United States v. Aleynikov, No. 11-1126 (2d Cir. 2012)
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Defendant, a computer programmer employed by Goldman Sachs & Co., appealed his conviction for stealing and transferring proprietary computer source code of Goldman's high frequency trading system in violation of the National Stolen Property Act (NSPA), 18 U.S.C. 2314, and the Economic Espionage Act of 1996 (EEA), 18 U.S.C. 1832. Defendant argued, inter alia, that his conduct did not constitute an offense under either statute because: (1) the source code was not a "stolen" "good" within the meaning of the NSPA, and (2) the source code was not "related" to a product "produced for or placed in interstate or foreign commerce" within the meaning of the EEA. The court agreed and concluded that defendant's conduct did not constitute an offense under either the NSPA or the EEA, and that the indictment was therefore legally insufficient. Accordingly, the court reversed the judgment of the district court.
This opinion or order relates to an opinion or order originally issued on February 16, 2012.
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11-1126 United States v. Aleynikov 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2011 (Argued: February 16, 2012 Decided: April 11, 2012) Docket No. 11-1126 - - - - - - - - - - - - - - - - - - - -x UNITED STATES OF AMERICA, Appellee, - v.SERGEY ALEYNIKOV, Defendant-Appellant. - - - - - - - - - - - - - - - - - - - -x Before: JACOBS, Chief Judge, CALABRESI and POOLER, Circuit Judges. Sergey Aleynikov appeals from his conviction, following 30 a jury trial, for stealing and transferring proprietary 31 computer source code of his employer s high frequency 32 trading system in violation of the National Stolen Property 33 Act, 18 U.S.C. § 2314, and the Economic Espionage Act of 34 1996, 18 U.S.C. § 1832. 35 alia, that his conduct did not constitute an offense under On appeal, defendant argues, inter 1 either statute. 2 a stolen good within the meaning of the National Stolen 3 Property Act, and [2] the source code was not related to a 4 product produced for or placed in interstate or foreign 5 commerce within the meaning of the Economic Espionage Act. 6 The judgment of the district court is reversed. 7 Calabresi concurs in the opinion and has filed an additional 8 concurring opinion. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 He argues that: [1] the source code was not Judge KEVIN H. MARINO, Marino, Tortorella & Boyle, P.C., Chatham, NJ, for Appellant. JOSEPH P. FACCIPONTI (JUSTIN S. WEDDLE, on the brief), Assistant United States Attorney, for PREET BHARARA, United States Attorney, Southern District of New York, New York, NY, for Appellee. DENNIS JACOBS, Chief Judge: Sergey Aleynikov was convicted, following a jury trial 25 in the United States District Court for the Southern 26 District of New York (Cote, J.), of stealing and 27 transferring some of the proprietary computer source code 28 used in his employer s high frequency trading system, in 29 violation of the National Stolen Property Act, 18 U.S.C. 30 § 2314 (the NSPA ), and the Economic Espionage Act of 1996, 2 1 18 U.S.C. § 1832 (the EEA ). On appeal, Aleynikov argues, 2 inter alia, that his conduct did not constitute an offense 3 under either statute. 4 was not a stolen good within the meaning of the NSPA, 5 and [2] the source code was not related to or included in a 6 product that is produced for or placed in interstate or 7 foreign commerce within the meaning of the EEA. 8 and reverse the judgment of the district court. He argues that: [1] the source code We agree, 9 10 11 BACKGROUND Sergey Aleynikov, a computer programmer, was employed 12 by Goldman Sachs & Co. ( Goldman ) from May 2007 through 13 June 2009, developing computer source code for the company s 14 proprietary high-frequency trading ( HFT ) system. 15 system is a mechanism for making large volumes of trades in 16 securities and commodities based on trading decisions 17 effected in fractions of a second. 18 the basis of algorithms that incorporate rapid market 19 developments and data from past trades. 20 programs used to operate Goldman s HFT system are of three 21 kinds: [1] market connectivity programs that process real- 22 time market data and execute trades; [2] programs that use 3 An HFT Trades are executed on The computer 1 algorithms to determine which trades to make; and [3] 2 infrastructure programs that facilitate the flow of 3 information throughout the trading system and monitor the 4 system s performance. 5 developing code for this last category of infrastructure 6 programs in Goldman s HFT system. 7 a competitive business that depends in large part on the 8 speed with which information can be processed to seize 9 fleeting market opportunities. Aleynikov s work focused on High frequency trading is Goldman closely guards the 10 secrecy of each component of the system, and does not 11 license the system to anyone. 12 policies bound Aleynikov to keep in strict confidence all 13 the firm s proprietary information, including any 14 intellectual property created by Aleynikov. 15 as well from taking it or using it when his employment 16 ended. 17 Goldman s confidentiality He was barred By 2009, Aleynikov was earning $400,000, the highest- 18 paid of the twenty-five programmers in his group. 19 2009, he accepted an offer to become an Executive Vice 20 President at Teza Technologies LLC, a Chicago-based startup 21 that was looking to develop its own HFT system. 22 was hired, at over $1 million a year, to develop the market 4 In April Aleynikov 1 connectivity and infrastructure components of Teza s HFT 2 system. 3 based hedge fund Citadel Investment Group) emailed Aleynikov 4 (and several other employees) in late May, conveying his 5 expectation that they would develop a functional trading 6 system within six months. 7 of programmers to develop an HFT system from scratch. Teza s founder (a former head of HFT at Chicago- It usually takes years for a team 8 Aleynikov s last day at Goldman was June 5, 2009. 9 approximately 5:20 p.m., just before his going-away party, At 10 Aleynikov encrypted and uploaded to a server in Germany more 11 than 500,000 lines of source code for Goldman s HFT system, 12 including code for a substantial part of the infrastructure, 13 and some of the algorithms and market data connectivity 14 programs.1 15 could operate independently of the rest of the Goldman 16 system and could be integrated into a competitor s system. 17 After uploading the source code, Aleynikov deleted the 18 encryption program as well as the history of his computer 19 commands. Some of the code pertained to programs that When he returned to his home in New Jersey, 1 In addition to proprietary source code, Aleynikov also transferred some open source software licensed for use by the public that was mixed in with Goldman s proprietary code. However, a substantially greater number of the uploaded files contained proprietary code than had open source software. 5 1 Aleynikov downloaded the source code from the server in 2 Germany to his home computer, and copied some of the files 3 to other computer devices he owned. 4 On July 2, 2009, Aleynikov flew from New Jersey to 5 Chicago to attend meetings at Teza. 6 flash drive and a laptop containing portions of the Goldman 7 source code. 8 was arrested by the FBI at Newark Liberty International 9 Airport. 10 He brought with him a When Aleynikov flew back the following day, he The indictment charged him with violating the EEA by 11 downloading a trade secret that is related to or included 12 in a product that is produced for or placed in interstate or 13 foreign commerce, with the intent to convert such trade 14 secret and to injure its owner, to the economic benefit of 15 anyone other than the owner, see 18 U.S.C. § 1832(a) (Count 16 One); and with violating the NSPA, which makes it a crime to 17 transport[], transmit[], or transfer[] in interstate or 18 foreign commerce any goods, wares, merchandise, securities 19 or money, of the value of $5,000 or more, knowing the same 20 to have been stolen, converted or taken by fraud, 18 U.S.C. 21 § 2314 (Count Two). 22 unauthorized computer access and exceeding authorized access A third count charged him with 6 1 in violation of the Computer Fraud and Abuse Act, 18 U.S.C. 2 § 1030. 3 Aleynikov moved to dismiss the indictment for failure 4 to state an offense. 5 district court dismissed Count Three of the indictment but 6 otherwise denied Aleynikov s motion. 7 Aleynikov, 737 F. Supp. 2d 173 (S.D.N.Y. 2010). 8 See Fed. R. Crim. P. 12(b)(3)(B). The United States v. As to Count One, the district court concluded: [1] the 9 stolen source code is a trade secret; [2] the HFT system 10 constitutes a product to which the source code relates 11 because the system was developed and modified through the 12 labor of Goldman s computer programmers; and [3] the HFT 13 system was produced for interstate commerce because it 14 facilitates the rapid execution of trades on financial 15 markets such as the New York Stock Exchange and NASDAQ. 16 at 177-79. 17 purpose of the HFT system was to engage in interstate and 18 foreign commerce. 19 Id. The district court reasoned that the whole Id. at 179. As to Count Two, the court held that the source code 20 for Goldman s HFT system constitutes goods that were 21 stolen within the meaning of the NSPA because, though 22 source code is intangible, it contains highly confidential 7 1 trade secrets related to the Trading System that would be 2 valuable for any firm seeking to launch, or enhance, a high- 3 frequency trading business. 4 Id. at 187. Count Three was dismissed on the ground that Aleynikov 5 was authorized to access the Goldman computer and did not 6 exceed the scope of his authorization, and that authorized 7 use of a computer in a manner that misappropriates 8 information is not an offense under the Computer Fraud and 9 Abuse Act. Id. at 192-94. 10 The jury convicted Aleynikov on Counts One and Two. 11 was sentenced to 97 months of imprisonment followed by a 12 three-year term of supervised release, and was ordered to 13 pay a $12,500 fine. 14 Aleynikov, a dual citizen of the United States and Russia, 15 was feared to be a flight risk. 16 He Bail pending appeal was denied because Aleynikov appealed his conviction and sentence, 17 arguing, among other things, that the district court erred 18 in denying his motion to dismiss the indictment in its 19 entirety. 20 Count Three of the indictment. 21 The Government did not appeal the dismissal of On February 17, 2012, following oral argument, we 22 issued a short order reversing Aleynikov s convictions on 23 both counts, and indicated that an opinion would follow. 8 1 2 DISCUSSION 3 On appeal, Aleynikov renews his challenge to the 4 sufficiency of the indictment on both Counts One and Two.2 5 As to Count One, he argues that the source code is not 6 related to or included in a product that is produced for or 7 placed in interstate or foreign commerce within the meaning 8 of the EEA. 9 source code--as purely intangible property--is not a good 10 11 As to Count Two, Aleynikov argues that the that was stolen within the meaning of the NSPA. Aleynikov s challenge requires us to determine the 12 scope of two federal criminal statutes. Since federal 13 crimes are solely creatures of statute, Dowling v. United 14 States, 473 U.S. 207, 213 (1985) (internal quotation marks 15 omitted), a federal indictment can be challenged on the 16 ground that it fails to allege a crime within the terms of 17 the applicable statute. 18 F.3d 86, 91-92 (2d Cir. 2000).3 See United States v. Pirro, 212 The sufficiency of an 2 Aleynikov challenges his conviction and sentence on several additional grounds as well. Because we conclude that the indictment failed to state an offense, we need not resolve these additional challenges. 3 On appeal, both the Government and Aleynikov frame their arguments in terms of the sufficiency of the indictment rather than the sufficiency of the evidence. 9 1 indictment and the interpretation of a federal statute are 2 both matters of law that we review de novo. 3 Fin. Indus. Regulatory Auth., Inc., 660 F.3d 569, 573 (2d 4 Cir. 2011); Pirro, 212 F.3d at 92. See Fiero v. 5 Statutory construction must begin with the language 6 employed by Congress and the assumption that the ordinary 7 meaning of that language accurately expresses the 8 legislative purpose. 9 675, 680 (1985) (quoting Park N Fly, Inc. v. Dollar Park & United States v. Albertini, 472 U.S. 10 Fly, Inc., 469 U.S. 189, 194 (1985)). 11 prerogatives of Congress in defining federal crimes prompts 12 restraint in this area, where we typically find a narrow 13 interpretation appropriate. 14 (internal quotation marks omitted). 15 Due respect for the Dowling, 473 U.S. at 213 We conclude that Aleynikov s conduct did not constitute 16 an offense under either the NSPA or the EEA, and that the 17 indictment was therefore legally insufficient. 18 the statutes in the order they were briefed: the NSPA first, 19 the EEA second. We consider 20 Because the result and analysis would be the same under either formulation, for the purposes of this opinion we adopt the one used by the parties, and do not decide which is doctrinally more sound. 10 1 I 2 The NSPA makes it a crime to transport[], transmit[], 3 or transfer[] in interstate or foreign commerce any goods, 4 wares, merchandise, securities or money, of the value of 5 $5,000 or more, knowing the same to have been stolen, 6 converted or taken by fraud. 7 statute does not define the terms goods, wares, or 8 merchandise. 9 and comprehensive designation of such personal property or 18 U.S.C. § 2314. The We have held that they provide a general 10 chattels as are ordinarily a subject of commerce. In re 11 Vericker, 446 F.2d 244, 248 (2d Cir. 1971) (Friendly, C.J.) 12 (quoting United States v. Seagraves, 265 F.2d 876, 880 (3d 13 Cir. 1959)). 14 code that Aleynikov uploaded to a server in Germany, then 15 downloaded to his computer devices in New Jersey, and later 16 transferred to Illinois, constituted stolen goods, 17 wares, or merchandise within the meaning of the NSPA. 18 Based on the substantial weight of the case law, as well as 19 the ordinary meaning of the words, we conclude that it did 20 not. The decisive question is whether the source 21 22 11 1 2 A. We first considered the applicability of the NSPA to 3 the theft of intellectual property in United States v. 4 Bottone, 365 F.2d 389 (2d Cir. 1966) (Friendly, J.), in 5 which photocopied documents outlining manufacturing 6 procedures for certain pharmaceuticals were transported 7 across state lines. 8 (as opposed to photocopies) were never transported across 9 state lines, the serious question (we explained) was 10 whether the papers showing [the] processes that were 11 transported in interstate or foreign commerce were goods 12 which had been stolen, converted or taken by fraud in view 13 of the lack of proof that any of the physical materials so 14 transported came from [the manufacturer s] possession. 15 at 393. 16 that what was stolen and transported was, ultimately, 17 tangible goods, notwithstanding the clever intermediate 18 transcription [and] use of a photocopy machine. 19 However, we suggested that a different result would obtain 20 if there was no physical taking of tangible property 21 whatsoever: 22 ever taken or transported, a court would be hard pressed to Since the actual processes themselves Id. We held that the NSPA was violated there, observing Id. To be sure, where no tangible objects were 12 1 conclude that goods had been stolen and transported within 2 the meaning of 2314. 3 would presumably not extend to the case where a carefully 4 guarded secret formula was memorized, carried away in the 5 recesses of a thievish mind and placed in writing only after 6 a boundary had been crossed. 7 treats its holding as the furthest limit of a statute that 8 is not endlessly elastic: 9 taken from the owner for there to be deemed a good that is 10 11 Id. Hence, we observed, the statute Id. Bottone itself thus Some tangible property must be stolen for purposes of the NSPA. Bottone s reading of the NSPA is confirmed by the 12 Supreme Court s opinion in Dowling v. United States, 473 13 U.S. 207 (1985), which held that the NSPA did not apply to 14 an interstate bootleg record operation. 15 the Government s argument that the unauthorized use of the 16 musical compositions rendered them stolen, converted or 17 taken by fraud. 18 always involved physical goods, wares, [or] merchandise 19 that have themselves been stolen, converted or taken by 20 fraud --even if the stolen thing does not remain in 21 entirely unaltered form, and owes a major portion of its 22 value to an intangible component. Dowling rejected Cases prosecuted under the NSPA have 13 Id. at 216. 1 This basic element --the taking of a physical thing-- 2 comports with the common-sense meaning of the statutory 3 language: by requiring that the goods, wares [or] 4 merchandise be the same as those stolen, converted or 5 taken by fraud, the provision seems clearly to contemplate 6 a physical identity between the items unlawfully obtained 7 and those eventually transported, and hence some prior 8 physical taking of the subject goods. 9 Id.4 We join other circuits in relying on Dowling for the 10 proposition that the theft and subsequent interstate 11 transmission of purely intangible property is beyond the 12 scope of the NSPA. 13 In a close analog to the present case, the Tenth 14 Circuit affirmed the dismissal of an indictment alleging 15 that the defendant transported in interstate commerce a 16 computer program containing source code that was taken from 17 his employer. United States v. Brown, 925 F.2d 1301, 1305, 4 In holding the NSPA inapplicable to copyright infringement, Dowling also relied on particular features of the Copyright Act, including the carefully calibrated criminal penalties for infringement: Applying the NSPA to copyright infringement would be a blunderbuss solution to a problem treated with precision when considered directly. Id. at 226. At the same time, the Court s reasoning and analysis focuses on the pure intangibility of a copyright, and the requirement under the NSPA that there be a physical taking and removal of goods. 14 1 1309 (10th Cir. 1991). Citing Dowling, the court held that 2 the NSPA applies only to physical goods, wares or 3 merchandise and that [p]urely intellectual property is 4 not within this category. 5 such as through writing on a page, but the underlying, 6 intellectual property itself, remains intangible. 7 1307. 8 is an intangible intellectual property, and as such, it 9 alone cannot constitute goods, wares, merchandise, It can be represented physically, Id. at The Court concluded that the computer program itself 10 securities or moneys which have been stolen, converted or 11 taken for purposes of the NSPA. 12 Id. at 1308. Similarly, the Seventh Circuit has held that numerical 13 Comdata codes used by truckers to access money transfers 14 at truck stops constitute intangible property the theft of 15 which is not a violation of the NSPA. 16 Stafford, 136 F.3d 1109 (7th Cir. 1998). 17 that the codes themselves were not goods, wares, or 18 merchandise, but rather information ; that the defendant 19 had not been charged with transporting pieces of paper 20 containing the codes; and that the only conduct charged was 21 transferring the codes themselves, which are simply 22 sequences of digits. Id. at 1114-15. 15 United States v. The court reasoned 1 The First Circuit has also concluded that the NSPA does 2 not criminalize the theft of intangible things: 3 does not apply to purely intangible information, the 4 theft of which is punishable under copyright law and other 5 intellectual property statutes but does apply when there 6 has been some tangible item taken, however insignificant or 7 valueless it may be, absent the intangible component. 8 United States v. Martin, 228 F.3d 1, 14-15 (1st Cir. 2000) 9 (quoting Brown, 925 F.2d at 1307, 1308 n.14). 10 The NSPA The Government argues that a tangibility requirement 11 ignores a 1988 amendment, which added the words transmit[] 12 and transfer[] to the terms: transport[], transmit[], or 13 transfer[]. 14 reflect an intent to cover generally transfers and 15 transmissions of non-physical forms of stolen property. 16 evident purpose of the amendment, however, was to clarify 17 that the statute applied to non-physical electronic 18 transfers of money. 19 F.3d 670, 678 n.6 (2d Cir. 1994). 20 intangible, is specifically enumerated in § 2314 as a thing 21 apart and distinct from goods, wares, or merchandise. 22 The addition to the possible means of transport does not The Government contends that the added words The See United States v. Piervinanzi, 23 16 Money, though it can be 1 bespeak an intent to alter or expand the ordinary meaning of 2 goods, wares, or merchandise and therefore does not 3 obviate the Government s need to identify a predicate good, 4 ware, merchandise, security, or money that has been stolen. 5 6 7 B. By uploading Goldman s proprietary source code to a 8 computer server in Germany, Aleynikov stole purely 9 intangible property embodied in a purely intangible format. 10 There was no allegation that he physically seized anything 11 tangible from Goldman, such as a compact disc or thumb drive 12 containing source code, so we need not decide whether that 13 would suffice as a physical theft. 14 transported portions of the source code to Chicago, on his 15 laptop and flash drive. 16 the statute unless the good is transported with knowledge 17 that the same has been stolen; the statute therefore 18 presupposes that the thing stolen was a good or ware, etc., 19 at the time of the theft. 20 physical identity between the items unlawfully obtained and 21 those eventually transported. 22 The later storage of intangible property on a tangible Aleynikov later However, there is no violation of The wording contemplate[s] a 17 Dowling, 473 U.S. at 216. 1 medium does not transform the intangible property into a 2 stolen good. 3 The infringement of copyright in Dowling parallels 4 Aleynikov s theft of computer code. Although [t]he 5 infringer invades a statutorily defined province guaranteed 6 to the copyright holder alone[,] . . . he does not assume 7 physical control over the copyright; nor does he wholly 8 deprive its owner of its use. 9 Aleynikov did not assume physical control over anything Id. at 217. Because 10 when he took the source code, and because he did not thereby 11 deprive [Goldman] of its use, Aleynikov did not violate 12 the NSPA. 13 As the district court observed, Goldman s source code 14 is highly valuable, and there is no doubt that in virtually 15 every case involving proprietary computer code worth 16 stealing, the value of the intangible code will vastly 17 exceed the value of any physical item on which it might be 18 stored. 19 crimes are solely creatures of statute. 20 at 213 (internal quotation marks omitted). 21 stretch or update statutory words of plain and ordinary 22 meaning in order to better accommodate the digital age. See Aleynikov, 737 F. Supp. 2d at 187. 18 But federal Dowling, 473 U.S. We decline to 1 2 II We next consider the sufficiency of the indictment as 3 to the EEA. As with the NSPA count, we conclude that the 4 indictment was insufficient as a matter of law. 5 6 7 A. The EEA contains two operative provisions. The first 8 section (18 U.S.C. § 1831(a)), which is not charged in the 9 indictment, applies to foreign espionage and is expressed 10 broadly: Whoever, intending or knowing that the offense 11 will benefit any foreign government, foreign 12 instrumentality, or foreign agent, knowingly . . . without 13 authorization . . . downloads, uploads, . . . transmits, 14 . . . or conveys a trade secret is guilty of a federal 15 offense, and may be imprisoned for up to 15 years. 16 U.S.C. § 1831(a). 18 17 Aleynikov, however, was charged with violating 18 18 U.S.C. § 1832, which imposes the italicized limitation 19 (which is not found in § 1831): 20 convert a trade secret, that is related to or included in a 21 product that is produced for or placed in interstate or 22 foreign commerce, to the economic benefit of anyone other 19 Whoever, with intent to 1 than the owner thereof, and intending or knowing that the 2 offense will, injure any owner of that trade secret, 3 knowingly . . . without authorization . . . downloads, 4 uploads, . . . transmits, . . . or conveys such information 5 is guilty of a federal offense, and may be imprisoned for up 6 to 10 years. 7 Id. § 1832(a) (emphasis added). Thus there is a limitation--that products be produced 8 for or placed in interstate or foreign commerce--in the 9 statute Aleynikov is charged with violating, a limitation 10 that does not appear in the otherwise parallel foreign 11 espionage statute. 12 language in one section of a statute but omits it in another 13 section of the same Act, it is generally presumed that 14 Congress acts intentionally and purposely in the disparate 15 inclusion or exclusion. 16 U.S. 16, 23 (1983) (internal quotation marks and alteration 17 omitted). 18 or placed in interstate or foreign commerce therefore must 19 be read as a term of limitation. 20 Where Congress includes particular Russello v. United States, 464 The requirement that products be produced for The legislative history confirms this. The version of 21 § 1832 that appeared in the original Senate bill did not 22 contain the limiting language. 20 It applied to any person who 1 steals proprietary economic information having a value of 2 not less than $100,000 ; it did not specify whether that 3 economic information relates to a product produced for or 4 placed in interstate commerce, and instead contained a 5 categorical finding that the development and production of 6 proprietary economic information involves every aspect of 7 interstate commerce and business. 8 §§ 2(a), 3 (2d Sess. 1996), reprinted in S. Rep. No. 104- 9 359, at 1, 3. S. 1556, 104th Cong. The limiting language was introduced in the 10 House Bill. 11 reprinted in 1996 U.S.C.C.A.N. 4021, 4021. 12 limitation in § 1832 were deliberately chosen. 13 See H.R. Rep. No. 104-788, at 2 (1996), The words of The natural reading that takes account of the distinct 14 meaning of the paired phrases ( produced for and placed 15 in ) is that § 1832(a) identifies two separate but related 16 categories. 17 introduced into the stream of commerce and have reached the 18 marketplace. 19 commerce but are still being developed or readied for the 20 marketplace can properly be described as being produced 21 for, if not yet actually placed in, commerce. 22 the statute in this way gives effect to both categories of Products placed in commerce have already been Products that have not yet been placed in 21 Reading 1 product (those produced for commerce and those placed in 2 commerce), without making one a subset of the other. 3 This interpretation has the added virtue of construing 4 the two categories of product in relationship to one another 5 (a sequential or temporal relationship), and finds support 6 in the doctrine of statutory interpretation which instructs 7 that words in a statute are known by the company they keep. 8 See Gustafson v. Alloyd Co., Inc, 513 U.S. 561, 575 (1995) 9 (invoking this doctrine to avoid ascribing to one word a 10 meaning so broad that it is inconsistent with its 11 accompanying words, thus giving unintended breadth to the 12 Acts of Congress (internal quotation marks omitted)). 13 statute would fall short of critical protections if it 14 applied only to the theft of trade secrets relating to those 15 products that had already been placed in the marketplace; 16 left vulnerable would be the class of trade secrets inhering 17 in products that have not yet been placed on the market, 18 such as prototypes--precisely the kinds of trade secrets 19 that are likely to attract espionage. 20 a gap by extending the statute s coverage to include 21 products produced for commerce as well as those already in 22 the marketplace. 22 The Congress thus plugged 1 The district court interpreted the phrase produced 2 for interstate or foreign commerce more broadly. It held 3 that the HFT system was produced for interstate commerce 4 because the sole purpose for which Goldman purchased, 5 developed, and modified the computer programs that comprise 6 the Trading System was to engage in interstate and foreign 7 commerce and because Goldman uses the Trading System to 8 rapidly execute high volumes of trades in various financial 9 markets and [t]he Trading System generates many millions 10 of dollars in annual profits. 11 at 179. 12 for interstate or foreign commerce if its purpose is to 13 facilitate or engage in such commerce. 14 Aleynikov, 737 F. Supp. 2d Under that interpretation, a product is produced The district court erred by construing the phrase-- 15 produced for . . . interstate or foreign commerce -- in a 16 vacuum. 17 803, 809 (1989). 18 construction that the words of a statute must be read in 19 their context and with a view to their place in the overall 20 statutory scheme. 21 gathers meaning from the words around it. 22 States, 527 U.S. 373, 389 (1999) (internal quotation marks See Davis v. Mich. Dep t of Treasury, 489 U.S. It is a fundamental canon of statutory Id. That way, a statutory phrase 23 Jones v. United 1 omitted). The district court s broad interpretation of the 2 phrase produced for commerce becomes untenable in light of 3 the paired phrase placed in commerce. 4 actually sold or licensed is by definition produced for the 5 purpose of engaging in commerce, every product that is 6 placed in commerce would necessarily also be produced 7 for commerce--and the phrase placed in commerce would be 8 surplusage. 9 of the most basic interpretive canons, that a statute should 10 be construed so that effect is given to all its provisions, 11 so that no part will be inoperative or superfluous, void or 12 insignificant. 13 (2009) (internal quotation marks and alteration omitted); 14 see also Duncan v. Walker, 533 U.S. 167, 174 (2001) ( It is 15 our duty to give effect, if possible, to every clause and 16 word of a statute. (internal quotation marks omitted)). 17 Judges should hesitate to treat statutory terms in any 18 setting as surplusage, and resistance should be heightened 19 when the words describe an element of a criminal offense. 20 Jones v. United States, 529 U.S. 848, 857 (2000) (internal 21 quotation marks and alterations omitted; emphasis added). Since every product This interpretation is inconsistent with one Corley v. United States, 556 U.S. 303, 314 22 24 1 Even construed in isolation, the phrase produced for 2 . . . interstate or foreign commerce cannot command the 3 breadth that the district court and the Government ascribe 4 to it. 5 131 S. Ct. 1177, 1184 (2011) ( [C]onstruing statutory 6 language is not merely an exercise in ascertaining the 7 outer limits of [a word s] definitional possibilities 8 . . . . (quoting Dolan v. U.S. Postal Serv., 546 U.S. 481, 9 486 (2006)). See generally Fed. Commc ns Comm n v. AT & T Inc., At oral argument, the Government was unable to 10 identify a single product that affects interstate commerce 11 but that would nonetheless be excluded by virtue of the 12 statute s limiting language.5 13 identify one such example, or two, it would not be a 14 category that would demand the attention of Congress, or be 15 expressed in categorical terms. And even if one could 16 If § 1832(a) was intended to have such a sweep, we 17 would expect to see wording traditionally understood to 5 The only example provided by the Government of a trade secret that affects interstate commerce but that is beyond the purview of the EEA was a proprietary training manual for stock brokers. But by the Government s explanation, such a trade secret would not be covered because the broker to whom it relates is a person and not a product, not because the training manual was not produced for . . . interstate or foreign commerce as the Government interprets that phrase. 25 1 invoke the full extent of Congress s regulatory power under 2 the Commerce Clause. 3 after the Supreme Court issued its landmark decision in 4 United States v. Lopez, which held that Congress s Commerce 5 Clause authority is limited to those activities that 6 substantially affect interstate commerce. 7 558-59 (1995).6 8 between legislation invoking Congress full power over 9 activity substantially affecting . . . commerce and 10 legislation which uses more limiting language, such as 11 activities in commerce, and thereby does not purport to 12 exercise the full scope of congressional authority. 13 529 U.S. at 856 (quoting Russell v. United States, 471 U.S. 14 858, 859-60 & n.4 (1985)). 15 the enactment of the EEA and the decision in Lopez makes 16 significant the omission from the EEA of the language 17 blessed in that case as invoking the outer limit of 18 Congress s regulatory authority. Notably, the EEA was enacted the year 514 U.S. 549, The Supreme Court observes a distinction Jones, The temporal proximity between 6 Lopez held that Congress may regulate three categories of activity under its commerce power: [1] the use of the channels of interstate commerce ; [2] the instrumentalities of interstate commerce, or persons or things in interstate commerce ; and [3] activities that substantially affect interstate commerce. Id. It is the third of the three categories that is at issue in this case. 26 1 B. 2 Goldman s HFT system was neither produced for nor 3 placed in interstate or foreign commerce. 4 intention of selling its HFT system or licensing it to 5 anyone. 6 great lengths to maintain the secrecy of its system. 7 enormous profits the system yielded for Goldman depended on 8 no one else having it. 9 designed to enter or pass in commerce, or to make something 10 that does, Aleynikov s theft of source code relating to that 11 system was not an offense under the EEA. 12 Aleynikov, 737 F. Supp. 2d at 175. Goldman had no It went to The Because the HFT system was not Even if we were to conclude that the phrase produced 13 for . . . interstate or foreign commerce is susceptible to 14 a broader reading than we think it will bear, it would at 15 most render § 1832(a) facially ambiguous, which would not 16 assist the prosecution. 17 of criminal statutes should be resolved in favor of lenity. 18 Rewis v. United States, 401 U.S. 808, 812 (1971). 19 choice has to be made between two readings of what conduct 20 Congress has made a crime, it is appropriate, before we 21 choose the harsher alternative, to require that Congress 22 should have spoken in language that is clear and definite. [A]mbiguity concerning the ambit 27 And when 1 United States v. Universal C.I.T. Credit Corp., 344 U.S. 2 218, 221-22 (1952). 3 The conduct found by the jury is conduct that Aleynikov 4 should have known was in breach of his confidentiality 5 obligations to Goldman, and was dishonest in ways that would 6 subject him to sanctions; but he could not have known that 7 it would offend this criminal law or this particular 8 sovereign. 9 10 11 12 CONCLUSION For the foregoing reasons, the judgment of the district court is reversed. 13 28 1 CALABRESI, J., concurring: 2 I join the majority opinion in its description of the facts and history of this case, and in its 3 discussion in Part I, which deals with the National Stolen Property Act ( NSPA ). I also join Part 4 II, which considers the Economic Espionage Act ( EEA ), but as to that act I wish to add a few 5 thoughts. 6 I agree with the majority that the text of the EEA is such that it would require stretching 7 to cover Aleynikov s acts. But texts must always be read in context, and context includes not 8 only the whole of the statute (well addressed by the majority), but also the mischief the law 9 was enacted to address. This is not the same as legislative history. It is significant that when 10 English courts were not allowed to look at Hansard (the account of the laws passage through 11 Parliament), they nevertheless could, and frequently did, consider the circumstances because of 12 which a law was introduced and passed. That is, they considered the situational context and 13 mischief. See Gorris v. Scott, (1874) 9 L.R. Exch. 125 (Eng.) (refusing to apply an order of the 14 Privy Council to a mischief different from that which prompted the issuance of the order); see 15 generally Heydon s Case, (1584) 76 Eng. Rep. 637 (Exch.) 638; 3 Co. Rep. 7a, 7b ( [T]he office 1 1 of all the Judges is always to make such construction as shall suppress the mischief, and advance 2 the remedy, and to suppress subtle inventions and evasions for continuance of the mischief . . . 3 . ). 4 The EEA was passed after the Supreme Court and the Tenth Circuit said the NSPA did 5 not cover intellectual property. See Dowling v. United States, 473 U.S. 207, 226 (1985); United 6 States v. Brown, 925 F.2d 1301, 1307-08 (10th Cir. 1991). While the legislative history can be 7 read to create some ambiguity as to how broad a reach the EEA was designed to have, it is hard 8 for me to conclude that Congress, in this law, actually meant to exempt the kind of behavior in 9 which Aleynikov engaged. See H.R. Rep. No. 104-788, at 6 (1996), reprinted in 1996 10 U.S.C.C.A.N. 4021, 4024-25 (citing Brown). I am not dissenting because I recognize the strength 11 of the majority s analysis of the text and the legislative history, and because, as the majority 12 says, ambiguous criminal statutes must be read in favor of the defendant. Nevertheless, while 13 concurring, I wish to express the hope that Congress will return to the issue and state, in 14 appropriate language, what I believe they meant to make criminal in the EEA. 2
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