United States v. Batti
2011 WL 111745, 631 F.3d 371, 2011 U.S. App. LEXIS 674 (2011)
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Rule of Law:
When information obtained in violation of the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030, lacks a readily ascertainable market value, its value may be determined by any reasonable method, including its cost of production, to satisfy the statutory threshold for a felony offense.
Facts:
- Luay Batti worked in the IT department of Campbell-Ewald, an advertising company.
- About six months before his termination, Batti accessed Campbell-Ewald’s server without authorization and copied confidential files belonging to the company's CEO, including executive compensation, financial statements, and strategic plans.
- On February 27, 2007, Batti met with company Vice Chairman Joseph Naporano, giving him a disk containing some of the copied CEO files and video footage that Campbell-Ewald had purchased for approximately $305,000 for use in television commercials for General Motors.
- A few days later, Campbell-Ewald fired Batti for exercising 'bad judgment' in accessing and copying the files.
- Following his termination, Batti accessed Campbell-Ewald’s confidential files at least twenty-one more times through a company server and another employee's email account.
- On April 18, 2007, Naporano discovered two publicly accessible websites containing confidential information regarding Campbell-Ewald and GM.
- In response to the security breach, Campbell-Ewald incurred costs of $47,565 for an IT security firm's investigation and advice from outside legal counsel.
Procedural Posture:
- The U.S. government charged Luay Batti in the United States District Court with one count of improperly accessing a protected computer under 18 U.S.C. § 1030(a)(2)(C).
- The government sought a felony conviction under § 1030(c)(2)(B)(iii), alleging the value of the information Batti obtained exceeded $5,000.
- At a bench trial, Batti challenged only the government's valuation of the information.
- The district court found Batti guilty, determining that the $305,000 production cost of video footage he obtained satisfied the statutory value threshold.
- The district court sentenced Batti and ordered him to pay $47,565 in restitution to Campbell-Ewald.
- Batti, as appellant, appealed his conviction and the restitution order to the United States Court of Appeals for the Sixth Circuit.
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Issue:
Does using the cost of production to determine the 'value of information obtained' under 18 U.S.C. § 1030(c)(2)(B)(iii) constitute a reasonable method of valuation when the information lacks a readily ascertainable market value?
Opinions:
Majority - Karen Nelson Moore
Yes. Where information obtained by a violation of § 1030(c)(2)(B)(iii) does not have a readily ascertainable market value, it is reasonable to use the cost of production as a means to determine the value of the information obtained. The statute requires a determination of the 'value of the information obtained,' not whether that value was diminished by the defendant's actions; terms like 'loss' and 'damage' are defined and used in other parts of the statute but are absent from the subsection in question. By analogy to the Interstate Transportation of Stolen Property Act, 18 U.S.C. § 2314, courts have held that when a stolen item lacks a market value, any reasonable method of valuation is permissible, including cost of development or production. Because the video footage Batti obtained was intangible and lacked an easily ascertainable market value, the district court's use of its production cost ($305,000) was a reasonable and permissible method to establish that its value exceeded the $5,000 felony threshold.
Analysis:
This decision provides a crucial valuation framework for prosecutors charging defendants under the Computer Fraud and Abuse Act for theft of intangible information. By endorsing the 'cost of production' method where market value is unclear, the court makes it easier to meet the $5,000 felony threshold for misappropriation of proprietary data like trade secrets, research, or internal strategic documents. This precedent broadens the practical application of the CFAA's felony provisions, ensuring that the theft of information that is internally valuable but not publicly traded can still be prosecuted as a serious offense. It solidifies an important tool for protecting intellectual property in the digital age.
