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The PEOPLE of the State of New York, Plaintiff, v. Sergey ALEYNIKOV, Defendant.
The Defendant moves to set-aside the verdict against him pursuant to CPL 330.30 (1). For the reasons outlined below, that motion is denied. The Court agrees with the Defendant that this Court's provision of the “figurative definition” of the word “tangible” to the jury in this case in response to a jury note was error. The Court believes, however, that this error was harmless. The Court also believes, for the reasons outlined infra, that this Court's provision of the figurative definition to the jury might well not be seen as error at all, by the First Department or the Court of Appeals. This Court rejects the Defendant's double-jeopardy argument primarily because of the law of the case doctrine. The same arguments made by the Defendant here were previously addressed on the merits and denied in a decision by Justice Zweibel, formerly of this Court.
Brief Outline of Prior Proceedings
The litigation underlying this conviction has consumed a nine year odyssey of federal and state proceedings, resulted in extended opinions by multiple federal and New York courts and will not be outlined in any detail here. Nor will this decision recount in any detail the facts which have been amply outlined in these decisions.
Briefly, the charges in this case arose from the Defendant's wrongful taking of “high-frequency trading” (“HFT”) computer code to trade securities, which he used while working as a computer programmer in the technology division of the international financial firm, Goldman Sachs (“Goldman”). As the Second Circuit explained in their decision in Aleynikov's federal prosecution for the same conduct which was prosecuted in the instant case, discussed infra, high frequency trading “is a mechanism for making large volumes of trades in securities and commodities based on trading decisions effected in fractions of seconds. Trades are executed on the basis of algorithms ․”. United States v. Aleynikov, 676 F.3d 71, 73 (2d Cir. 2012).
Aleynikov encrypted and transferred a large volume of Goldman's HFT code to a server in Germany and then to Aleynikov's home computer in New Jersey prior to the termination of his employment at Goldman. At the time, he had been hired to work developing HFT source code for a competitor. As this Court noted in its initial decision dismissing the indictment in this case (a decision which was later overturned by appellate courts, as outlined infra ): “There was no evidence [at Defendant's state trial] that Aleynikov ever duplicated the source code he downloaded to a piece of paper, any medium where it could be touched or any medium outside a computer or thumb drive”. People v. Aleynikov, 49 Misc.3d 286, 290, 15 N.Y.S.3d 587 (New York County Supreme Court 2015) (subsequent history outlined infra ).
The Defendant was charged in the state prosecution in this case with one count of Unlawful Use Of Secret Scientific Material in violation of Penal Law § 165.07 for conduct which occurred on June 1, 2009 (Count 1); one count alleging a violation of the same statute for conduct which occurred on June 5, 2009 (Count 2) and one count of Unlawful Duplication of Computer Related Material in the First Degree in violation of Penal Law § 156.30 (1) for conduct which occurred on June 5, 2009 (Count 3). After a jury trial presided over by this Court, the jury was unable to reach a unanimous verdict on Count 1, returned a guilty verdict under Count 2 and a not-guilty verdict under Count 3. The jury deliberated for eight days and sent 23 notes to the Court prior to rendering its partial verdict. The verdict was reached by a ten person jury.1 Unlawful Use of Secret Scientific Material (the sole count the Defendant was convicted of) is a Class E felony.
After the jury's verdict, this Court granted the Defendant's motion for a trial order of dismissal with respect to the two counts for which that motion remained outstanding (Counts 1 & 2). In an extended opinion, this Court held that, viewing the evidence in a light most favorable to the People, the prosecution did not prove the Defendant made a “tangible reproduction or representation” of secret scientific material as required by the statute. This Court also held, under the same evidentiary standard, that the People did not demonstrate Aleynikov had the “intent to appropriate ․ the use of secret scientific material” as required by the law. People v. Aleynikov, supra.
This Court's decision was reversed by a unanimous decision of the First Department in People v. Aleynikov, 148 A.D.3d 77, 48 N.Y.S.3d 9 (1st Dept. 2017). The First Department reinstated the verdict. The Court of Appeals then granted leave to appeal and unanimously affirmed the First Department's decision. People v. Aleynikov, 31 N.Y.3d 383, 79 N.Y.S.3d 583, 104 N.E.3d 687 (2018). The Court of Appeals held that the trial evidence was sufficient to show both that Aleynikov made a “tangible reproduction or representation” of secret scientific material and had the “intent to appropriate” that material. This Court continues to respectfully disagree with the decisions of the First Department and the Court of Appeals for the reasons outlined in this Court's prior decision and as partially outlined infra. Following the Court of Appeals' ruling, the Defendant raised two clams in the instant motion, which are addressed here.
Proceedings Relevant to Alleged Incorrect Jury Instructions
The first issue raised by the Defendant here concerns the response this Court provided to the jury in response to a jury question during deliberations. That response, which is outlined infra, concerned the definition of the statutory word which was one of the two bases on which this Court vacated the verdict: the word “tangible” under the Secret Scientific Material statute. Specifically, the Defendant asserts that this Court should not have informed the jury that one of the dictionary definitions for the word “tangible” was “capable of being understood by the mind” (the “figurative definition”). The Secret Scientific Material counts at issue here read as follows:
A person is guilty of unlawful use of secret scientific material when, with intent to appropriate to himself or another the use of secret scientific material, and having no right to do so and no reasonable ground to believe that he has such right, he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material. Penal Law § 165.07.
The term “Secret Scientific Material” is also defined in the Penal Law:
“Secret Scientific Material” means a sample, culture, micro-organism, specimen, record, recording, document, drawing or any other article, material, device or substance which constitutes, represents, evidences, reflects, or records a scientific or technical process, invention or formula or any part or phase thereof, and which is not, and is not intended to be, available to anyone other than the person or persons rightfully in possession thereof or selected persons having access thereto with his or their consent, and when it accords or may accord such rightful possessors an advantage over competitors or other persons who do not have knowledge or the benefit thereof. Penal Law § 155.00 (6).
In its final instructions to the jury, the Court provided the standard pattern jury instruction for the Secret Scientific Material counts, without defining the word “tangible”. The Court denied the Defendant's application to define the word “tangible” to the jury. The Court also indicated to the parties that, were the jury to request a definition of the word, the Court would provide the word's three common dictionary definitions. The Defendant objected to this approach, and particularly objected to the Court providing any definition of “tangible” which would indicate the term could mean “capable of being understood by the mind”.
The jury then did send a note asking: “What is the definition of tangible? Is computer data tangible”.2 Over the Defendant's objections, the Court instructed the jury as follows:
The reason I did not define the word “tangible” for you when I gave you my final instructions on the law is because the law doesn't define the word and that means the word has its ordinary meaning, okay?
Now sometimes dictionary definitions can be helpful as guideposts to help a jury understand the ordinary meaning of a word.
Dictionary definitions are not legal instructions, are not the equivalent of legal definitions and they're not controlling, but dictionary definitions can also be useful guideposts to helping the jury understand the plain meaning of a word, the ordinary another [SIC] meaning of a word.3
So I'm going to read you in a minute three definitions of tangible from a dictionary.
* * * * * * * * * * * * * *
The final question you have, “Is computer data tangible?” that's a question of how the law applies to the fact[s] and that's a question you're going to have to answer․
So let me read you the first the dictionary definitions, okay?
Tangible means having or possessing physical form, corporeal, that's number one.
Two, capable of being touched and seen, perceptible to the touch, capable of being possessed or are 4 realized.
And three, capable of being understood by the mind.5
The Defendant subsequently restated his objection to this answer and asked the Court for a corrected instruction, applications this Court denied. During their subsequent deliberations, the jury asked for multiple readbacks and exhibits, asked multiple questions about the larceny aspects of the Secret Scientific Material statute including the definitions of specific words, repeatedly asked for a copy of the charge and addressed significant conflicts among certain jurors. They did not pose any additional questions on the “tangibility” issue.
The People maintained that the “capable of being understood by the mind” construction of the statute was plausible when they argued to this Court in opposition to the Defendant's motion for a trial order of dismissal. In its decision dismissing the indictment, this Court outlined why it believed the “capable of being understood by the mind” construction was inapplicable to the word “tangible” here (reaching a different conclusion than this court reached during the trial):
It can be argued that the “capable of being understood by the mind” construction of the word “tangible” makes sense because the drafters of the statute intended to criminalize only representations of secret scientific material which were comprehensible. In other words, it might be argued, the word “tangible” was inserted into the law to distinguish reproductions or representations which had economic value (because they could be understood) from copies of inventions or formulas which could not be understood, had no value and thus should not result in criminal liability. Thus, the People argue, “tangible” as defined by the statute may simply refer to something which is “real and not imaginary, or extant and not illusory”.6
When the entire secret scientific material statute is considered, however, the logic of this analysis fails. First, the statute requires a defendant have the “intent to appropriate ․ the use of secret scientific material”. As discussed in more detail infra, the intent to appropriate is the intent to steal. It is the intent “to exercise control over it [the secret scientific material], or to aid a third person to exercise control over it, permanently or for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit” or to dispose of the property for one's benefit.
It would seem odd, to say the least, however, for the Legislature to insert the word “tangible” into the statute to avoid punishing people for intending to obtain economic value from something which was worthless. A copy of an invention, formula, recording, document or technical process which was not “capable of being understood by the mind” would have no value. A wrongdoer could not possibly have the intent to acquire the “major portion of the economic value or benefit” of such an item. Secret scientific material is valuable only because it is cognizable. But if that is so, then the word “tangible” meaning “capable of being understood by the mind” would be a superfluous addition to the statute. To cite one of the People's proposed constructions, the Legislature surely did not insert the word “tangible” into the statute to clarify that secret scientific material had to be “real and not imaginary” in order to result in a felony conviction. We can safely presume the Legislature was not concerned about clarifying that New Yorkers should not be punished through the criminal law for their imaginations.
The definition of “secret scientific material”, as noted supra, also requires that such material “accords or may accord such rightful possessors an advantage over competitors or other persons who do not have knowledge or the benefit thereof.” Penal Law § 155.00 (6). It would seem impossible, however, for a wrongdoer to obtain a competitive advantage by wrongfully duplicating something which was not “capable of being understood by the mind”. As with the appropriation issue, secret scientific material is only valuable if it can be understood.
It is a fundamental principle of statutory construction that a court must assume every word in a statute has a meaning and was inserted for a purpose. See Bliss v. Bliss, 66 N.Y.2d 382 [497 N.Y.S.2d 344, 488 N.E.2d 90] (1985); Direen Operating Corp. v. State Tax Commission, 46 A.D.2d 191 [361 N.Y.S.2d 736] (3d Dept. 1974); McKinney's NY Statutes § 231. “In construing a statute, no part thereof is to be considered meaningless unless that conclusion is inevitable, and words in statutes are not to be rejected as superfluous when it is practicable to give to each a distinct and separate meaning.” Id. The only way to make sense of the word “tangible”, meaning “capable of being understood by the mind”, would be to violate that statutory maxim — twice in the same statute. But that would not only be inappropriate and, as discussed infra, contrary to the overwhelming weight of legal authority. It is unnecessary. A perfectly reasonable alternative construction exists. That comes from the physical definitions. People. v. Aleynikov, supra, 49 Misc.3d at 311-312, 15 N.Y.S.3d 587.
In its written decision dismissing the indictment, this Court also acknowledged that it had erred when it provided the “capable of being understood by the mind” dictionary definition to the jury. Id., at 341-342, 15 N.Y.S.3d 587.
On their appeal of this Court's dismissal ruling to the First Department, the People abandoned their claim that the word “tangible” could be defined as “capable of being understood by the mind”.7 The First Department noted that the People were in agreement that “ ‘tangible’ means something having ‘physical form and characteristics’ ”. Id., at 84-85, 48 N.Y.S.3d 9 (quotation omitted). The People also did not pursue the argument that the word “tangible” could have a figurative meaning before the Court of Appeals. As the Court of Appeals noted in their decision, “the People do not argue on appeal that the term ‘tangible’ in the statute means ‘capable of being understood by the mind’ ”. (n. 2.)
Justice Zweibel's Ruling on Defendant's Double-Jeopardy Claim
The Defendant was initially charged, inter alia, with violations of the federal “National Stolen Property Act, 18 USCA § 2314 (the “NSPA”) and the “Economic Espionage Act of 1996, 18 USCA § 1832 (the “EEA”) for the conduct alleged here. He was convicted after trial and then had that conviction vacated by the Second Circuit after serving one year in prison. United States v. Aleynikov, supra (discussed infra ). In what this Court understands was a highly unusual procedure, the Second Circuit reversed Aleynikov's conviction on the day of the oral argument and ordered him released. The Court then followed up with its written decision two months later.
Although this Court presided over Aleynikov's state trial in 2015, a different justice of this Court, Justice Zweibel, presided over extensive pre-trial matters over more than 2 1/212 years. The Defendant raised a double-jeopardy claim before Justice Zweibel and he denied that claim in a written unpublished decision on May 2, 2013. He found that “the instant prosecution is not barred under double jeopardy grounds and is expressly permitted under CPL 40.20 (2) (f).” SlipOp at 20. Justice Zweibel found the instant prosecution was not barred by the double jeopardy clause of the Fifth Amendment or under New York statutory law. The statutory provision he relied upon and which Defendant argues here is CPL 40.20 (2) (f), which provides that a person “may not be separately prosecuted for two offenses based upon the same act or criminal transaction unless”:
One of the offenses consists of a violation of a statutory provision of another jurisdiction, which offense has been prosecuted in such other jurisdiction and has there been terminated by a court order expressly founded upon insufficiency of evidence to establish some element of such offense which is not an element of the other offense, defined by the laws of this state;
As discussed infra, the Second Circuit vacated Aleynikov's conviction because it found the source code he transmitted was not “tangible” and was therefore not “goods”, “wares” or “merchandise” under the NSPA. Justice Zweibel found, inter alia, that the element of Aleynikov's violation of the NSPA, that he stole “goods”, “wares” or “merchandise”, was not an element of the Secret Scientific Material statute.
CONCLUSIONS OF LAW 8
Alleged Incorrect Jury Instructions
A guilty verdict “must be set aside where the jurors in reaching their verdict may have relied on an illegal ground or on an alternative legal ground and there is no way of knowing which ground they chose”. People v. Martinez, 83 N.Y.2d 26, 32, 607 N.Y.S.2d 610, 628 N.E.2d 1320 (1993); see also, People v. Lourido, 70 N.Y,2d 428, 522 N.Y.S.2d 98, 516 N.E.2d 1212 (1987). The Court does not believe that occurred here.
Initially, contrary to the People's argument, there is no basis to deny this claim on procedural grounds. Even assuming the Defendant was required to preserve the instant claim, he certainly did so.
The “capable of being understood by the mind” portion of the answer provided by the Court to the jury question was not given as a legal definition but one of a number of standard dictionary definitions for the word tangible. The Court prefaced its answer to the jury note, as noted supra, with the statement: “Dictionary definitions are not legal instructions, are not the equivalent of legal definitions and they're not controlling.” The Court said the word “tangible” had its “ordinary meaning” and that dictionary definitions could be “useful guideposts” in understanding the meaning of the term. This instruction properly outlined the evidentiary value of the dictionary definitions the Court read. The Court of Appeals in Aleynikov stated the same principles, although later noting, as outlined supra, that the People had abandoned the argument that the word “tangible” had a figurative definition:
The term “tangible” is not defined in the Penal Law. When a word used in a statute is not defined in the statute, dictionary definitions serve as “useful guideposts” in determining the word's “ordinary” and “commonly understood” meaning. 31 N.Y.3d at 397, 79 N.Y.S.3d 583, 104 N.E.3d 687 (quotation omitted).
A dictionary definition should not be given to a jury, however, if the definition does not correctly indicate the meaning of a word in a court's charge. That is what occurred here, in this Court's view, and that is why this Court agrees with the Defendant that the provision of this definition was error.
This Court's answer to the jury note, of course, occurred after the closing arguments. Those arguments, however, concerned, inter alia, the question of whether the computer source code was “tangible” pursuant to the physical definitions of the term, not the “figurative” definition at issue here. In fact, the “figurative” definition was not argued to the jury at all, by either party.
The People in their closing argument did not assert that the term “tangible” meant “capable of being understood by the mind” or any equivalent formulation. They rather focused on the argument that the computer source code was tangible because it was possible to “possess”, “takes up space” existed in the “physical world” and was “physically stored in the memory of the computer”.9 The People also argued that the hard drive was physical. They said the computer code could be seen on a CD. These arguments mirrored the propositions which were accepted by the First Department and the Court of Appeals in their decisions. Although the People supported this Court's reading of the figurative definition to the jury and argued on the Defendant's initial dismissal motion before this Court that the figurative definition was plausible, they consistently argued to the jury that the Defendant should be convicted based on a physical definition of the word tangible.
The Defendant, in his final argument to the jury, also focused on a physical tangibility definition. The Defendant argued: “ ‘Tangible’ means capable of being touched, perceptible by touch” and said computer code was intangible.10 “It's intangible property and it never stops being intangible property unless you print it out on a piece of paper and then it can be touched, then it can be tangible”.11 As the Defendant points out, there was evidence presented during the trial that the source code “was capable of being understood by the mind”. But that was not the focus of the questions posed by the parties during the trial. Moreover, there was no evidence presented during the trial that the Defendant obtained the source code through other than a computer transfer, for example, by memorizing it.
The Court informed the parties prior to summations that, were the jury to request a definition of the word “tangible”, the Court would provide them with dictionary definitions, including the figurative definition. The People were thus on notice that the jury might be told the word “tangible” had a figurative definition. But they did not at any point argue to the jury that this dictionary definition should be relied on.
The jury asked no questions about the “tangibility” issue following the Court's response to their initial inquiry. Rather, as was apparent from their numerous additional notes, they were focused on a variety of other issues concerning the law, the evidence and their interactions with each other. Under all of these circumstances, this Court believes the jury did not rely on the figurative definition of tangibility in reaching their verdict. As the People argue: “The trial record as a whole supported only one theory of liability regarding the “tangible reproduction” element: that defendant created a physical copy of Goldman's code on the German server”.12
The Differing Views of this Court and the Appellate Courts on Tangibility
There is also a second important reason, however, why this Court believes that Defendant's jury instruction claim should be denied. This Court obviously did not believe the figurative definition of tangible was applicable here. Both the First Department and the Court of Appeals noted that the People had abandoned their argument that the figurative definition was valid on appeal. But both courts had a significantly different view of the sufficiency of the evidence than this Court, in multiple foundational respects. In this Court's view, there is no reason to believe either the Court of Appeals or the First Department would believe the figurative definition of tangible was erroneous.
One of the multiple reasons this Court believed the trial evidence was legally insufficient to demonstrate a “tangible reproduction or representation” of the source code was its view that construing Aleynikov's transfer of the code through computers as “tangible” would make the word tangible superfluous. This Court rejected the People's argument that the word “tangible” may have been inserted into the statute by the Legislature to distinguish a person's “memory” from a reproduction of data in a more concrete form (like a transfer of code through a computer). Thus, the People argued, “had the Defendant simply used his memory to recall certain code he saw, or algorithms he created ․ he would not have been in violation of this particular statute.” 13 This Court responded to that argument by opining that:
The New York Penal Law ․ obviously doesn't criminalize memories. There would be no reason for the Legislature to insert the word “tangible” into the statute to clarify that having a memory about confidential information was not a crime”.14
The language of the statute also obviously doesn't apply to the process of forming a memory. As outlined supra, it requires a “tangible reproduction or representation ․ by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material.” Penal Law § 165.07. The Court of Appeals opined that “copying secret scientific material solely by memorizing it would not fall under the statute” for that reason. 31 N.Y.3d at 399, 79 N.Y.S.3d 583, 104 N.E.3d 687. The Court of Appeals nevertheless found that construing the word “tangible” as having been inserted by the Legislature to clarify that having a memory about secret scientific material was not a crime would not make the word tangible redundant:
Someone with a photographic memory who memorized a piece of source code would not be making a tangible reproduction of the code. [citation omitted]․ [T]he word “tangible” as we interpret it, does not introduce redundancy; it adds a modest element to “reproduction” serving to emphasize that the crime consists in making a physical, not a mental, copy of secret scientific material. 31 N.Y.3d at 399–400, 79 N.Y.S.3d 583, 104 N.E.3d 687.
This Court respectfully disagrees. If memorizing secret scientific material is indisputably not covered by the statute, as the Court of Appeals recognized, there would be no reason for the Legislature to insert the word “tangible” into the statute to emphasize that point. Nor is there anything in the statute's legislative history which indicates that was the Legislature's intent.
The Court of Appeals also expressed its acceptance of additional definitions of the word tangible as the word applied in this case which this Court rejected. In surveying a range of possible meanings for the word, the Court of Appeals noted that, in addition to the physical definition it adopted, an “equally valid” meaning of the term was “material, externally real, objective” and “substantially real: material”. 31 N.Y.3d at 398, 79 N.Y.S.3d 583, 104 N.E.3d 687 (dictionary citations omitted). This Court expressed a different view. As outlined in this Court's response to the People's claim that the word “tangible” might have been intended to indicate that a representation of scientific material had to be “real and not imaginary”, this Court again opined that this construction would make the word superfluous: See 49 Misc.3d at 311-312, 15 N.Y.S.3d 587, discussed supra.
One of the two reasons this Court saw the figurative definition as superfluous, as outlined supra, was that a person could not have the intent to obtain “economic value” and “steal” secret scientific material which could not be understood, since a scientific document or formula which was not “capable of being understood by the mind” would have no value. But, as discussed infra, the Court of Appeals and the First Department construed the word “appropriate” in a completely different manner, concluding that the term did not require a defendant to have any intent to take anything of economic value from a victim so long as there was an intent, under the Secret Scientific Material counts, to use such material “permanently”.
This Court also differed with the First Department and the Court of Appeals on a number of other significant issues which were key to construing the tangibility issue. As noted supra, the Defendant was initially charged, inter alia, with violations of the federal National Stolen Property Act for the conduct alleged here, convicted after trial and then had that conviction vacated by the Second Circuit. The Second Circuit considered the same tangibility question as was at issue in this case, with equivalent trial evidence but under a different statute. The Second Circuit held that:
By uploading Goldman's proprietary source code to a computer server in Germany, Aleynikov stole purely intangible property embodied in a purely intangible format․ Aleynikov later transported portions of the source code to Chicago, on his laptop and flash drive․ The later storage of intangible property on a tangible medium does not transform the intangible property into a stolen good. 676 F.3d at 78.
The Second Circuit repeated this characterization in its decision in United States v. Agrawal, 726 F.3d 235, 251-252 (2d Cir 2013), in rejecting the argument that the Defendant in that case was not guilty of an NSPA crime based on the authority of Aleynikov:
Relying on Aleynikov, Agrawal challenges the legal sufficiency of his NSPA charge, complaining that he too is accused of stealing computer code constituting only intangible property. The argument fails because it ignores Aleynikov's emphasis on the format in which intellectual property is taken. In Aleynikov, the defendant stole computer code in an intangible form, electronically downloading the code to a server in Germany and then from that server to his own computer. By contrast, Agrawal stole computer code in the tangible form of thousands of sheets of paper, which paper he then transported to his home in New Jersey. This makes all the difference. (citations omitted) (italics and underline added).
See also, Agrawal, 726 F.3d at 253 (“[A]t the moment of the code's theft in Aleynikov, its form was intangible and remained so as it was transmitted from Goldman Sachs's servers to a server in Germany and then to defendant's home computer.”)
This Court cited these cases (and numerous other authorities) in support of its ruling that the source code Aleynikov took was not tangible property. The New York Court of Appeals, however, construed the meaning of the Second Circuit's Aleynikov decision in a completely different manner:
What must be tangible is not the secret scientific material — here, the source code — but the reproduction or representation thereof․ Once this distinction is made, it becomes clear that the Second Circuit's conclusion, that Goldman's source code was “purely intangible property ․ at the time of the theft” (Aleynikov, 676 F.3d at 78), i.e., prior to being stored on the German server, has no direct bearing on the question before us today, namely, whether the “reproduction or representation” that defendant made of the source code is tangible. A copy of source code may be tangible even if the source code itself is not. 31 N.Y.3d at 398–99, 79 N.Y.S.3d 583, 104 N.E.3d 687 (emphasis added).
The First Department expressed the same view. 148 A.D.3d at 88, 48 N.Y.S.3d 9. The Second Circuit in Aleynikov, however, did not find the source code was intangible only prior to its transmission to the German server. As is made plain by the above quoted language from Agrawal, and as is apparent from the Aleynikov decision itself, the Second Circuit found the transmission of the code to the German server and then to Aleynikov's computer was intangible. The Second Circuit construed the identical data transmission that was considered in Aleynikov's New York prosecution.
That is apparent, moreover, not only from the plain language of the Second Circuit's two opinions but from the subject of the Aleynikov decision. The NSPA statute the Second Circuit construed in Aleynikov concerned goods, wares or merchandise which moved through interstate commerce.15 The Court was not concerned with the abstract theoretical question of whether computer code was intangible. It considered the question before it: whether Aleynikov's actions in transmitting the code violated the NSPA. The Second Circuit and this Court found the data intangible and the Court of Appeals and First Department reached the opposite conclusion.
Even were the proper construction of the word “tangible” a close call, however, this Court believed the Rule of Lenity compelled the dismissal of the charges here. “If two constructions of a criminal statute are plausible, the one more favorable to the defendant should be adopted ․ ” People v. Golb, 23 N.Y.3d 455, 468, 991 N.Y.S.2d 792, 15 N.E.3d 805 (2014), quoting People v. Green, 68 N.Y.2d 151, 153, 506 N.Y.S.2d 298, 497 N.E.2d 665 (1986). The Second Circuit's decision in Aleynikov was authored by Chief Judge Dennis Jacobs and joined by Judge Pooler. Judge Calabresi issued a concurring opinion which added additional thoughts on the construction of the EEA. The Second Circuit's decision in Agrawal was authored by Judge Raggi and joined by Judge Lynch. Judge Pooler issued an opinion concurring with the majority's analysis of the NSPA issues and dissenting regarding the majority's EEA analysis. Both courts found that the transmission of the computer code at issue in this case was intangible, without dissent. In this Court's view, the views of these five federal appeals court judges were, at a minimum, “plausible”.
As the Second Circuit outlined the principle in Aleynikov:
Due respect for the prerogatives of Congress in defining federal crimes prompts restraint in this area, where we typically find a narrow interpretation appropriate”. 676 F.3d at 76 (citation omitted)․ Ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity. And when choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definite. 676 F.3d at 82 (construing the EEA; citations and quotations omitted).
Again, however, the New York appellate courts saw the issue differently. Neither the First Department nor the New York Court of Appeals mentioned the Rule of Lenity or any equivalent doctrine in their decisions.
Differing Views of the Meaning of “Appropriate”
The New York Court of Appeals and the First Department also differed with this Court's construction of the word “appropriate” under the Secret Scientific Material statute. That definition reads as follows:
“Appropriate.” To “appropriate” property of another to oneself or a third person means (a) to exercise control over it, or to aid a third person to exercise control over it, permanently or for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit, or (b) to dispose of the property for the benefit of oneself or a third person. Penal Law § 155.00 (4).
In its decision, this Court construed the phrase “major portion of its economic value or benefit” as applicable to property which was controlled “permanently or for so extended a period or under such circumstances” as to acquire such a major portion of a property's economic value or benefit. This Court held that the trial evidence was legally insufficient to demonstrate that Aleynikov had the intent to acquire the major portion of the source code's economic value and that the indictment had to be dismissed for that reason.
The appellate courts held, however, that this Court simply misread the statute and that, under the definition of “appropriate”, so long as a defendant had the intent to exercise control over property “permanently”, a defendant need not also have the intent to acquire the major portion of a property's economic value or benefit. Since the trial evidence was sufficient to demonstrate that Aleynikov had the intent to exercise control over the code permanently, the appellate courts held, his intent regarding the code's value was irrelevant. This Court continues to believe it read the statute in accordance with its plain meaning:
[W]here general words appear at the end of a sentence and following several possible antecedents, they usually refer to, and modify, the whole sentence and not merely the last preceding antecedent; but if the same general words appear in the middle of a sentence, they are generally held to modify only the part which they succeed. Thus, in a clause providing that certain persons should not “be liable to military or jury duty, or to arrest on civil process, nor to service of subpoenas from civil courts, whilst actually on duty,” the italicized words referred to all the previous exemptions named, and not merely to the last one preceding․ Similarly, where a law provided that “it shall not be lawful for any person to carry on the business of fat rendering, bone boiling, or the manufacture of fertilizers, or any business as a public nuisance”, the last four words related to, and qualified, all the preceding phrases and not merely the words “any business”. McKinney's N.Y. Statutes § 254; A.J. Temple Marble and Tile v. Union Carbide Marble Care, Inc., 87 N.Y.2d 574, 580 [640 N.Y.S.2d 849, 663 N.E.2d 890] (1996) (“Where ․ a descriptive or qualifying phrase follows a list of possible antecedents, the qualifying phrase generally refers to and modifies all of the preceding clauses”).
This principle, in this Court's view, is even more apparent in construing the word “appropriate” here because no comma offsets the word “permanently” from the remainder of the clause. “Common marks of punctuation are used to clarify the writer's intended meaning and thus form a valuable aid in determining legislative intent”. Id., 87 N.Y.2d at 581, 640 N.Y.S.2d 849, 663 N.E.2d 890, citing McKinney's N.Y. Statutes, § 253. New York Statutes § 254 goes on to provide that in spite of this general rule, clauses must be given a reasonable construction which accords with legislative intent. Legislative intent, of course, is always the ultimate controlling principle. “The marks of punctuation ․ are not to be disregarded when the meaning of the statute is not clear, and the courts may follow the punctuation in ascertaining the antecedent”. McKinney's N.Y. Statutes § 254.
The definition of the word “deprive” under the larceny statutes has the same grammatical structure, where deprive means either to dispose of property or “(a) to withhold it or cause it to be withheld from him permanently or for so extended a period or under such circumstances that the major portion of its economic value or benefit is lost to him,”. This Court is not aware of any legislative history which indicates that the definitions of “appropriate” and “deprive” should not be given their plain meanings. See A.J. Temple Marble and Tile, supra, 87 N.Y.2d at 580-581, 640 N.Y.S.2d 849, 663 N.E.2d 890 (in construing the rule outlined in N.Y. Statutes § 254, supra, “courts may not reject a literal construction (of a statute) unless it is evident that a literal construction does not correctly reflect the legislative intent”) (quotation omitted).
The Court of Appeals and the First Department, however, construed this clause in a completely different way. The Court of Appeals held:
We read the clause “as to acquire the major portion of its economic value or benefit” as grammatically dependent on “for so extended a period or under such circumstances” and not on “permanently”. 31 N.Y.3d at 404, 79 N.Y.S.3d 583, 104 N.E.3d 687.
The Court did not explain its reasoning but did illustrate the statute's proper construction by modifying its punctuation; breaking the single statutory clause into two new subparagraphs (i) and (ii):
Under Penal Law § 155.00 (4) (a), then, a person “appropriate[s]” property by exercising control over the property either (i) “permanently” or (ii) “for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit”. Id. (emphasis in decision).
The First Department in its Aleynikov decision had earlier modified the statute's punctuation to illustrate its proper construction in the identical way:
Under Penal Law § 155.00 , a person “appropriate[s]” property by exercising control over the property either (i) “permanently” or (ii) “for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit”. 148 A.D.3d at 88, 48 N.Y.S.3d 9.
The First Department cited one authority in support of its construction: the Court of Appeals decision in People v. Jennings, 69 N.Y.2d 103, 118, 512 N.Y.S.2d 652, 504 N.E.2d 1079 (1986). Id. The holding in Jennings did not concern the statutory construction issue here. In Jennings, an armored car company was given cash by Chemical bank so the company could count and transport the money. Unbeknownst to the bank, the company was able to perform those tasks during only part of the time they retained the funds and then invested the money earning fees for the company during periods of up to 48 hours without the bank's authorization. Analogizing this conduct to a wrongdoer who temporarily takes a car for a “joy ride” the Court found this temporary use of the bank's funds legally insufficient to constitute larceny because, inter alia, it at most indicated an intent to temporarily acquire all of the money's value rather than an intent to “deprive” or “appropriate” that value from its owner.
Although Jennings did not analyze the construction of the appropriation definition, it did refer to the concepts of permanent control and loss of value in the alternative, lending support to the construction of the word “appropriate” which was provided by the appellate courts here. See New York Court of Appeals decision in Aleynikov, 31 N.Y.3d at 405, 79 N.Y.S.3d 583, 104 N.E.3d 687, quoting Jennings, 69 N.Y.2d at 118, 512 N.Y.S.2d 652, 504 N.E.2d 1079 (“the concepts of ‘deprive’ and ‘appropriate’ ․ connote a purpose ․ to exert permanent or virtually permanent control over the property taken, or to cause permanent or virtually permanent loss to the owner of the possession and use thereof”).
The term “appropriate” is most commonly used in larceny statutes. Larceny occurs when “with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof”. Penal Law § 155.05 (1). In a typical larceny, however, a defendant who intends to exercise permanent control over property will also intend to obtain most or all of the property's economic value. Hence, the requirement that a defendant have the intent to obtain “the major portion” of an asset's value, in a typical larceny, will usually be readily apparent because of the Defendant's intent to exercise permanent control of the asset. In Jennings, in contrast, the Defendant did not intend to take the property “permanently” or take most of its value. The evidence in the case was deficient in both respects. Jennings, however, in this Court's view, did not change the plain meaning of the appropriation definition.
In contrast to larceny, the Secret Scientific Material statute is a duplication crime. A victim under the statute retains the original asset. Under these circumstances, the elimination of any requirement that a wrongdoer intend to obtain any value from copied intellectual property may be significant. The Legislature intended that a person who wrongfully duplicates Secret Scientific Material have the intent to “steal” the material's value, as in a larceny:
“Unlawful use of secret scientific material” works in tandem with the crime of larceny of secret scientific material (Penal Law § 155.30  ). In the larceny, the defendant steals “property” consisting of secret scientific material, for example, a document reciting a secret scientific formula. In the unlawful use, with the same larcenous intent with respect to the contents of the formula, the defendant, for example, photographs the document.” Donnino, Practice Commentary to Penal Law § 165.07, McKinney 2018 (emphasis added).
The construction of “appropriate” here eliminates any requirement that a wrongdoer have the intent to obtain any economic value from a copied asset. It eliminates any requirement that a defendant have the intent to “steal” any of the material's worth. If Aleynikov had left Goldman to work as a computer programmer in a non-financial field and took a line of code to study as a purely intellectual exercise, with no intent or effect of depriving Goldman of one penny of value, he would still be guilty of a felony. He would have the intent to exercise control over the code he took “permanently”. He would also have “no right to do so [take the computer code] and no reasonable ground to believe that he has such right”.
As outlined supra, the Secret Scientific Material statute covers a broad range of content. It includes, inter alia, any “record ․ document ․ article ․ material [or] device” which “evidences” any “technical process” “or any part ․ thereof”. The record must be intended to not be available to others and have the potential to afford a rightful holder an advantage over competitors. Despite the statute's title, however, it covers a scope of material well beyond “scientific secrets”.
The construction here, in this Court's view, might criminalize the civil wrong of patent infringement in many cases, so long as an infringer had the intent to take intellectual property permanently and no reasonable ground to believe he had the right to infringe a patent. See 18 USCA § 271 (defining an “Infringement of patent”). Indeed, in the Aleynikov hypothetical here, even were the computer code protected by a patent, Aleynikov might not be guilty of patent infringement, since he took the code purely to study it.16 But he would be guilty of a felony.
Under the Rule of Lenity, if this Court's construction of the word “appropriate” was “plausible”, the evidence in this case should have been analyzed for legal sufficiency pursuant to that construction.17 This Court also continues to respectfully disagree with the Court of Appeals and the First Department's views in this case in other respects. This Court believes New York authorities which have previously considered whether computer code is tangible support its view, but the appellate courts saw the same case law differently.18 The bottom line is that the views of this Court on the issues raised by the Defendant at this point are, to say the least, a poor indicator of how the First Department and the New York Court of Appeals would view those issues. This Court believes its submission of the figurative definition to the jury was harmless error. But the appellate courts might conclude the submission of that definition was not error at all.
Argument That The Verdict Should be Vacated on Double-Jeopardy Grounds
Defendant's motion here is made pursuant to CPL 330.30 (1). That provision allows a court to “set-aside or modify the verdict or any part thereof” based on “[a]ny ground appearing in the record which, if raised upon an appeal from a prospective judgment of conviction, would require a reversal or modification of the judgment as a matter of law by an appellate court”.
The double-jeopardy issue raised here has nothing to do with an error which allegedly occurred during the trial and does not technically concern the trial “verdict”. It rather asks this Court to reverse a pre-trial ruling made by a judge of coordinate jurisdiction on an omnibus motion. The People argue that CPL 330.30 (1) does not apply to pre-trial rulings and that position certainly reflects the way the statute is generally applied. Trial courts do not generally consider attacks on pre-trial omnibus motion rulings through CPL 330.30 (1) motions. However, as the Defendant points out, there is nothing in the statute which limits the reach of CPL 330.30 (1) in that way and this Court is not aware of any case which has held that a pre-trial ruling is not part of the “record” which may be attacked through such a motion.
Assuming the instant claim has been properly brought pursuant to CPL 330.30 (1) however, the Court is denying the motion because of the law of the case doctrine. This is a judicially crafted policy which urges courts to generally refuse to reopen matters that have already been decided by courts of concurrent jurisdiction. People v. Evans, 94 N.Y.2d 499, 706 N.Y.S.2d 678, 727 N.E.2d 1232 (2000). The “doctrine is designed to eliminate the inefficiency and disorder that would follow if courts of coordinate jurisdiction were free to overrule one another in an ongoing case.” People v. Evans, supra at 504, 706 N.Y.S.2d 678, 727 N.E.2d 1232. The sound policy reason for applying the rule is that once an issue has been judicially determined, that should be the end of the matter as far as judges and courts of concurrent jurisdiction are concerned. Martin v. City of Cohoes, 37 N.Y.2d 162, 371 N.Y.S.2d 687, 332 N.E.2d 867 (1975). The doctrine presupposes that the parties to the litigation have fully litigated the issue in controversy. People v. Bilsky, 95 N.Y.2d 172, 712 N.Y.S.2d 84, 734 N.E.2d 341 (2000). The concept has been described as “amorphous” because while it “directs a court's discretion” it does not restrict a court's authority. People v. Evans, supra at 503, 706 N.Y.S.2d 678, 727 N.E.2d 1232, quoting Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983).
The Court recognizes that the law of the case doctrine does not limit this Court's authority and that this Court has the discretion to not apply the doctrine in appropriate cases. But no such circumstance, in this Court's view, exists here. The double-jeopardy argument being made here was previously fully briefed and argued by highly effective counsels on both sides. Justice Zweibel ruled on the motion in a written decision. The Defendant complains that Justice Zweibel's analysis of the discrete issue here was brief (the decision's analysis of all of the double-jeopardy issues raised in the motion consumed five pages). But a decision's written length does not necessarily speak to the care with which a Court considered it. Justice Zweibel was fully familiar with the underlying facts. Of course this Court, having presided over the trial, became more familiar with those facts. But that is often true when one judge issues a pre-trial ruling and another judge conducts the trial. There are no circumstances warranting a departure from the law of the case doctrine here.
A well recognized exception to the law of the case doctrine exists where there is a change in controlling legal authority following a judicial decision. Town of Massena v. Healthcare Underwriters Mutual Insurance Company, 40 A.D.3d 1177, 1179, 834 N.Y.S.2d 736 (3d Dept. 2007); Brownrigg v. New York City Housing Authority, 29 A.D.3d 721, 815 N.Y.S.2d 681 (2d Dept. 2006); Seltzer v. New York State Democratic Committee, 293 A.D.2d 172, 174, 743 N.Y.S.2d 565 (2d Dept. 2002); Lipovsky v. Lipovsky, 271 A.D.2d 658, 706 N.Y.S.2d 185 (2d Dept. 2000), lv denied, 96 N.Y.2d 712, 729 N.Y.S.2d 440, 754 N.E.2d 200 (2001).19 Aleynikov notes that the Court of Appeals' reversal of this Court's legal sufficiency ruling as well as the Second Circuit's decision in Agrawal both post-dated Justice Zweibel's double-jeopardy ruling. He argues that both decisions further clarified the double-jeopardy issue here and made it clear that the tangibility issue in both the federal and state prosecutions concerned the copy of the source code transmitted by Aleynikov rather than the code itself. But these authorities, in this Court's view, did not constitute a change in the law sufficient to obviate the application of the law of the case doctrine.
In any event, the New York Court of Appeals and the First Department construed the tangibility issue in the instant case as being different than the tangibility issue addressed by the Second Circuit. The First Department and the Court of Appeals believed the issue addressed by the Second Circuit in Aleynikov was whether the source code, in the abstract, was intangible. The issue in the instant case was whether the transmission of the code was intangible. This Court obviously believes the New York appellate courts' view of what the Second Circuit decided was erroneous. But, presumably, the First Department and the Court of Appeals would reach the same conclusion in considering Defendant's double-jeopardy argument.
Aleynikov argues that the element which resulted in the reversal of his federal conviction; that he did not steal a “good” because the source code he took was intangible, was the same element which resulted in his state conviction, that is, that he took the same code but it was now “tangible”. The argument that these were not common elements, Aleynikov asserts, simply elevates form (the form of the federal vs. the state statute) over substance. The Defendant is presumably free to make these arguments on appeal. But this Court does not believe it would be proper for it to revisit Justice Zweibel's ruling here.
This case has garnered significant public attention and often been presented through a simple compelling narrative. Working surreptitiously at the world headquarters of Goldman Sachs, in the heart of the financial capital of the world, Aleynikov wrongfully took computer code which was valuable, proprietary and secret. Moreover, while Aleynikov was not a Wall Street titan, he was no underling. He earned $400,000 per year at Goldman. He was scheduled to make $1.2 million at the competitor he was next scheduled to work for. What he did simply must have been a crime.
The evidence in this case clearly indicated that Aleynikov did not take the code to simply “plug it in” to his new employer's trading system. That would likely not even have been possible. As one prosecution witness testified: “Computer software that works tremendously effectively in one scenario, in one high frequency trading system, might not work at all transferred to another.” 20 Aleynikov's new company had not yet even made basic decisions about how its yet-to-be constructed trading system would work. Rather, as the senior Goldman executive who testified at Aleynikov's state trial agreed, Aleynikov apparently downloaded the code to “study it” and use the results of that study to assist him in his new position.21 After his arrest, Aleynikov never went to work for the competitor. There is no evidence his actions ever, in fact, reduced Goldman's HFT profits. But there has never been any doubt that what he did was wrong.
Moreover, it has been often argued, the distinction drawn by the Second Circuit between taking computer code and printing it on paper (resulting in criminal liability) and accessing it through an intangible computer transmission (resulting in no criminal liability) makes no sense. As the First Department argued in its Aleynikov decision: “It would be incongruous to allow defendant to escape criminal liability merely because he made a digital copy of the misappropriated source code instead of printing it onto a piece of paper”. 148 A.D.3d at 86, 48 N.Y.S.3d 9 (citation omitted).
These are obviously valid policy arguments. But they have never been the dispositive issue here. The question here was whether the New York State Legislature, when they drafted the Secret Scientific Material statute in 1967, intended to criminalize Aleynikov's conduct. Of course, such conduct did not exist in 1967. Moreover, the drafters of the statute likely never imagined the kind of computer transfer Aleynikov effected. But statutes can certainly cover conduct which was never anticipated by their drafters. The fact that the Secret Scientific Material statute was written in 1967, however, continues to be relevant here:
A statute and the words used therein are to be construed according to the meaning thereof at the time of the enactment of the statute rather than a meaning subsequently acquired, and expediency both of changing circumstances and conditions will not be permitted to alter the meaning of the plain and ordinary language therein. McKinney's N.Y. Statutes § 124.
See also, People v. Litto, 8 N.Y.3d 692, 697, 840 N.Y.S.2d 736, 872 N.E.2d 848 (2007) (“The plain meaning of a statute must be interpreted ‘in the light of conditions existing at the time of its passage and construed as the court would have construed it soon after its passage’ ”) (quotation and citation omitted); Department of Finance of the City of New York v. New York Telephone Company, 262 A.D.2d 96, 98, 692 N.Y.S.2d 34 (1st Dept. 1999), lv denied, 94 N.Y.2d 755, 701 N.Y.S.2d 711, 723 N.E.2d 566 (1999) (similar).
As the First Department outlined in their Aleynikov decision, the impetus for the enactment of the Secret Scientific Material law in 1967 was a concern that a particular kind of tangible reproduction of secret scientific material was not encompassed within the larceny statutes:
The Temporary Commission on Revision of the Penal Law and Criminal Code explained that prior to the statute's enactment, “a person who [stole] the blueprints of a secret process, commit[ted] larceny [, but] one who surreptitiously [made] a photographic copy of such blueprint, leaving the original in its proper place [did] not commit larceny because he [was] not stealing ‘property’ ”. Mem of Temp St Comm on Rev of Penal Law and Crim Code, 1967 NY Legis. Ann. at 21; see William C. Donnino, Practice Commentary, McKinney's Cons. Laws of NY, Book 39, Penal Law § 165.07 at 200 [“In the absence of the unlawful use crime, the photographing (of a document containing a secret scientific formula) would not be a crime since it does not represent a traditional taking of the ‘property’]. 148 A.D.3d at 84, 48 N.Y.S.3d 9.
The New York Court of Appeals noted that the incident which served as the impetus for the Secret Scientific Material statute was a case “in which defendants took, photocopied (at home), and then returned secret scientific documents — instructions for the manufacture of antibiotics and a steroid — from a drug manufacturing company”. 31 N.Y3d at 397, 79 N.Y.S.3d 583, 104 N.E.3d 687.
This Court, in its decision, outlined a number of reasons why the distinction between tangible and intangible transmissions which seems formalistic and even ridiculous today may have been seen in a completely different light by the 1967 Legislature. 49 Misc.3d at 323-324, 15 N.Y.S.3d 587. During the ensuing 50 years, prior to the instant case, the Secret Scientific Material statute has been notable only for its obscurity.22 District Attorneys in New York have made active efforts to change the Penal Law to cover conduct like Aleynikov's. But those efforts have not yet been successful.23
The attempt to divine whether what Aleynikov did was a crime has also been hampered over the past nine years by a lack of understanding of how HFT systems work and the related challenge of assessing the extent to which Aleynikov's actions had the potential to harm Goldman or any other entity or person. Law enforcement agents, prosecutors, jurors, the media, the public and judges have all labored under these difficulties. This Court sat through weeks of testimony and argument, read hundreds of pages of briefs and read numerous secondary sources about high-frequency trading. Yet, to this day, this Court believes it has only a rudimentary understanding of the technology. For the 1967 Legislature, this would all have been in the realm of science fiction.
Criminal laws, obviously, are not written by courts. The Legislature is often slow, moreover, to adjust statutes to changes in the world, particularly when an aspect of our world is changing as rapidly as information technology. But that is our system. It is particularly problematic, moreover, for courts to stretch the meaning of statutes to fit changing conditions when the results impose criminal liability. The Second Circuit in Aleynikov held that: “[F]ederal crimes are ‘solely creatures of statute’. We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age”. 676 F.3d at 79. (citation omitted). Those same principles should apply to the construction of criminal statutes in New York. The Legislature will doubtless update our criminal laws to cover Aleynikov's conduct at some point. Indeed, that is what Congress did to address what it saw were gaps in the law following the Second Circuit's Aleynikov decision.24 In the meantime, we, as courts, do not have the authority to fill in the gaps.
This Court's provision of the “figurative” definition to the jury in this case, in this Court's view, was harmless error. But that response to a jury note may not have been seen as error at all by the First Department or the Court of Appeals. A judge of coordinate jurisdiction previously denied the Defendant's double-jeopardy claims. Under the law of the case doctrine, this Court does not believe it should revisit that ruling. For all of those reasons, Defendant's motion is denied.
1. In People v. Gajadhar, 9 N.Y.3d 438, 850 N.Y.S.2d 377, 880 N.E.2d 863 (2007) the Court of Appeals held that where a juror is excused after deliberations have begun, a defendant with the consent of the court may provide written consent to continue deliberations with 11 jurors. This Court and the parties here concluded the logic of Gajadhar also allowed deliberations in this case to continue with 10 jurors. Such a procedure has never been assessed, however, by any New York appellate court.
2. Trial transcript (“TT”) at 1858.
3. The Court does not believe it said the word “another” here and believes this was a typographical error in the transcript.
4. The Court believes it here said “and/or” rather than “or are”.
5. Id., pp. 1902-1903
6. People's undated Response to Defendant's Dismissal Motion, submitted on April 20, 2015 (“People's April 20 Response”), p. 37.
7. People v. Alenikov, supra, 148 A.D.3d 77 (n. 5.), 48 N.Y.S.3d 9 (“Although Black's Law Dictionary also defines “tangible” as “capable of being understood by the mind,” the People, on appeal, do not argue that this definition should be used to determine the legal sufficiency of the trial evidence”.)
9. TT, p. 1698-1699
10. Id., p. 1648
11. Id., p. 1649
12. People's Response to Defendant's Motion, p. 14.
13. 49 Misc.3d at 313, 15 N.Y.S.3d 587, quoting People's Affirmation.
14. 49 Misc.3d at 313, 15 N.Y.S.3d 587.
15. See United States v. Aleynikov, supra, 676 F.3d at 76 (quoting the NSPA) (“The NSPA makes it a crime to 'transport [ ], transmit [ ], or transfer [ ] in interstate or foreign commerce any goods, wares, merchandise, securities or money ․”
16. See Hitkansut LLC v. United States, 130 Fed.Cl. 353, 392 (2017) (the “experimental use defense” to patent infringement protects a party from liability “when the alleged infringer's use was solely for research, academic or experimental purposes”. (quotation omitted).
17. As noted supra, the appellate courts held that, under their construction of the word “appropriate”, the trial evidence was legally sufficient to demonstrate that Aleynikov “intended to exercise permanent control over the use of Goldman's source code”. 148 A.D.3d at 88-89, 48 N.Y.S.3d 9. The trial evidence indicated, however, that HFT code was continually revised and not readily transferrable. One Goldman prosecution witness testified that roughly 20% of Goldman's high-frequency trading software was rewritten annually. 49 Misc.3d at 304, 15 N.Y.S.3d 587 (quoting Navin Kumar). Source code is not a fungible commodity. It is a species of intellectual property whose value extinguishes over time, as new trading systems are developed and new code is written. In holding that the trial evidence was legally sufficient to show Aleynikov had the intent to exercise permanent control of the source code, the source code at issue was the version used by Goldman in June of 2009. This Court respectfully disagrees that the trial evidence was sufficient to demonstrate that Aleynikov intended to exercise permanent control over Goldman's 2009 source code.
18. This Court's analysis of New York case law on the tangibility issue can be seen at 49 Misc.3d at 317-323, 15 N.Y.S.3d 587.
19. This Court's legal citations to the law of the case doctrine here are copied from an earlier decision of this Court in an unrelated case, State v. Rashid, 25 Misc.3d 318, 328, 883 N.Y.S.2d 435 (New York County Supreme Court 2009), aff'd, 68 A.D.3d 615, 892 N.Y.S.2d 76 (1st Dept. 2009); aff'd, 16 N.Y.3d 1, 917 N.Y.S.2d 16, 942 N.E.2d 225 (2010).
20. 49 Misc.3d at 337, 15 N.Y.S.3d 587 (quoting testimony of Navin Kumar).
21. Id. at 333, 15 N.Y.S.3d 587 (quoting testimony of Paul Walker, co-head of the Goldman Sachs technology division).
22. See this Court's decision dismissing the indictment, 49 Misc.3d at 307-309, 15 N.Y.S.3d 587 (discussing the limited instances in which the statute has been used or cited).
23. Id., 49 Misc.3d at 342-344, 15 N.Y.S.3d 587 (discussing the status of those efforts at the time of this Court's decision on July 7, 2015).
24. In response to the Second Circuit Decision, Congress enacted the “Theft of Trade Secrets Clarification Act of 2012” (18 USC § 1832) which was intended to close a “dangerous loophole” and ensure that the EEA was adapted to the demands of the digital age. June 20, 2014 unpublished Decision and Order in People v. Aleynikov, Ind. # 4447/12 (the instant case), by Justice Zweibel n. 25 (quotation omitted). The federal statute now covers one who obtains trade secrets which are “related to a product or service used in or intended for use in interstate or foreign commerce” and, inter alia, who without authorization “duplicates ․ downloads, uploads ․ transmits ․ sends ․ communicates, or conveys” trade secret information. 18 USC § 1832 (a) (2).
Daniel P. Conviser, J.
Response sent, thank you
Docket No: 0447/12
Decided: August 14, 2018
Court: Supreme Court, New York County, New York.
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