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United States v. Nosal

United States Court of Appeals for the Ninth Circuit
844 F.3d 1024 (2016)


Facts

The federal government (plaintiff) prosecuted David Nosal (defendant) for trade-secret theft, in violation of 18 U.S.C. § 1832. The trial evidence established that Nosal was employed by Korn/Ferry International, a corporate executive-search firm. Korn/Ferry's key asset was its proprietary "Search" database, containing data on thousands of potential corporate executives. The data was uploaded from public sources such as LinkedIn. Search's value to Korn/Ferry derived from its capability to aggregate previous user queries and the outcomes of previous executive searches to refine its capability to generate targeted candidate search lists. Korn/Ferry never gave anyone access to Search without making them sign strict confidentiality agreements, which emphasized Search's valuable and legally protected status. The Search home screen notified users that it was "intended to be used by Korn/Ferry employees for work on Korn/Ferry business only," and search lists generated by Search were marked "Korn/Ferry Proprietary & Confidential." Nosal and several associates secretly downloaded Search data to help them establish a rival executive-search company. Even after Nosal and his associates quit Korn/Ferry and set up their own business, they persuaded an ally still on the Korn/Ferry payroll to continue funneling Search data to them. The jury convicted Nosal. On appeal to the Ninth Circuit Court of Appeals, Nosal argued that Search data could not be considered a trade secret because it came from public sources, that Korn/Ferry shared Search data with others, and that Nosal neither knew nor intended that his unauthorized use of Search data would hurt Korn/Ferry.

Rule of Law

Issue

Holding and Reasoning (McKeown, J.)

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