Fidlar v. LPS Deconstructed
Several months ago, I briefly summarized Fidlar Technologies v. LPS Real Estate Data Solutions, 2015 WL 1059007 (N.D.Ill. 2015), a Federal court case in Illinois pitting Fidlar, a software firm against LPS, a real estate data analytics company who allegedly reverse- engineered Fidlar’s Laredo program, which made paper real estate records available on-line to various counties across the country. In late 2013, the court denied LPS’ motion to dismiss Fidlar’s claims. Today’s article is the sequel to the earlier one. [web-scraper-1]
Last month (March 2015), the Federal court granted summary judgment for LPS on all of Fidlar’s claims. You might recall that the Laredo program allowed County Recorders’ offices to make electronic real estate records available to viewers for a fee. Fidlar sued when it found out that LPS was using a web harvester to bypass Fidlar’s protocols and capture the electronic records without allowing its on-line minutes to be tracked and also not having to pay certain print fees associated with the records.
The Computer Fraud And Abuse Act Claim
On its Computer Fraud and Abuse Act (CFAA) claim, the court found there was a lack of evidence of LPS’ intent to defraud based on LPS’ avoidance of paying print fees. The CFAA defines an intent to defraud as acting “willfully and with specific intent to deceive or cheat, usually for the purpose of getting financial gain for one's self or causing financial loss to another.”
The court noted that LPS offered sworn testimony that printing real estate records was never its objective, that LPS continued paying the maximum monthly access fees to the counties and used its “client” program not only in fee-charging counties, but also those counties that didn’t charge access fees.
The court also gave a restrained application of the CFAA. It found that the Act’s aim is to punish those who access computers with the intention of deleting, destroying, or disabling information they find.
LPS’ alleged attempt to avoid paying for minutes and printing fees wasn’t the type of damage contemplated by the CFAA. The mere copying of electronic information from a computer system is not enough to satisfy the CFAA's damage requirement.
Fidlar’s Illinois Computer Crime Prevention Law (CCPL) Claim
This claim also failed. Like the CFAA, the CCPL broadly outlaws computer tampering and knowingly causing damage to a computer or to its data. The court held that Fidlar failed to show that LPS knew or should have known that the use of its client program would cause loss to the counties or cause Fidlar to lose customer goodwill and subscription revenue.
Fidlar's Trespass to Chattels Claim
Finally, Fidlar’s trespass to chattels claim failed. Trespass to chattel is an archaic legal doctrine aimed at protecting the integrity of someone’s personal property. To successfully claim trespass to chattels, a plaintiff in Fidlar’s position must show “direct physical interference.”
Fidlar’s claim that LPS's web harvester commands “physically touched” its computers and “substantially interfered” with Fidlar's computer network wasn’t supported by the evidence.
The court noted that any interference was Fidlar’s claimed loss of subscription revenue and loss of goodwill. These did not equate to something that threatened the proper functioning of Fidlar’s servers.
Much has been and more likely will be written on the scope of the CFAA. It is a broad Federal statute with both criminal and civil components and figures fairly prominently in both national and local news.
The Fidlar case is representative of a court narrowing the Act’s scope and refusing to expansively apply it to the economic losses (e.g. subscription fees, etc.) claimed by Fidlar. Instead, a successful CFAA claimant must show that its computer equipment or system was physically damaged or its data destroyed. Otherwise, the proper remedy likely involves a breach of contract or violation of trade secrets action.
About the Author: Paul Provaznik
Paul is a Chicago-based commercial litigation attorney with over 15 years’ experience trying cases in state and federal courts.