U.S. v. Aleynikov Redux: Senate Closes Loophole in EEA

This past spring, we reported the Second Circuit’s reversal in U.S. v. Aleynikov, where the Court considered violations of the Economic Espionage Act of 1996 (“EEA”), 18 U.S.C. § 1832, and the National Stolen Property Act (“NSPA”), 18 U.S.C. § 2314. In short, the Second Circuit ruled that the EEA pertains to trade secrets “placed in” commerce, and that Aleynikov’s alleged misappropriation of the source code of Goldman Sachs & Co.’s trading system, which was for internal use, therefore was not violative of the EEA or the NSPA.

In response, enter the Theft of Trade Secrets Clarification Act of 2012, S. 3642, a bill introduced last week by Senator Patrick Leahy (D, VT). Specifically, the bill broadens the statute’s scope to cover trade secrets that are “related to a product or service used in or intended for use in interstate or foreign commerce.” The previous language limited application of the EEA to trade secrets “related to or included in a product that is produced for or placed in interstate commerce,” language which the Court in Aleynikov had narrowly construed to mean an actual product that was either placed in interstate commerce or intended ultimately to be placed in interstate commerce. As such, there would be no distinction between a trade secret used internally, versus something sold commercially.

The new legislation closes a loophole on the important front of protecting against theft or other misappropriation of proprietary information, and seemingly broaden the reach of the EEA.

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