Second Circuit Reverses Convictions in Data-Theft Prosecution and Narrowly Interprets Federal Criminal Statutes with Important Intellectual Property Implications

On our sister blog, Security, Privacy and the Law, our colleague Daniel Marx reports on a recent Second Circuit case addressing the limits of criminal liability for the theft of intellectual property. It turns out that criminal liability can turn on some rather technical details – such as whether the allegedly stolen source code was copied to a flash drive or disk actually owned by the employer. Marx notes:

If Aleynikov had copied data onto a Goldman disc, he would have violated the NSPA, but instead he uploaded it to a server, so he did not. That distinction makes the critical question of criminal liability turn on whether a defendant steals a five-cent CD, not a five-million-dollar computer program. That seems somewhat silly, as the Second Circuit acknowledged, noting ‘there is no doubt that in virtually every case involving proprietary computer code worth stealing, the value of the intangible code will vastly exceed the value of any physical item on which it might be stored.’ Read this way, the NSPA does a better job protecting thumb drives than the trade secrets stored on them.

Read the entire article here.

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