On December 28, 2012, President Obama enacted the Theft of Trade Secrets Clarification Act of 2012, which clarifies the scope of the Economic Espionage Act of 1996 (18 U.S.C. §§ 1831-39). The newly enacted amendments are intended to reverse the recent Second Circuit decision in United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012).
In the heavily-criticized Aleynikov decision, the Second Circuit overturned a conviction against a former employee accused of stealing trade secret computer source code under the Economic Espionage Act. To understand purpose of the Theft of Trade Secrets Clarification Act, it is necessary to review the facts of the Aleynikov ruling.
In Aleynikov, the defendant was previously employed by Goldman Sachs & Co. as a computer programmer. He helped develop source code for the company’s proprietary high-frequency trading (HFT) system that was used in securities and commodities trading for making large volumes of trades within fractions of a second. On the last day of his employment in June 2009, he encrypted and uploaded more than 500,000 lines of source code for the HFT system to a server in Germany. After uploading the source code, the defendant deleted the encryption program and his history of computer commands. When he returned to his home in New Jersey, he then downloaded the encrypted source code for use at his new employment with a Chicago-based startup that sought to create its own HFT system. In July 2009, after returning from Chicago following a meeting with his new employer’s principals with a flash drive and a laptop containing portions of the Goldman HFT source code, he was arrested by the FBI.