## Facts

- Sergey Aleynikov worked as a computer programmer at Goldman Sachs & Co., developing source code for Goldman’s proprietary high-frequency trading system.
- Goldman treated the system and its components as confidential, prohibited employees from taking proprietary information, and did not license the system to others.
- On his last day of employment, Aleynikov encrypted and uploaded over 500,000 lines of Goldman-related source code to a remote server located in Germany.
- He later downloaded the code to his home computer in New Jersey and transferred it to portable devices while traveling to begin work for a competitor.
- Federal authorities arrested Aleynikov, and the government prosecuted him based on the electronic copying and transmission of the source code.

## Issues

1. Whether proprietary computer source code copied and transmitted electronically, without physical deprivation of the owner’s property, constitutes “goods, wares, [or] merchandise” “stolen, converted or taken by fraud” under the National Stolen Property Act, 18 U.S.C. § 2314.
2. Whether the source code constituted a trade secret “related to or included in a product that is produced for or placed in interstate or foreign commerce” under the Economic Espionage Act, 18 U.S.C. § 1832(a) (as then written).

## Decision

- The Second Circuit reversed the judgment of conviction and held the indictment legally insufficient under both statutes.
- As to the NSPA count, the court held that § 2314 does not cover the interstate or foreign transmission of purely intangible property such as electronically copied source code.
- As to the EEA count, the court held that Goldman’s internal trading system was not a “product” produced for or placed in commerce because it was not intended for sale, licensing, or commercial distribution.
- A concurring opinion agreed with the result, emphasizing that any gap in coverage was for Congress to address rather than for courts to cure by expanding statutory language.

## Legal Principles

- Under 18 U.S.C. § 2314, “goods, wares, [and] merchandise” ordinarily refer to tangible items, and the statute requires a physical taking such that the item transported is the same item unlawfully obtained.
- Copying and electronically transmitting proprietary information, while leaving the owner’s original property intact, is not transportation of “stolen” goods within the meaning of the NSPA.
- Courts construe federal criminal statutes narrowly and do not extend them to new forms of conduct absent clear statutory text; ambiguity is resolved against expansive criminal liability.
- Under 18 U.S.C. § 1832(a) (as then written), the statute’s commerce element requires that the trade secret relate to a “product” produced for or placed in interstate or foreign commerce; an internal system kept from the market does not satisfy that requirement.

## Conclusion

The Second Circuit set aside Aleynikov’s convictions because the NSPA did not criminalize electronic transmission of purely intangible source code, and the then-existing EEA did not reach misappropriation of trade secrets tied only to an internal system not produced for or placed in commerce.


United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012)