Déjà Vu for a Computer Programmer: A New York Statute’s Language Saves Him Again
A former Goldman Sachs computer programmer who had a federal jury conviction for illegally taking proprietary computer code from his employer overturned in 2012 was found guilty again—only to have the conviction reversed again by a judge. The verdict came in a New York state prosecution, People v. Aleynikov. This high profile case not only inspired a character in Michael Lewis’s book Flash Boys, but it also provides an interesting example of how a statute’s text can play a pivotal role in a case’s outcome.
According to the facts in his federal appeal, Sergey Aleynikov worked as a computer programmer for
New York State Capitol
Albany 1899
Goldman Sachs from 2007-2009 where he developed complicated code for the company’s high frequency trading (HFT) system. He left the company in June 2009 to go work for a start-up trading company. However, on his last day, he uploaded more than 500,000 lines of code from Goldman Sachs’ HFT system to a server in Germany. When he arrived home, he downloaded the code to this personal computer and copied some of the files to other devices. On July 2, 2009, he traveled to attend meetings at his new company and took a flash drive with him containing some of the source code. The next day he was arrested. He was charged with violating the federal Economic Espionage Act (EEA) and the National Stolen Property Act (NSPA). After only a few hours of deliberation, a jury found Aleynikov guilty of violating both acts. However, on appeal, the Second Circuit reversed both verdicts and held that Aleynikov’s behavior did not violate either the EEA or the NSPA.
What caused the reversal despite a seemingly confident jury? The language of both statutes. Aleynikov argued that the computer code was not a “product” that was “produced for or placed in interstate commerce” as required by the EEA and that the computer code was not a “good” or “ware” under the NSPA because it was a purely intangible product. The Second Circuit agreed and adopted these fairly narrow readings of both statutes when it determined that Aleynikov’s behavior did not violate either act.
Starting with the EEA charge, the court did not resolve the question of whether intangible computer code is a “product” because it determined that Goldman’s HFT system was not “produced for” or “placed in” interstate commerce (discussion at U.S. v. Aleynikov, 676 F.3d 71 at 82). The court read these words as requirements for a person to be found guilty of violating the EEA after relying on both the act’s plain language and legislative history (discussion at pages 79-80). The court ultimately held that an internally used computer program that a company has no intention of selling was not “produced for” or “placed in” interstate commerce (discussion at page 82).
The court did address whether computer code qualified as a “good” when it looked at the NSPA because the term is undefined in the statute (discussion at page 76). The court heavily relied on precedent, including the Supreme Court’s decision in Dowling v. United States, to determine that a “good” must be a tangible piece of property taken over state lines and because code is purely intangible it does not fall under the NSPA (discussion at page 77). In Dowling, the Supreme Court held that the NSPA “clearly…contemplate[s] a physical identity between the items unlawfully obtained and those eventually transported.” (discussion at Dowling v. U.S., 473 U.S. 207 page 216). The Second Circuit also relied on similar decisions by the Tenth, Seventh, and First Circuits to conclude the NSPA does not cover the theft of intangible things and therefore, Aleynikov is not guilty of violating the act. (discussion at U.S. v. Aleynikov, 676 F.3d 71 pages 77-78).
However, the story does not end there. After his federal charges were overturned, the Manhattan District Attorney’s office decided to prosecute Aleynikov under state law. Aleynikov was charged with two counts of unlawful use of secret scientific material and one count of unlawful duplication of computer related material. The jury recently issued a split verdict and found Aleynikov guilty on one of the secret scientific material charges. The jury could not reach a decision on the second scientific material charge, and acquitted him on the duplication charge (which is a bit odd since both charges require a finding that the protected material was reproduced). For the purposes of a potential appeal, it is important to focus on the secret scientific material statute to determine whether it is likely an appeals court will overturn Aleynikov’s guilty verdict.
The statute states a “person is guilty of unlawful use of secret scientific material when…he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material.” (emphasis added). Similar to the federal case, because the New York statute fails to define “tangible” or whether computer code qualifies as a tangible item, the jury was required to make this decision to determine whether Aleynikov’s transferring of source code to a flash drive violated the law. The jury spent over a week deliberating and had to have the jury instructions re-read several times before the instructions were eventually provided in writing. The jury also sent the presiding justice over a dozen notes asking for clarity on the meaning of the law, which suggested the statute is unclear. As the New York Times reported, even the justice who presided over the case expressed concern about whether Aleynikov’s actions fell within the statute. Despite the long deliberation and some odd twists and turns (including avocadogate), the jury ultimately decided Aleynikov violated the law. In July, 2015, however, the conviction was overturned by the New York State Supreme Court. Justice Daniel Conviser said prosecutors “did not prove [Aleynikov] committed this particular obscure crime.”
This case is interesting because it highlights the difficulty jurors and judges face when interpreting statutes—especially in light of advancing technology. The federal and state statutes were drafted prior to the creation of much of the technology involved in this case. After the Second Circuit’s ruling on the EEA, Congress actually amended the statute’s language.
Given the judge’s disagreement with the jury in this case, the New York statute’s language is ambiguous and clearly a barrier to prosecutors bringing future criminal charges. Like Congress, the New York Legislature will have to make amendments to the current statutes, or create a new statute that reflects current technology—and hope the language remains relevant for more than a few months.
Amanda Hesse is from Princeton, New Jersey and graduated from American University with a dual major in Law & Society and Public Communication. She anticipates graduating from Boston University School of Law with a Juris Doctor in Spring 2016. During Summer 2015, Amanda will intern at the Southern Poverty Law Center in Jackson, Mississippi, where she will focus on juvenile justice and prison conditions reform.
