Typically the laws that govern us are behind the curve when it comes to technology. The simple fact is that technology moves forward at a phenomenal pace, and the law cannot keep up.
A case in point is the prosecution of Sergey Aleynikov, a former Goldman Sachs programmer who stole the source code for the company’s high-frequency trading system when leaving to work for competitor Teza Technologies. Goldman Sachs took action and had Aleynikov arrested by the FBI for stealing national property and commiting economic espionage. A court awarded him an 8-year prison sentence for the theft.
Aleynikov appealed the decision, and after serving 11 months of his term he is now a free man. The reason? The Unites States Court of Appeals rejected claims that the source code he stole was classed as a trade secret and punishable under the National Stolen Property Act (NSPA) and Economic Espionage Act (EEA).
Although on the surface this looks like an open and shut case, it is anything but. Aleynikov uploaded the source code for the trading system to a remote server while still employed at Goldman Sachs. He then downloaded it to his PC at home. As far as the appeals court sees it, Aleynikov obtained the data legally while still working at Goldman (he had not misused it at this point).
The source code was never actually physically removed from the premises, which turns out to be important. It means the code cannot be classed as physical “goods” or “wares” or “merchandise,” which the NSPA used to prosecute him covers. Further, the EEA relates to products licensed and used by some entity other than the creator. The trading system was for internal use only at Goldman, so does not fit the EEA. In both cases Aleynikov can therefore not be convicted using those laws.
Aleynikov is bound to face a further lawsuit because he did steal from Goldman. However, the charges brought against him will be different due to the way in which the law is currently structured. It seems you can’t class source code as property theft or a trade secret in the US unless it is stolen on a physical device.
Read more at Reuters and ars technica
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