injunction. The central figure in the case is Daniel Dehner, a former Sladekutter employee who is now the vice president and chief technical officer at Labwerks. According to court papers, Dehner worked full-time at Sladekutter as a multi-media developer from November 1997 to September 1988, and then continued to work there part-time for two months as a consultant. During his consulting phase, Dehner worked for both Sladekutter and Labwerks. At times, he would use Sladekutter's computers to access Labwerks' system in order to complete projects. Judge Ambrose of the Western District found that Dehner informed Sladekutter of his other work. And when he started full-time work with Labwerks in November 1998, he never again accessed Sladekutter's computers. She also found that Dehner never took any of Sladekutter's materials and had accessed only those files that were pertinent to the projects he was working on. But Ambrose found that Sladekutter mistakenly believed that Dehner was violating a non-compete clause he had signed in December 1997. The non-compete agreement was never valid, Ambrose found, since Dehner signed it without receiving any additional compensation, benefits or title in exchange. On Nov. 13, 1998, Ambrose found that Sladekutter "gained unauthorized access" to Labwerks computer system by using a combination of Dehner's name and his social security number. Once he had successfully hacked his way in, Ambrose said, Sladekutter copied Dehner's e-mails and the names of Labwerks' customers. Labwerks' attorney, Peter A. Santos of Dickie McCamey & Chilcote, said he proved that Sladekutter was the hacker by presenting a detailed computer log in court which showed that the unauthorized entry into its system came from "sladekutter.com," and that the hacker made several unsuccessful attempts at guessing Dehner's password before breaking in. Soon after the hack job, Abrose found that Sladekutter wrote letters to two of Labwerks clients and demanded that they stop doing business with Labwerks based on the non-compete clause. Both clients soon informed Labwerks that they would likely be withdrawing their business. In her conclusions of law, Ambrose declared that the non-compete agreement was invalid since it was presented to Dehner after he had agreed to the terms of his employment, but added no new consideration. Sladekutter's removal of Dehner's e-mails, she said, violated the Federal Wiretap Act and its contacts with the two customers "constitute an intentional interference with plaintiff's existing contractual relations." Ambrose said Labwerks proved that it would suffer irreparable harm without a court injunction "since it established through testimony that it will go out of business if the two clients withdraw their business." Santos hailed the decision as a significant victory that had rescued his client from potential financial disaster. "The court has said in no uncertain terms that it will not tolerate one business breaking into another business's computer system. It's illegal and it will be stopped," Santos said. -o- Subscribe: mail majordomoat_private with "subscribe isn". Today's ISN Sponsor: Internet Security Institute [www.isi-sec.com]
This archive was generated by hypermail 2b30 : Fri Apr 13 2001 - 13:19:56 PDT