Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 1 of 22 PageID #:1000
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`KLUBER SKAHAN & ASSOCIATES,
`INC., an Illinois Corporation,
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`Plaintiff,
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`v.
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`CORDOGAN, CLARK & ASSOC., INC.,
`an Illinois Corporation, and JEYEONG JIM,
`an individual,
`
`No. 08-cv-1529
`Judge James B. Zagel
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`Defendants.
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`I. BACKGROUND
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`MEMORANDUM OPINION AND ORDER
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`Kluber Skahan & Associates, Inc. (“KS+A”) is an architectural firm based in Batavia,
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`Illinois. It has sued a competing architectural firm, Cordogan, Clark & Assoc., Inc.
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`(“Cordogan”), and a former engineering intern, Mr. Jeyeong Kim (“Kim”), who left KS+A to
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`join Cordogan. KS+A’s seven-count complaint arises out of Defendants’ alleged acquisition and
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`misappropriation of numerous of its copyrighted works, including architectural plans, designs,
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`and other specifications. The second amended complaint alleges: (1) copyright infringement
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`under the Copyright Act (Count I), 17 U.S.C. §§ 101-1332; (2) violation of the Computer Fraud
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`and Abuse Act (“CFAA”) (Count II), 18 U.S.C. § 1030; (3) consumer fraud under the Illinois
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`Consumer Fraud and Deceptive Business Practice Act (Count III), 815 ILCS §§ 505/1-505/12.;
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`(4) unfair and deceptive trade practices under the Uniform Deceptive Trade Practices Act (Count
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`IV), 815 ILCS §§ 510/1-510/5.; (5) common law unfair competition (Count V); (6) common law
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`breach of contract (Count VI) against Kim only; and (7) common law tortious interference with
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`contractual relations (Count VII) against Cordogan only. Before the court is Defendants’ motion
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`to dismiss, filed under Federal Rule of Civil Procedure 12(b)(6), which argues that: (1) the
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`copyright infringement claim should be dismissed to the extent that it concerns works covered by
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`allegedly invalid copyright registrations; (2) the CFAA claim should be dismissed as falling
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`beyond the statute’s two year statute of limitations; (3) the state and common law claims for
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`consumer fraud, deceptive trade practices, and unfair competition should be dismissed because
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`they are preempted by the Copyright Act’s preemption clause; (4) the consumer fraud claim does
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`not state a cause of action under the Consumer Fraud Act; (5) Plaintiff’s allegations do not
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`support its claim under the Deceptive Trade Practices Act or its unfair competition claim; and (6)
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`the alleged contract does not support either the breach of contract claim or the tortious
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`interference with contract claim because the contract lacks consideration. For the following
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`reasons, Defendants’ motion is granted in part and denied in part.
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`II. STANDARD OF REVIEW
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`A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency
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`of a complaint, not the merits of a case. Autry v. Northwest Premium Servs., Inc., 144 F.3d 1037,
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`1039 (7th Cir. 1998). The defendants’ motion to dismiss should be granted only if the plaintiff
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`cannot prove any set of facts in support of its claim that would entitle it to relief. Conley v.
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`Gibson, 355 U.S. 41, 45-46 (1957). Furthermore, I must construe the complaint “in the light
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`most favorable to the plaintiff, taking as true all well-pleaded factual allegations and making all
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`possible inferences from those allegations in his or her favor.” See Barnes v. Briley, 420 F.3d
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`673, 677 (7th Cir. 2005). Dismissal is warranted only if it “appears beyond doubt that the
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`plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”
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`Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 3 of 22 PageID #:1002
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`County of McHenry v. Ins. Co. of the West, 438 F.3d 813, 817 (7th Cir. 2006). That said,
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`plaintiff’s “obligation to provide the grounds of his entitlement for relief requires more than
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`labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.
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` Factual allegations must be enough to raise a right to relief above the speculative level.” Bell
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`Atlantic v. Twombly, 550 U.S. 544, 555 (2007).
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`III. STATEMENT OF RELEVANT FACTS
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`KS+A is an Illinois corporation and is a licensed professional design firm engaged in the
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`practice of architecture and engineering. Cordogan is a competing architecture firm. From April
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`15, 2002, through April 12, 2004, KS+A employed Kim as an engineering intern. KS+A alleges
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`that Kim became an employee of Cordogan on or before April 5, 2004, at least one week before
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`he left KS+A. KS+A’s claims center around Defendants’ alleged unauthorized acquisition,
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`infringement of, and continued misappropriation of KS+A’s copyrighted works.
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`A. KS+A’s Copyrighted Work
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`Two categories of content copyrighted by KS+A are at issue in the defendants’ motion to
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`dismiss. They are: (1) works in the KS+A Electrical Standards Library; and (2) the KS+A
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`Project Plans. 2
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`1. The KS+A Electrical Standards Library
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`The KS+A Electrical Standards Library is a compiled library of original technical
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`engineering drawings (the “KS+A Electrical Standards Drawings”) and symbols and
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`abbreviations used in electrical engineering (the “KS+A Symbols and Abbreviations”). KS+A
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`1
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` Kim left Cordogan some time in 2006 and is presently employed by an unnamed third party.
` In addition to the categories of copyrighted works at issue in this opinion are the KS+A Specification Sections.
`he defendants have filed a separate answer regarding these works, so they need not be treated here.
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`continues to update and add to its Electrical Standards Library. KS+A uses these works in the
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`creation of its architectural and engineering plans, drawings, and designs. Indeed, KS+A alleges
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`that the KS+A Electrical Standards Drawings and the KS+A Symbols and Abbreviations are
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`integral components of a successful construction project because they increase job efficiency and
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`reduce the time needed to create the plans, drawings and specifications needed for its building
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`projects. KS+A has spent considerable time, money and effort to create, develop, and maintain
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`these works. KS+A obtained a copyright registration in the KS+A Symbols and Abbreviations in
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`2007. KS+A alleges that it subsequently sought to change the content of that work, so on May
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`21, 2008, KS+A submitted an application for registration of the KS+A Symbols and
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`Abbreviations on May 21, 2008, which the Copyright Office registered on May 22, 2008. In its
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`application for the 2008 KS+A Symbols and Abbreviations registration, KS+A indicated that it
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`filed this new registration as an updated version of the work covered by the 2007 registration.
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`Pl.’s Resp. to Def.’s Mot. to Dismiss 2d Am. Compl. (Doc. 52) Ex. 2.
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`Similarly, KS+A also obtained a copyright registration in the KS+A Electrical Standards
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`Drawings in 2007. KS+A sought to change the nature of this work in May 2008, so it obtained a
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`new registration at that point for the KS+A Electrical Standards. It did this once more on
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`September 24, 2008, obtaining another copyright registration on September 29, 2008. 6
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`3 (
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`4 (
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` Copyright registration VAu 739-704, dated January 11, 2007. Pl.’s Resp. to Def.’s Mot. to Dismiss 2d Am. Compl.
`Doc. 52) Ex. 1. The title of the work that KS+A references in its pleadings is “Grande Park Elementary School
`Plans and Project Manual – Under Construction.” Id. The nature of this work is listed as “architectural work.” Id.
` Copyright registration VAu 960-756, dated May 21, 2008. Pl.’s Resp. to Def.’s Mot. to Dismiss 2d Am. Compl.
`Doc. 52) Ex. 2. The title of the work that KS+A references in its pleadings is “KS+A Symbols and Abbreviations.”
`Id. The nature of this work is listed as “Technical Drawing of Symbols and Text.” Id.
` In its pleadings, KS+A references the VAu 739-704 registration, dated January 11, 2007 and mentioned supra note
`.
` Copyright registration VAu 967-727, dated September 29, 2008. Pl.’s Resp. to Def.’s Mot. to Dismiss 2d Am.
`ompl. (Doc. 52) Ex. 7. The title of the work that KS+A references in its pleadings is “KS+A Electrical Standards
`Drawings.” Id. The nature of this work is listed as “Technical drawings and text.” Id. This most recent registration
`reflects that it pertains to an updated version of the two previous registrations covering the KS+A Electrical
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`Every time that KS+A updated its registrations for the KS+A Symbols and Abbreviations
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`and the KS+A Electrical Symbols and Abbreviations, it used Copyright Office form VA. This is
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`the form used to file new registrations pertaining to works in the visual arts.
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`2. The KS+A Project Plans
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`The KS+A Project Plans consist of numerous original project plans, including technical
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`drawings and project manuals. The work covered under this heading includes the drawings and
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`project manuals for various entire construction projects. By way of example in its complaint,
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`KS+A specifically identifies as infringed the following KS+A Project Plans: (1) the Park District
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`Southbury Plans; (2) the New (Plank) Junior High School Plans and Project Manual; (3) the New
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`(Ashcroft) Junior High School Architectural Plans; (4) the Grande Park Elementary School Plans
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`and Project Manual; and (5) the New Elementary Schools 1 and 2 (Southbury Elementary)
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`Architectural Plans. 2d Am. Compl. ¶¶ 22-26.
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`Each of the five project plans is protected by copyright registrations. In all five cases,
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`KS+A obtained a copyright registration for the project plan in January 2007. These initial
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`registrations reflect the nature of the work contained therein as “Architectural Work.”
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`Subsequently, in May 2008, KS+A sought to change the nature of the work for each of the five
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`project plans by filing Copyright Office Form CA with Register of Copyrights. Form CA is the
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`form used to file supplemental registrations that correct or update existing registrations. See Pl.’s
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`Resp. to Def.’s Mot. to Dismiss 2d Am. Compl. (Doc. 52) Ex. 3 (Copyright Office Form CA).
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`On May 21, 2008, the United States Register of Copyrights granted KS+A a Supplementary
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`Standards Drawings.
` On January 5, 2007, the United States Register of Copyrights granted KS+A Certificates of Registration for
`egistrations numbered VAu 740-105, VAu 734-219, and VAu 739-071. 2d Am. Compl. ¶¶ 22-24. On January 11,
`2007, the Register of Copyrights granted KS+A Certificates of Registration for registrations numbered VAu 739-704
`and VAu 739-070. Id. ¶¶ 25-26.
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`Certificate of Registration for each of the five project plans. In each of the five supplemental
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`registrations for the project plans, the correction stated is that the nature of the work should be
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`“Architectural Plans,” and not “Architectural Work” as originally filed in 2007. See, e.g., 2d
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`Am. Compl. Ex I (reflecting as the incorrect information from the basic registration “The Nature
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`of This Work was provided as Architectural Work,” and reflecting as the corrected information,
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`“The Nature of This Work should be Architectural Plans”).
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`B. The Parties’ Actions
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`As an employee of KS+A, Kim was exposed and had access to KS+A’s copyrighted
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`works. To the extent that these works are stored electronically, KS+A employed passwords and
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`other security measures to protect its intellectual property. KS+A alleges that during the course
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`of Kim’s employment with KS+A, his authorized access to such electronic content was limited to
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`assisting Kluber in drawing and entering the KS+A Electrical Standards and Drawings and
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`KS+A Symbols and Abbreviations into KS+A’s proprietary Electrical Standards Library. At no
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`point, KS+A alleges, was Kim authorized to copy or use for his own benefit or the benefit of a
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`third party KS+A’s copyrighted works. Kim’s authorization to the KS+A Project Plans was
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`similarly limited.
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`On Kim’s last day working for KS+A, April 12, 2004, KS+A founder Michael T. Kluber
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`conducted an exit interview with Kim. Plaintiff alleges that during the exit interview, Kim was
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`reminded that he was not to take KS+A’s intellectual property, including “plans, specs, and work
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`product,” with him upon resigning. See 2d Am. Compl. ¶ 78. Kim was informed that doing so
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`would be “punishable by law.” See id. KS+A alleges that Kluber and Kim memorialized Kim’s
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`8 V
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` The supplemental registrations were numbered VAu 756-017, VAu 756-019, VAu 756-018, VAu 756-021, and
`Au 756-020, respectively. Id. ¶¶ 22-26.
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`post-employment obligations in an exit interview contract. See 2d Am. Compl. Ex. O. A
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`handwritten section of the exit interview contract reads, “MK requested reimbursement for PE
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`exam and training [sic] $180 + 595. Jey Kim agrees to pay.” Id. Although this language
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`indicates that Kim was obliged to repay these debts to KS+A under the contract, KS+A alleges
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`that it released Kim from his obligations to repay certain other expenses owed to the firm during
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`the exit interview. Both Kluber and Kim signed what is alleged to be the exit interview contract.
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`See id.
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`According to Plaintiff, Kim understood his duty not to take copies of KS+A’s intellectual
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`property and confidential information upon his departure from KS+A, and yet, despite the
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`agreement, Kim allegedly took copyrighted plans, specs and work product, and various other
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`materials, to his new employer Cordogan, at Cordogan’s persuasion. Although Plaintiff does not
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`yet know the exact date upon which Kim took its copyrighted works, it alleges that Kim did so
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`by accessing its protected computers, either without authorization or beyond the scope of his
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`authorization, and copying, transferring, and/or downloading its copyrighted works. Kim
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`allegedly did this while acting as Cordogan’s agent and with the intent to defraud.
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`According to KS+A, shortly after Kim left KS+A to work for Cordogan, Defendants used
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`and reproduced numerous of KS+A’s copyrighted works in preparing Cordogan’s documents,
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`designs, plans, drawings, and specifications. KS+A alleges numerous examples of substantial
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`similarities between its work and Cordogan’s, including references to identical typographical
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`errors. Plaintiff maintains that Defendants used Plaintiff’s copyrighted works knowingly and
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`without KS+A’s consent, thus forming the basis of KS+A’s copyright infringement claim.
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`9
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` Presumably, “MK” stands for Michael Kluber.
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`KS+A alleges that Defendants have and continue to copy, reproduce, and use its copyrighted
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`works, causing KS+A to suffer harm. These allegedly infringed works are KS+A’s copyrighted
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`architectural plans. Further, by selling architectural services that incorporate KS+A copyrighted
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`material, Plaintiff alleges that Defendant perpetrated various forms of fraud, deceptive trade
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`practices, and unfair competition against members of the industry and the consuming public.
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`KS+A commenced this action on March 14, 2008.
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`IV. DISCUSSION
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`A. Copyright Infringement
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`In their motion to dismiss, Defendants argue that Plaintiff’s copyright infringement claim
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`should be dismissed to the extent that it asserts rights over invalid supplemental copyright
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`registrations. Defendants assert that the 2008 registrations over the KS+A Standards Drawings,
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`the KS+A Symbols and Abbreviations, and the KS+A Project Plans all constitute invalid
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`supplemental copyright registrations. Therefore, Defendants argue, because 17 U.S.C. § 411(a)
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`of the Copyright Act requires valid copyright registration as a condition precedent to the
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`commencement of an infringement suit, this court lacks subject matter jurisdiction over the
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`copyright infringement claim.
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`Defendants are correct in asserting that valid copyright registration is required before an
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`infringement suit may be filed. See 17 U.S.C. § 411(a) (“no civil action for infringement of the
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`copyright in any United States work shall be instituted until preregistration or registration of the
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`copyright claim has been made in accordance with this title”); Chicago Bd. of Educ. v.
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`Substance, Inc., 354 F.3d 624, 631 (7th Cir. 2003) (“Although a copyright no longer need be
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`registered with the Copyright Office to be valid, an application for registration must be filed
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`Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 9 of 22 PageID #:1008
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`before the copyright can be sued upon.”). However, I cannot at this time fond the registrations at
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`issue to be invalid supplemental registrations. Therefore, for the following reasons, I deny
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`Defendants’ motion to dismiss Plaintiff’s copyright infringement claim, thereby retaining
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`jurisdiction.
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`1. The Registrations for the KS+A Electrical Standards Drawings and KS+A
`Symbols and Abbreviations Are New Registrations
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`Defendants characterize the 2008 registrations over the KS+A Electrical Standards
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`Drawings and the KS+A Symbols and Abbreviations as impermissible supplemental
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`registrations. Yet taking Plaintiff’s allegations as true, as I must at this stage in the litigation,
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`KS+A has sufficiently pled that the copyright registrations over these works are valid new
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`registrations. KS+A owned a valid copyright in these works under its 2007 registration. As
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`discussed above, it subsequently filed for new registrations over the KS+A Electrical Standards
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`Drawings and the KS+A Symbols and Abbreviations. These applications sought to change the
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`content of the works from the 2007 registration and relied on the 2007 registration as a previous
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`version of the content claimed in the 2008 applications. In so applying, KS+A filed Copyright
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`Office Form VA, which is the form required to apply for new copyright registrations in the visual
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`arts. See 37 C.F.R. § 202.3(b)(2) (setting out the forms to be used when filing new basic
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`copyright registrations). The United States Copyright Register conferred new registrations for
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`the KS+A Electrical Standards Drawings and the KS+A Symbols and Abbreviations on
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`September 29, 2008, and May 22, 2008, respectively. Accordingly, I deny Defendants’ motion to
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`dismiss on this ground. 10
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`10
`Defendants have not asserted, neither of the parties have briefed, and so I will not decide whether KS+A changing
`the nature of the works from “Architectural Work” in the 2007 registration to “Technical Drawings and Text” in the
`new 2008 registrations calls this court’s jurisdiction into question under 17 U.S.C. § 411(a). Regulations require that
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`2. The Supplemental Registrations for the KS+A Project Plans Are Proper
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`With regard to the KS+A Project Plans, Defendants assert that KS+A’s supplemental
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`registrations are invalid, asserting that by making corrections to its Project Plans registrations,
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`KS+A impermissibly attempted to change the nature or content of the original copyright.
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`Section 408(d) of the Copyright Act provides the relevant statutory language concerning
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`corrections and amplifications of copyright registrations:
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`The Register may also establish, by regulation, formal procedures for
`the filing of an application for supplementary registration, to correct
`an error in a copyright registration or to amplify the information given
`in a registration. Such application . . . shall clearly identify the
`registration to be corrected or amplified. The information contained
`in a supplementary registration augments but does not supersede that
`contained in the earlier registration.
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`17 U.S.C. § 408(d). With regard to the “errors” permitted to be corrected under § 408(d), the
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`legislative history the Copyright Act of 1976 and the regulations implementing the Act both
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`indicate: “The ‘error’ to be corrected under subsection (d) is an error by the applicant that the
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`Copyright Office could not have been expected to note during its examination of the claim[.]”
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`H.R. Rep. No 94-1476, at 155 (1976), as reprinted in 1976 U.S.C.C.A.N. 5659, 5771;
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`37 C.F.R. § 201.5(b)(2)(i) (“A correction is appropriate if information in the basic registration
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`was incorrect at the time that basic registration was made, and the error is not one that the
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`Copyright Office itself should have recognized[.]”). Yet the regulations implementing § 408(d)
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`“[w]here dual copyright claims exist in technical drawings and the architectural work depicted in the drawings, any
`claims with respect to the technical drawings and architectural work must be registered separately.” See 37 C.F.R. §
`202.11(c)(4). Although Defendants argue that separate registrations are required for architectural works and plans in
`the context of asserting that KS+A’s registrations are invalid supplemental registrations, nowhere do they suggest
`that KS+A filing a new registration for architectural plans obtained after the commencement of the suit offends §
`411(a) of the Copyright Act when that registration claims a registration for an architectural work as a previous
`registration. The defendants do not press the question of whether independent registrations for architectural plans
`(here, the KS+A Electrical Standards Drawings and KS+A Symbols and Abbreviations) needed to exist in addition
`to the earlier 2007 architectural work registration before the commencement of this suit.
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`proscribe the scope of permissible supplements. Among other restrictions, supplementary
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`registration is not appropriate “to reflect changes in the content of a work[.]” 37 C.F.R. §
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`201.5(b)(2)(iii)(B). Thus, KS+A may use supplemental registrations to correct errors in its
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`original registrations to the extent that doing so does not violate restrictions upon such
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`supplemental registration, as set out by 37 C.F.R. § 201.5(b)(2).
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`Here, KS+A sought supplemental registration to change the nature of the KS+A Project
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`Plans registered in 2007 from “Architectural Work” to “Architectural Plans.” KS+A alleges that
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`these supplemental registrations “merely correct inadvertent errors in the ‘nature of authorship’
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`and ‘nature of this work’ categories of its original registrations.” Pl.’s Resp. to Def.’s Mot. to
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`Dismiss 2d Am. Compl. (Doc. 52) 5. Although there is some concern that KS+A changed its
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`registrations in this way as a tactic to facilitate suit, at this stage in the litigation I must accept
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`KS+A’s well-pleaded factual allegations as true.
`11
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` Since the supplement purports merely to
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`correct the nature of the work, it stands to reason that the supplemental registration does not
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`impermissibly alter the content protected by the original registration. Because KS+A has pled
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`that the correction it made is of the nature intended to be corrected by supplemental registration, I
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`deny Defendants’ motion to dismiss on this ground.
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`B. Computer Fraud and Abuse Act Claim
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`KS+A alleges in Count II that Defendants violated the CFAA when Kim gained access to
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`KS+A’s protected computers, either beyond his authorization or without authorization, to copy
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`and download KS+A’s protected works. In their motion to dismiss, Defendants argue that
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`KS+A’s CFAA claim is time barred by the statute. For the following reasons, I deny
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`11
` If subsequent discovery suggests that the KS+A’s supplemental registrations were motivated by impermissible
`justifications and not to correct “inadvertent error” as alleged by the plaintiff and required by the Copyright Act, then
`the landscape of my analysis may change.
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`Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 12 of 22 PageID #:1011
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`Defendants’ motion to dismiss the CFAA claim at this stage. Yet I decline to adopt KS+A’s
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`proposed interpretation of § 1030(g) and will not apply equitable tolling to the CFAA claim.
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`Although the CFAA is primarily a criminal statute, it also provides a private right of
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`action: “[a]ny person who suffers damage or loss by reason of a violation of this section may
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`maintain a civil action against the violator to obtain compensatory damages and injunctive relief
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`or other equitable relief.” 18 U.S.C. § 1030(g). Section 1030(a) lists the actions giving rise to
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`such violations. Additionally, plaintiffs must allege the existence of at least one of the five
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`numbered clauses of § 1030(c)(4)(A)(i). 18 U.S.C. § 1030(g). “In short, a person suing under
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`section 1030(g) must prove: (1) damage or loss (2) by reason of (3) a violation of some other
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`provision of section 1030, and (4) conduct involving one of the factors set forth in section
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`[1030(c)(4)(A)(i)].” Motorola, Inc. v. Lemko Corp., 2009 U.S. Dist. LEXIS 10668, *10-*11
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`(N.D. Ill. Feb. 11, 2009).
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`KS+A alleges that Defendants violated § 1030(a)(4), one of the violations giving rise to a
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`private right of action through § 1030(g), when Kim, while purportedly acting as an agent of
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`Cordogan, accessed KS+A’s protected computers to download and copy various of KS+A’s
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`copyrighted works, either without authorization or in excess of his authorized access.
`12
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` It is
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`unclear from Plaintiff’s complaint and subsequent pleadings when Kim’s allegedly violating
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`access took place. The complaint does reflect that Kim had access to KS+A’s copyrighted works
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`during his employment with that firm, from April 15, 2002, to April 12, 2004. 2d Am. Compl.
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`¶¶ 30-31. But Plaintiff does not explain whether Kim had access to its computer systems or to
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`12
` A person violates § 1030(a)(4) if he “knowingly and with intent to defraud, accesses a protected computer without
`authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains
`anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and
`the value of such use is not more than $5,000 in any 1-year period.” 18 U.S.C. § 1030(a)(4). Plaintiff claims the
`existence of § 1030(c)(4)(A)(i)(I), alleging that it suffered a loss of greater than $5,000 in a 1-year period.
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`Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 13 of 22 PageID #:1012
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`the copyrighted works after he left its employ on April 12, 2004. Nevertheless, as a result of the
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`defendants’ alleged actions, KS+A claims that it suffered harms from “the unauthorized use of
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`the KS+A Copyrighted Works, a loss of business goodwill, the cost and lost time spent
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`investigating Defendants’ conduct and the money spent to upgrade KS+A’s computer system to
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`remedy Defendants’ conduct and prevent a future occurrence.” Id. at ¶ 75.
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`1. The CFAA’s Two-Year Limitation Period
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`The CFAA contains a two-year limitation period within which plaintiffs must file suits
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`under the Act. Beyond conferring the private right of action described above, § 1030(g) explains
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`that: “[n]o action may be brought under this subsection unless such action is begun within 2
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`years of the date of the act complained of or the date of the discovery of the damage.” 18 U.S.C.
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`§ 1030(g). Congress’ language indicates that a plaintiff’s CFAA claim can survive only if the
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`plaintiff commences suit: (1) within two years of a defendant’s alleged violation; or (2) within
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`two years of the plaintiff discovering damage. Id. Congress’ first limitation, that the complaint
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`must be filed within two years of the violation, is a factual question that turns on when the
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`alleged violation occurred. Because questions remain as to when Kim’s unauthorized access into
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`the protected computers took place, more discovery is needed before this claim can be dismissed
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`as a matter of law. As for Congress’ second limitation, that the claim must be filed within two
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`years of the plaintiff discovering damage, Plaintiff has not presented any evidence of damage
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`following the alleged incident. Because the injury-discovery limitation does not permit a distinct
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`two-year limitation tolled by the discovery of loss, this part of the claim must be dismissed as a
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`matter of law. Accordingly, because Plaintiff may have commenced this suit within two years of
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`the allegedly violating action, I must deny Defendants’ motion to dismiss the CFAA claim so that
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`questions of fact can be resolved.
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`Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 14 of 22 PageID #:1013
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`a. Discovery of “Loss” Does Not Toll the § 1030(g) Injury-Discovery
`Limitation
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`In spite of the language of § 1030(g), KS+A asks that its CFAA claim be allowed to
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`escape the two-year limitation by treating its discovery of loss as comparable to the “discovery of
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`damage” limitation in the statute. Because accepting KS+A’s proposal would require an inapt
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`reading of the statute, I decline to adopt it. Instead, I find that the language of 18 U.S.C. § 1030
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`favors a strict reading of the injury-discovery limitation that applies only to discovery of damage.
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`Congress defined “damage” and “loss” as separate harms for the purposes of § 1030.
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`While the term “damage” “means any impairment to the integrity or availability of data, a
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`program, a system, or information,” 18 U.S.C. § 1030(e)(8), the term “loss” “means any
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`reasonable cost to any victim, including the cost of responding to an offense, conducting a
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`damage assessment, and restoring the data, program, system, or information to its condition prior
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`to the offense, and any revenue lost, cost incurred, or other consequential damages incurred
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`because of interruption of service[.]” 18 U.S.C. § 1030(e)(11). Beyond the difference in
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`definition, the terms “damage” and “loss” are conceptually distinct: whereas “damage”
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`contemplates harms to data and information, “loss” refers to monetary harms. See Patrick
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`Patterson Custom Homes, Inc. v. Bach, 586 F. Supp. 2d 1026, 1035-37 (N.D. Ill. 2008) (finding
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`that the plaintiff properly alleged damage where it claimed “permanent deletion and shredding of
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`substantial files” and properly alleged loss where it claimed monetary harms of costs incurred in
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`responding to the unauthorized access).
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`Injuries of the type KS+A alleges to have endured constitute “losses,” and not “damages,”
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`under the CFAA. Plaintiff does not allege that it suffered any damage as that term is defined in
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`the CFAA; the harms it alleges to have endured are purely monetary and do not contemplate the
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`

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`Case: 1:08-cv-01529 Document #: 63 Filed: 02/25/09 Page 15 of 22 PageID #:1014
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`destruction of or loss of access to any of its own data or information. See Garelli Wong &
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`Assocs. v. Nichols, 551 F. Supp. 2d 704, 710 (N.D. Ill. 2008) (finding that the misappropriation
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`of a trade secret cannot constitute damage under the CFAA because, “such conduct alone
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`can[not] show ‘impairment to the integrity or availability of data, a program, a system, or
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`information’”) (quoting 18 U.S.C. § 1030(8)). Instead, Plaintiff alleges losses exclusively.
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`3
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`1
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`The plain text of § 1030(g) reflects both that Congress understood “damage” and “loss”
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`as distinct harms and that it intended to apply the injury-discovery limitation to the former only.
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`The relevant portion of § 1030(g) reads:
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`Any person who suffers damage or loss by reason of a violation of
`this section may maintain a civil action against the violator to obtain
`compensatory damages and injunctive relief or other equitable
`relief. . . . No action may be brought under this subsection unless
`such action is begun within 2 years of the date of the act complained
`of or the date of the discovery of the damage. . . .
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`18 U.S.C. § 1030(g) (emphasis added). “[W]here Congress includes particular language in one
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`section of a statute but omits it in another section of the same Act, it is generally presumed that
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`Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Bates v.
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`United States, 522 U.S. 23, 29-30 (1997) (quoting Russello v. United States, 464 U.S. 16, 23
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`(1983)). Here, within the same subsection, Congress conferred a private right of action for those
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`who suffer either damage or loss, but conferred the injury-discovery limitation only upon the
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`discovery of damage. 18 U.S.C. § 1030(g). Courts “ordinarily resist reading words or elements
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`into a statute that do not appear on its face,” Bates, 522 U.S. at 24, and Plaintiff does not offer
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`13
` Compare, for instance, the allegations of monetary loss here with the allegations of damage to data in Int