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D. 18 Usc § 1030(A)(2) and Its Felony

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D. 18 Usc § 1030(A)(2) and Its Felony 120 COMPUTER MISUSE CRIMES CH. 2 IP blocking may be an imperfect barrier to screening out a human being Orin Kerr ! 10/27/2014 2:45 AM who can change his IP address, but it is a real barrier, and a clear signal Deleted: from the computer owner to the person using the IP address that he is Orin Kerr ! 10/27/2014 2:45 AM no longer authorized to access the website. Formatted: Indent: Left: 0", First line: 0" Orin Kerr ! 10/27/2014 2:14 AM Is the District Court correct? Formatted: Text Paragraph Orin Kerr ! 10/30/2014 2:03 AM Formatted: Justified, Line spacing: single D. 18 U.S.C. § 1030(A)(2) AND ITS FELONY Orin Kerr ! 10/30/2014 2:03 AM ENHANCEMENTS Formatted: Font:10.5 pt Orin Kerr ! 10/30/2014 2:03 AM Formatted: Font:10.5 pt, Italic On page 88, at the end of Note 2, add the following: Orin Kerr ! 10/30/2014 2:03 AM Formatted: Font:10.5 pt United States v. Auernheimer, 2012 WL 5389142 (D.N.J. 2012), Orin Kerr ! 10/30/2014 2:03 AM vacated on other grounds, 748 F.3d 525 (3d Cir. 2014), raised an Formatted: Font:10.5 pt, Italic interesting variation on Cioni. In Auernheimer, the government argued Orin Kerr ! 10/30/2014 2:03 AM that a misdemeanor violation of 1030(a)(2) becomes a felony under Formatted: Font:10.5 pt 1030(c)(2)(B)(ii) if the act also violates a state unauthorized access statute. In that instance, the government argued, the offense becomes a Orin Kerr ! 10/27/2014 2:14 AM federal unauthorized access crime in furtherance of a state unauthorized Deleted: access crime. The district court agreed, at least when the state Orin Kerr ! 10/30/2014 2:03 AM unauthorized access includes an extra element that 1030(a)(2) does not Formatted ... [18] have: Orin Kerr ! 10/30/2014 2:03 AM Formatted ... [19] Although there is an overlap of facts for the first two elements of each Orin Kerr ! 10/30/2014 2:10 AM offense, N.J.S.A. 2C:20–31(a) requires the additional component that Formatted ... [20] defendant “knowingly or recklessly discloses or causes to be disclosed Orin Kerr ! 10/30/2014 2:03 AM any data ... or personal identifying information.” Hence, an essential Formatted ... [21] N.J.S.A. 2C:20–31(a) element requires proof of conduct not required Orin Kerr ! 10/30/2014 2:03 AM for a CFAA offense Formatted ... [22] Orin Kerr ! 10/30/2014 2:03 AM 2012 WL 5389142 at *4. Formatted ... [23] On appeal, the defendant argued that the district court had Orin Kerr ! 10/30/2014 2:03 AM misapplied Cioni. According to the defendant, the key question under Formatted ... [24] Cioni was whether the government had charged two different acts, not Orin Kerr ! 10/30/2014 2:03 AM two different statutes. Otherwise, mere overlap with analogous state Formatted ... [25] unauthorized access statutes would transform every 1030(a)(2) Orin Kerr ! 10/30/2014 2:03 AM misdemeanor into a felony. The Third Circuit vacated the defendant’s Formatted ... [26] conviction on venue grounds without reaching the felony enhancement Orin Kerr ! 10/30/2014 2:03 AM issue. If the Third Circuit had reached the issue, how should it have Formatted ... [27] ruled? Orin Kerr ! 10/30/2014 2:03 AM Formatted ... [28] Orin Kerr ! 10/30/2014 2:03 AM Formatted ... [29] CHAPTER 3 TRADITIONAL CRIMES A. ECONOMIC CRIMES 1. PROPERTY CRIMES ————— At the bottom of page 150, add the following new Note 6: 6. In United States v. Agrawal, 726 F.3d 235 (2d Cir. 2013), a quantitative analyst named Agrawal was working at a high-frequency trading group at a company named SocGen in New York City. Agrawal decided to seek employment opportunities elsewhere. In effort to impress prospective employers, Agrawal came into his regular office one day, “printed out more than a thousand pages of [SocGen’s trading] code, put the printed pages into a backpack, and physically transported the papers to his apartment in New Jersey.” During subsequent interviews, Agrawal promised prospective employers that he could replicate the valuable code for them to use to compete against SocGen. As in Aleynikov, Agrawal was charged with violating 18 U.S.C. § 2314 and the EEA. Under the deferential standard of plain error review (applied because Agrawal did not challenge the issue at trial), the Second Circuit the affirmed the conviction for violating 18 U.S.C. § 2314 because Agrawal stole a physical copy of the code: 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. As Aleynikov explained, a defendant who transfers code electronically never assumes “physical control” over anything tangible. Id. By contrast, a defendant such as Agrawal, who steals papers on which intangible intellectual property is reproduced, 121 122 TRADITIONAL CRIMES CH. 3 does assume physical control over something tangible as is necessary for the item to be a ‘good’ for purposes of the NSPA. Here, Agrawal produced paper copies of SocGen’s computer code in the company’s office, on its paper and with its equipment. The fact that the code had been in an intangible form before Agrawal, a SocGen employee, himself reproduced it on company paper is irrelevant. The papers belonged to SocGen, not Agrawal. When Agrawal removed this tangible property from SocGen’s offices without authorization, and transported it to his home in New Jersey, he was engaged in the theft or conversion of a “good” in violation of the NSPA. 2. THE ECONOMIC ESPIONAGE ACT ————— On page 160, at the middle of the page, add the following new Note 4: 4. The significance of Aleynikov was significantly undercut by the Second Circuit’s subsequent decision in United States v. Agrawal, 726 F.3d 235 (2d Cir. 2013). Agrawal was working at a high-frequency trading group at SocGen when he decided to seek employment opportunities elsewhere. Agrawal came into his SocGen office, “printed out more than a thousand pages of [SocGen’s trading] code, put the printed pages into a backpack, and physically transported the papers to his apartment in New Jersey.” Agrawal then promised prospective employers that he could replicate the valuable SocGen code he had taken for them to use. Somewhat surprisingly, at least in light of Aleynikov, the Second Circuit held that this conduct violated the EEA and was distinguishable from Aleynikov: As to the EEA charge, in this case, neither the indictment nor the prosecution’s arguments or the court’s charge identified SocGen’s confidential HFT systems as the “product” relied on to satisfy the crime’s jurisdictional element. Rather, the record indicates that the relevant product was the publicly traded securities bought and sold by SocGen using its HFT systems. In United States v. Aleynikov, this court construed the phrase “a product that is produced for or placed in interstate or foreign commerce” as a “limitation” on the scope of the EEA, signaling that Congress did not intend to invoke its full Commerce Clause power to criminalize the theft of trade secrets. Aleynikov explained that for a product to be “placed in” commerce, it must have “already been introduced into the stream of commerce and have reached the marketplace.” Products “being developed or readied for the marketplace” qualified “as being ‘produced for,’ if not yet actually ‘placed in,’ commerce.” But a “product” could not be deemed “produced for” commerce simply because its “purpose is to facilitate or engage in such commerce”; such a construction of the EEA’s SEC. A ECONOMIC CRIMES 123 product requirement would deprive the statutory language of any limiting effect. Aleynikov’s construction of the phrase “a product that is produced for or placed in interstate commerce” controls on this appeal. We note, however, that the reversal of Aleynikov’s EEA conviction was based on the application of that phrase to the particular “product” that was the basis of the jurisdictional allegation in his case. As we explain below, the present case was submitted to the jury on a very different product theory than that relied on in Aleynikov. Thus, the same construction that prompted reversal in Aleynikov leads to affirmance here. In Aleynikov, the EEA charge was submitted to the jury on the theory that the trade secret converted by the defendant, i.e., the proprietary computer code, was “included in” a single product: Goldman Sachs’s confidential trading system. The jury instructions in Aleynikov unambiguously stated that “[t]he indictment [in that case] charges that the Goldman Sachs high-frequency trading platform is a product,” and that the jury’s responsibility was to “determin[e] whether the trading platform was produced for or placed in interstate or foreign commerce.” This had been the court’s and the parties’ understanding of the Aleynikov indictment from the start. In its opinion denying the defendant’s motion to dismiss the indictment, the court noted the parties’ agreement “that the trade secret at issue in [the EEA Count] is the source code, and that the relevant ‘product’ is the Trading System.” United States v.
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