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12 April 2012, 16:59

Developer wins appeal - code is not physical property

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Justice icon The 2nd Circuit Court of Appeals has ruled that code is not physical property in its written opinionPDF in which it cleared Sergey Aleynikov of charges stemming from a 2009 incident. Aleynikov was arrested and convicted in 2010 after he was found to have stolen proprietary code from Goldman Sachs. The software in question was connected to high frequency trading, used for machine high-speed trades in the stock market to cash in on small discrepancies in pricing.

Aleynikov was sentenced to ten years in prison, but began his appeal – in February 2012, the 2nd Circuit Court ordered his conviction reversed and acquitted Aleynikov, saying it would deliver its opinion later. The unanimous decision upholds Aleynikov's contention that he could not have stolen the code as he did not take physical control of it, and, as it was not a product for interstate or foreign commerce, it fell outside the meaning of the Economic Espionage Act of 2010. "We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age", said the judges.

The case has been held up in the past as an example of how the US Justice Department pursue the theft of intellectual property and trade secrets. The judgement is believed to be a blow to the US government's ability to prosecute such cases using existing legislation.


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