This article was prepared by Keith Walter, a partner in the Delaware Office of Lewis Brisbois.

In Sarwal v. Nephrosant, Inc., C.A. No. 2023-0222-BWD (Del. Ch. Aug. 28, 2025), the Court of Chancery addressed a counterclaim brought under the Delaware Computer Related Offenses Act in an action in which the plaintiff sought advancement and indemnification for expenses incurred during an internal investigation concerning complaints about the defendant’s products.

During that investigation, the defendant alleged that the plaintiff used an email account associated with the School of Medicine at the University of California, San Francisco, to access, download, and delete tens of thousands of confidential company documents stored in a Box account.

The defendant asserted a counterclaim alleging that these actions violated the Delaware Computer Related Offenses Act, 11 Del. C. §§ 931–941. The plaintiff moved to dismiss the counterclaim for failure to state a claim, arguing that the Act lacks extraterritorial effect.

Court’s Analysis

The Court examined Title 11, Section 204(a) of the Delaware Code, which governs the territorial applicability of criminal statutes, and analyzed the conduct alleged in the counterclaims. The Court found that none of the alleged conduct occurred in Delaware and that the counterclaims did not allege that any resulting harm occurred in Delaware or that the computer systems at issue were located in Delaware.

The defendant argued that Section 204(a) nevertheless applied because the allegedly deleted information belonged to a Delaware corporation. The Court rejected that argument, explaining that the defendant cited “no authority that uses the state of incorporation of the plaintiff as a controlling, predominant, or even weighty factor when determining what law governs a claim for computer-related offenses.” The Court further held that Section 204(a)(5) did not apply because Sections 933, 934, and 935 of the Delaware Computer Related Offenses Act do not “expressly prohibit conduct outside the State.”

Accordingly, the Court dismissed the counterclaim for failure to state a reasonably conceivable claim under the Delaware Computer Related Offenses Act.