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Second Cir Explains Sergey Aleynikov Source Code Theft Reversal

By Robyn Hagan Cain on April 12, 2012 | Last updated on March 21, 2019

The Second Circuit Court of Appeals released its opinion in the Sergey Aleynikov appeal on Wednesday, more than six weeks after the court reversed Aleynikov's source code theft conviction.

Aleynikov was convicted in 2010 of stealing trade secrets from his employer, Goldman Sachs, under the Economic Espionage Act (EEA). On appeal, Aleynikov argued that the Goldman Sachs source code at the center of the case was not a "stolen good" within the meaning of the National Stolen Property Act (NSPA), and that it was not related to a product "produced for or placed in interstate or foreign commerce" within the meaning of the EEA.

In February, the Second Circuit reversed Aleynikov's conviction, and ordered the district court to enter an acquittal in the case. The following day, the appellate court amended the order to remove the acquittal language, Wired reported.

Second Circuit Chief Judge Dennis Jacobs, who wrote the opinion, agreed that the code was "highly valuable," but "not designed to enter or pass in commerce, or to make something that does," which means it wasn't covered by the EEA.

Furthermore, the court concluded that Aleynikov didn't violate the NSPA because he "stole purely intangible property embodied in a purely intangible format." Aleynikov transported portions of the source code to Chicago, on his own laptop and flash drive, thus his actions failed to satisfy the NSPA's tangibility requirement.

The Second Circuit Court of Appeals noted that Aleynikov should have known that his conduct breached his confidentiality obligations to Goldman, and was dishonest in ways that would subject him to sanctions, but declined to "stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age."

Judge Guido Calabresi, however, thinks it's time for Congress to revamp the laws to cover source code theft. Calabresi wrote in a concurring opinion that he hopes "Congress will return to the issue and state, in appropriate language, what I believe they meant to make criminal in the EEA."

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