A recent Second Circuit decision has narrowed the protections afforded against theft of proprietary information, trade secrets and intellectual property and will affect the way companies, especially those in technology-intensive markets, internally manage the protection of their own trade secrets and other sensitive information from employee theft.
In United States v. Aleynikov, the defendant, a former computer programmer at Goldman Sachs & Co. (Goldman), was convicted after a jury trial of violations of the National Stolen
Property Act (NSPA) and the Economic Espionage Act of 1996 (EEA). Aleynikov was convicted under these statutes for stealing computer source code for Goldman’s proprietary high-frequency trading system, which is used for the rapid execution of a high volume of trades on the financial markets. Specifically on Aleynikov’s last day of
employment, the evidence established that he uploaded the company’s source code to a server in Germany. He later downloaded the source code to his home computer and other devices in New Jersey, and then brought it with him to a meeting in Illinois with his new
employer, for whom he had been hired to develop a high-frequency trading system. Following Aleynikov’s conviction, the lower court sentenced him to 97 months of imprisonment and he was ordered to pay a $12,500 fine. More…