People v. Aleynikov

Facts

Goldman hired D as a computer programmer to write and maintain software for the company's high-frequency trading system. High-frequency trading can be very lucrative, earning Goldman about $300 million in profits in 2009. As a programmer at Goldman, D had access to the source code that ran the high-frequency trading system. Source code is a set of computer instructions written in a human-readable programming language. D's programming duties included copying source code from Goldman's source code repository, modifying and testing it, and then integrating it into the existing software. Goldman took steps to safeguard its code. Every Goldman employee signed confidentiality and nondisclosure agreements wherein they acknowledged that they could not use Goldman's confidential information for their own purposes. Goldman programmers were forbidden from copying Goldman's source code outside of Goldman's network. D left Goldman and was hired by Teza Technologies, a startup high-frequency trading firm. D's annual salary was $1.2 million, about three times his salary at Goldman. D ended his employment with Goldman on June 5, 2009. Later that month, Goldman's information security department noticed unusual activity while reviewing a report generated by Goldman's computer monitoring systems. On June 1, 2009, and June 5, 2009, large amounts of data had been uploaded from the Goldman network to a Germany-based 'subversion website,' which is a website designed to allow a user to move, copy and store source code. Goldman's security system had a flaw in it that allowed the operations to occur. The transfers were made from D's work computer. On his last day of work, D executed a program he had written to copy thousands of proprietary files from Goldman's source code repository. These files included Goldman's high-frequency trading platform that would be highly valuable to any competitor. Evidence showed that D tried to cover his tracks. Police in Germany located the server of the subversion website, removed the hard drives, and made forensic copies of them. A user named 'saleyn' had uploaded information onto the server and then later retrieved it. D had used this same username-which consists of his first initial and the first five letters of his last name-as his personal email address. It was discovered that D had placed some source code into a 'repository' account that Teza had created on a third-party website. That code revealed that it was based upon the Goldman high-frequency trading programs that D had copied to the German server. D was arrested and Teza immediately terminated his employment. All of D's computers had data from Goldman. D eventually admitted that (i) he uploaded material from Goldman to the German server; (ii) [he specifically chose that server because it was not blocked by Goldman's security system; (iii) he subsequently downloaded the material from the German server to his home computer and other storage devices; and that (iv) he purposely erased the encryption software, the tarballs and his bash history because he knew his actions had violated Goldman's security policies. D was convicted of a violation of the National Stolen Property Act (18 USC § 2314). The Second Circuit reversed the conviction, concluding that Ds actions did not violate the federal statute. D was charged in a New York County with two counts of unlawful use of secret scientific material and one count of unlawful duplication of computer-related material in the first degree. At the close of the People's case, defendant moved, pursuant to CPL 290.10, for a trial order of dismissal as to all counts of the indictment; the court reserved its decision on the motion. The jury returned a verdict of guilty on the charge of unlawful use of secret scientific material but the court granted D's motion for a trial order of dismissal as to the two counts of unlawful use. The court concluded that the evidence was insufficient to show that (i) D made a 'tangible reproduction or representation' of the source code and that (ii) he acted with the 'intent to appropriate . . . the use of' the source code. P appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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