'Agrawal' Allays Concerns About Trade Secret Protection

On April 11, 2012, the U.S. Court of Appeals for the Second Circuit issued its opinion in United States v. Aleynikov,¹ vacating the Southern District of New York convictions of a former Goldman Sachs computer programmer who stole source code related to Goldman’s confidential trading system under the National Stolen Property Act² (NSPA) and the Economic Espionage Act³ (EEA). At the time, commentators expressed concern that the opinion would severely limit the ability of prosecutors to enforce companies’ trade secrets under the NSPA and EEA in cases, like Aleynikov, in which the stolen source code was not a good intended for resale (the court’s basis for holding that the EEA did not apply) and was taken by intangible means (the court’s basis for holding that the NSPA did not apply).

Courtwatchers expected further guidance to arrive in United States v. Agrawal, a case pending in the Second Circuit at the time Aleynikov was decided. Like Aleynikov, Agrawal was an appeal in a trade secrets case from convictions in the Southern District of New York under the NSPA and EEA. The fact patterns of the two cases were similar, yet different in ways that could allow the court to explore the reach of the Aleynikov decision. The Second Circuit did not issue its decision in Agrawal until last month, approximately 14 months after the case was argued—and over 8 months after the defendant completed his prison term. But in its decision, the court—in a partially split decision—noted the limits of the Aleynikov decision and upheld Agrawal’s convictions under both the NSPA and EEA. Although the ultimate significance of the decision remains to be seen, the case—as well as other developments that have taken place in the year since Aleynikov was decided—should allay some of the concerns expressed after Aleynikov about the strength of trade secret rights in the Second Circuit.

Second Circuit’s 2012 Decision in ‘Aleynikov’