Goldman Sachs Programmer on Trial for “Stolen Code”

Sergey Aleynikov is a former Goldman Sachs computer programmer who in 2009 was charged in federal court with violating the Economic Espionage Act (EEA) and the National Stolen Property Act (NSPA) after it was found that he had e-mailed himself 8 megabytes of source code four separate times that came from a Goldman Sachs high-frequency-trading platform.  He was initially found guilty, but his conviction was overturned in April 2012, when the Second Circuit Court of Appeals unanimously found that his actions did not constitute an offense under either statute.  The court found that under the meaning of the two laws, the source code he e-mailed to himself neither qualified as a “stolen good” under the meaning of the NSPA, nor was it a “product that is produced for or placed in interstate or foreign commerce” under the EEA because Goldman Sachs had no intent of selling it.

In December 2012, Congress drafted the Theft of Trade Secrets Clarification Act to include new language to the EEA with the intent to make behavior such as Aleynikov’s a valid offense.  The new language of the act included “service[s] used in or intended for use…in interstate commerce” as items that would now fall under the scope of the EEA, meaning that material such as code from a Goldman Sachs trading system would now qualify under the law.

Despite the federal trial reaching its conclusion, the Manhattan District Attorney filed new charges against Aleynikov in August 2014, asserting he had violated NY laws related to unlawful use of secret scientific material[1] and unlawful duplication of computer related material.[2]  To be found guilty, it must be shown that Aleynikov either, with intent to appropriate for himself or another, unlawfully made a tangible reproduction of secret scientific material, or copied, reproduced, or duplicated without right to do so, any computer data or program that wrongfully deprives from the owner an economic value or benefit in excess of $2,500.

While any number of factors can play a role in the jury’s decision-making, how to quantify the value of code is critical.  This is particularly difficult in this case, where it has been argued that a majority of the code transmitted by Aleynikov was open source and could not be used to reverse engineer the Goldman Sachs trading system.  Additionally, code that is governed by an open source license comes with obligations to remain open, meaning that failure to disclose new code could place Goldman Sachs in a position of liability, though very little litigation takes place over open source license breaches due to the decentralized nature of the ecosystem.  The case is currently in the midst of jury deliberations, and its outcome could radically change the relationship between software developers and private sector entities, placing new avenues of liability for employees and further graying the role software ethics plays in the workplace.

 

[1] N.Y. Penal Law §165.07, Unlawful use of secret scientific material.

[2] N.Y. Penal Law §156.30, Unlawful duplication of computer related material in the 1st Degree; N.Y. Penal Law §156.35, Unlawful duplication of computer related material in the 2nd Degree.