United States v. Aleynikov

11-1126
United States v. Aleynikov
UNITED STATES COURT OF APPEALS 1
2
FOR THE SECOND CIRCUIT 3
4
August Term, 2011 5
6
7
(Argued: February 16, 2012 Decided: April 11, 2012) 8
9
Docket No. 11-1126 10
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UNITED STATES OF AMERICA, 14
15
Appellee, 16
17
- v.- 18
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SERGEY ALEYNIKOV, 20
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Defendant-Appellant. 22
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Before: JACOBS, Chief Judge, CALABRESI and 26
POOLER, Circuit Judges. 27
28
Sergey Aleynikov appeals from his conviction, following 29
a jury trial, for stealing and transferring proprietary 30
computer source code of his employer’s high frequency 31
trading system in violation of the National Stolen Property 32
Act, 18 U.S.C. § 2314, and the Economic Espionage Act of 33
1996, 18 U.S.C. § 1832. On appeal, defendant argues, inter 34
alia, that his conduct did not constitute an offense under 35

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2
either statute. He argues that: [1] the source code was not 1
a “stolen” “good” within the meaning of the National Stolen 2
Property Act, and [2] the source code was not “related” to a 3
product “produced for or placed in interstate or foreign 4
commerce” within the meaning of the Economic Espionage Act. 5
The judgment of the district court is reversed. Judge 6
Calabresi concurs in the opinion and has filed an additional 7
concurring opinion. 8
KEVIN H. MARINO, Marino, 9
Tortorella & Boyle, P.C., 10
Chatham, NJ, for 11
Appellant. 12
13
JOSEPH P. FACCIPONTI (JUSTIN S. 14
WEDDLE, on the brief), Assistant 15
United States Attorney, for 16
PREET BHARARA, United States 17
Attorney, Southern District of 18
New York, New York, NY, for 19
Appellee. 20
21
DENNIS JACOBS, Chief Judge: 22
23
Sergey Aleynikov was convicted, following a jury trial 24
in the United States District Court for the Southern 25
District of New York (Cote, J.), of stealing and 26
transferring some of the proprietary computer source code 27
used in his employer’s high frequency trading system, in 28
violation of the National Stolen Property Act, 18 U.S.C. 29
§ 2314 (the “NSPA”), and the Economic Espionage Act of 1996, 30

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3
18 U.S.C. § 1832 (the “EEA”). On appeal, Aleynikov argues, 1
inter alia, that his conduct did not constitute an offense 2
under either statute. He argues that: [1] the source code 3
was not a “stolen” “good” within the meaning of the NSPA, 4
and [2] the source code was not “related to or included in a 5
product that is produced for or placed in interstate or 6
foreign commerce” within the meaning of the EEA. We agree, 7
and reverse the judgment of the district court. 8
9
BACKGROUND 10
Sergey Aleynikov, a computer programmer, was employed 11
by Goldman Sachs & Co. (“Goldman”) from May 2007 through 12
June 2009, developing computer source code for the company’s 13
proprietary high-frequency trading (“HFT”) system. An HFT 14
system is a mechanism for making large volumes of trades in 15
securities and commodities based on trading decisions 16
effected in fractions of a second. Trades are executed on 17
the basis of algorithms that incorporate rapid market 18
developments and data from past trades. The computer 19
programs used to operate Goldman’s HFT system are of three 20
kinds: [1] market connectivity programs that process real- 21
time market data and execute trades; [2] programs that use 22

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4
algorithms to determine which trades to make; and [3] 1
infrastructure programs that facilitate the flow of 2
information throughout the trading system and monitor the 3
system’s performance. Aleynikov’s work focused on 4
developing code for this last category of infrastructure 5
programs in Goldman’s HFT system. High frequency trading is 6
a competitive business that depends in large part on the 7
speed with which information can be processed to seize 8
fleeting market opportunities. Goldman closely guards the 9
secrecy of each component of the system, and does not 10
license the system to anyone. Goldman’s confidentiality 11
policies bound Aleynikov to keep in strict confidence all 12
the firm’s proprietary information, including any 13
intellectual property created by Aleynikov. He was barred 14
as well from taking it or using it when his employment 15
ended. 16
By 2009, Aleynikov was earning $400,000, the highest- 17
paid of the twenty-five programmers in his group. In April 18
2009, he accepted an offer to become an Executive Vice 19
President at Teza Technologies LLC, a Chicago-based startup 20
that was looking to develop its own HFT system. Aleynikov 21
was hired, at over $1 million a year, to develop the market 22

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1 In addition to proprietary source code, Aleynikov
also transferred some open source software licensed for use
by the public that was mixed in with Goldman’s proprietary
code. However, a substantially greater number of the
uploaded files contained proprietary code than had open
source software.
5
connectivity and infrastructure components of Teza’s HFT 1
system. Teza’s founder (a former head of HFT at Chicago- 2
based hedge fund Citadel Investment Group) emailed Aleynikov 3
(and several other employees) in late May, conveying his 4
expectation that they would develop a functional trading 5
system within six months. It usually takes years for a team 6
of programmers to develop an HFT system from scratch. 7
Aleynikov’s last day at Goldman was June 5, 2009. At 8
approximately 5:20 p.m., just before his going-away party, 9
Aleynikov encrypted and uploaded to a server in Germany more 10
than 500,000 lines of source code for Goldman’s HFT system, 11
including code for a substantial part of the infrastructure, 12
and some of the algorithms and market data connectivity 13
programs. 1 Some of the code pertained to programs that 14
could operate independently of the rest of the Goldman 15
system and could be integrated into a competitor’s system. 16
After uploading the source code, Aleynikov deleted the 17
encryption program as well as the history of his computer 18
commands. When he returned to his home in New Jersey, 19

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6
Aleynikov downloaded the source code from the server in 1
Germany to his home computer, and copied some of the files 2
to other computer devices he owned. 3
On July 2, 2009, Aleynikov flew from New Jersey to 4
Chicago to attend meetings at Teza. He brought with him a 5
flash drive and a laptop containing portions of the Goldman 6
source code. When Aleynikov flew back the following day, he 7
was arrested by the FBI at Newark Liberty International 8
Airport. 9
The indictment charged him with violating the EEA by 10
downloading a trade secret “that is related to or included 11
in a product that is produced for or placed in interstate or 12
foreign commerce,” with the intent to convert such trade 13
secret and to injure its owner, to the economic benefit of 14
anyone other than the owner, see 18 U.S.C. § 1832(a) (Count 15
One); and with violating the NSPA, which makes it a crime to 16
“transport[], transmit[], or transfer[] in interstate or 17
foreign commerce any goods, wares, merchandise, securities 18
or money, of the value of $5,000 or more, knowing the same 19
to have been stolen, converted or taken by fraud,” 18 U.S.C. 20
§ 2314 (Count Two). A third count charged him with 21
unauthorized computer access and exceeding authorized access 22

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7
in violation of the Computer Fraud and Abuse Act, 18 U.S.C. 1
§ 1030. 2
Aleynikov moved to dismiss the indictment for failure 3
to state an offense. See Fed. R. Crim. P. 12(b)(3)(B). The 4
district court dismissed Count Three of the indictment but 5
otherwise denied Aleynikov’s motion. United States v. 6
Aleynikov, 737 F. Supp. 2d 173 (S.D.N.Y. 2010). 7
As to Count One, the district court concluded: [1] the 8
stolen source code is a trade secret; [2] the HFT system 9
constitutes a “product” to which the source code relates 10
because the system was developed and modified through the 11
labor of Goldman’s computer programmers; and [3] the HFT 12
system was “produced for” interstate commerce because it 13
facilitates the rapid execution of trades on financial 14
markets such as the New York Stock Exchange and NASDAQ. Id. 15
at 177-79. The district court reasoned that the whole 16
purpose of the HFT system was “to engage in interstate and 17
foreign commerce.” Id. at 179. 18
As to Count Two, the court held that the source code 19
for Goldman’s HFT system constitutes “goods” that were 20
“stolen” within the meaning of the NSPA because, though 21
source code is intangible, it “contains highly confidential 22

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8
trade secrets related to the Trading System” that “would be 1
valuable for any firm seeking to launch, or enhance, a high- 2
frequency trading business.” Id. at 187. 3
Count Three was dismissed on the ground that Aleynikov 4
was authorized to access the Goldman computer and did not 5
exceed the scope of his authorization, and that authorized 6
use of a computer in a manner that misappropriates 7
information is not an offense under the Computer Fraud and 8
Abuse Act. Id. at 192-94. 9
The jury convicted Aleynikov on Counts One and Two. He 10
was sentenced to 97 months of imprisonment followed by a 11
three-year term of supervised release, and was ordered to 12
pay a $12,500 fine. Bail pending appeal was denied because 13
Aleynikov, a dual citizen of the United States and Russia, 14
was feared to be a flight risk. 15
Aleynikov appealed his conviction and sentence, 16
arguing, among other things, that the district court erred 17
in denying his motion to dismiss the indictment in its 18
entirety. The Government did not appeal the dismissal of 19
Count Three of the indictment. 20
On February 17, 2012, following oral argument, we 21
issued a short order reversing Aleynikov’s convictions on 22
both counts, and indicated that an opinion would follow. 23

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2 Aleynikov challenges his conviction and sentence on
several additional grounds as well. Because we conclude
that the indictment failed to state an offense, we need not
resolve these additional challenges.
3 On appeal, both the Government and Aleynikov frame
their arguments in terms of the sufficiency of the
indictment rather than the sufficiency of the evidence.
9
1
DISCUSSION 2
On appeal, Aleynikov renews his challenge to the 3
sufficiency of the indictment on both Counts One and Two. 2
4
As to Count One, he argues that the source code is not 5
“related to or included in a product that is produced for or 6
placed in interstate or foreign commerce” within the meaning 7
of the EEA. As to Count Two, Aleynikov argues that the 8
source code--as purely intangible property--is not a “good” 9
that was “stolen” within the meaning of the NSPA. 10
Aleynikov’s challenge requires us to determine the 11
scope of two federal criminal statutes. Since federal 12
crimes are “solely creatures of statute,” Dowling v. United 13
States, 473 U.S. 207, 213 (1985) (internal quotation marks 14
omitted), a federal indictment can be challenged on the 15
ground that it fails to allege a crime within the terms of 16
the applicable statute. See United States v. Pirro, 212 17
F.3d 86, 91-92 (2d Cir. 2000). 3 The sufficiency of an 18

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Because the result and analysis would be the same under
either formulation, for the purposes of this opinion we
adopt the one used by the parties, and do not decide which
is doctrinally more sound.
10
indictment and the interpretation of a federal statute are 1
both matters of law that we review de novo. See Fiero v. 2
Fin. Indus. Regulatory Auth., Inc., 660 F.3d 569, 573 (2d 3
Cir. 2011); Pirro, 212 F.3d at 92. 4
Statutory construction “must begin with the language 5
employed by Congress and the assumption that the ordinary 6
meaning of that language accurately expresses the 7
legislative purpose.” United States v. Albertini, 472 U.S. 8
675, 680 (1985) (quoting Park ‘N Fly, Inc. v. Dollar Park & 9
Fly, Inc., 469 U.S. 189, 194 (1985)). “Due respect for the 10
prerogatives of Congress in defining federal crimes prompts 11
restraint in this area, where we typically find a narrow 12
interpretation appropriate.” Dowling, 473 U.S. at 213 13
(internal quotation marks omitted). 14
We conclude that Aleynikov’s conduct did not constitute 15
an offense under either the NSPA or the EEA, and that the 16
indictment was therefore legally insufficient. We consider 17
the statutes in the order they were briefed: the NSPA first, 18
the EEA second. 19
20

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11
I 1
The NSPA makes it a crime to “transport[], transmit[], 2
or transfer[] in interstate or foreign commerce any goods, 3
wares, merchandise, securities or money, of the value of 4
$5,000 or more, knowing the same to have been stolen, 5
converted or taken by fraud.” 18 U.S.C. § 2314. The 6
statute does not define the terms “goods,” “wares,” or 7
“merchandise.” We have held that they provide “a general 8
and comprehensive designation of such personal property or 9
chattels as are ordinarily a subject of commerce.” In re 10
Vericker, 446 F.2d 244, 248 (2d Cir. 1971) (Friendly, C.J.) 11
(quoting United States v. Seagraves, 265 F.2d 876, 880 (3d 12
Cir. 1959)). The decisive question is whether the source 13
code that Aleynikov uploaded to a server in Germany, then 14
downloaded to his computer devices in New Jersey, and later 15
transferred to Illinois, constituted stolen “goods,” 16
“wares,” or “merchandise” within the meaning of the NSPA. 17
Based on the substantial weight of the case law, as well as 18
the ordinary meaning of the words, we conclude that it did 19
not. 20
21
22

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12
A. 1
We first considered the applicability of the NSPA to 2
the theft of intellectual property in United States v. 3
Bottone, 365 F.2d 389 (2d Cir. 1966) (Friendly, J.), in 4
which photocopied documents outlining manufacturing 5
procedures for certain pharmaceuticals were transported 6
across state lines. Since the actual processes themselves 7
(as opposed to photocopies) were never transported across 8
state lines, the “serious question” (we explained) was 9
whether “the papers showing [the] processes that were 10
transported in interstate or foreign commerce were ‘goods’ 11
which had been ‘stolen, converted or taken by fraud’ in view 12
of the lack of proof that any of the physical materials so 13
transported came from [the manufacturer’s] possession.” Id. 14
at 393. We held that the NSPA was violated there, observing 15
that what was “stolen and transported” was, ultimately, 16
“tangible goods,” notwithstanding the “clever intermediate 17
transcription [and] use of a photocopy machine.” Id. 18
However, we suggested that a different result would obtain 19
if there was no physical taking of tangible property 20
whatsoever: “To be sure, where no tangible objects were 21
ever taken or transported, a court would be hard pressed to 22

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13
conclude that ‘goods’ had been stolen and transported within 1
the meaning of 2314.” Id. Hence, we observed, “the statute 2
would presumably not extend to the case where a carefully 3
guarded secret formula was memorized, carried away in the 4
recesses of a thievish mind and placed in writing only after 5
a boundary had been crossed.” Id. Bottone itself thus 6
treats its holding as the furthest limit of a statute that 7
is not endlessly elastic: Some tangible property must be 8
taken from the owner for there to be deemed a “good” that is 9
“stolen” for purposes of the NSPA. 10
Bottone’s reading of the NSPA is confirmed by the 11
Supreme Court’s opinion in Dowling v. United States, 473 12
U.S. 207 (1985), which held that the NSPA did not apply to 13
an interstate bootleg record operation. Dowling rejected 14
the Government’s argument that the unauthorized use of the 15
musical compositions rendered them “stolen, converted or 16
taken by fraud.” Cases prosecuted under the NSPA “have 17
always involved physical ‘goods, wares, [or] merchandise’ 18
that have themselves been ‘stolen, converted or taken by 19
fraud’”--even if the stolen thing does not “remain in 20
entirely unaltered form,” and “owes a major portion of its 21
value to an intangible component.” Id. at 216. 22

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4 In holding the NSPA inapplicable to copyright
infringement, Dowling also relied on particular features of
the Copyright Act, including the carefully calibrated
criminal penalties for infringement: Applying the NSPA to
copyright infringement would be a “blunderbuss solution to a
problem treated with precision when considered directly.”
Id. at 226. At the same time, the Court’s reasoning and
analysis focuses on the pure intangibility of a copyright,
and the requirement under the NSPA that there be a physical
taking and removal of goods.
14
“This basic element”--the taking of a physical thing-- 1
“comports with the common-sense meaning of the statutory 2
language: by requiring that the ‘goods, wares [or] 3
merchandise’ be ‘the same’ as those ‘stolen, converted or 4
taken by fraud,’ the provision seems clearly to contemplate 5
a physical identity between the items unlawfully obtained 6
and those eventually transported, and hence some prior 7
physical taking of the subject goods.” Id. 4
8
We join other circuits in relying on Dowling for the 9
proposition that the theft and subsequent interstate 10
transmission of purely intangible property is beyond the 11
scope of the NSPA. 12
In a close analog to the present case, the Tenth 13
Circuit affirmed the dismissal of an indictment alleging 14
that the defendant transported in interstate commerce a 15
computer program containing source code that was taken from 16
his employer. United States v. Brown, 925 F.2d 1301, 1305, 17

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15
1309 (10th Cir. 1991). Citing Dowling, the court held that 1
the NSPA “applies only to physical ‘goods, wares or 2
merchandise’” and that “[p]urely intellectual property is 3
not within this category. It can be represented physically, 4
such as through writing on a page, but the underlying, 5
intellectual property itself, remains intangible.” Id. at 6
1307. The Court concluded that “the computer program itself 7
is an intangible intellectual property, and as such, it 8
alone cannot constitute goods, wares, merchandise, 9
securities or moneys which have been stolen, converted or 10
taken” for purposes of the NSPA. Id. at 1308. 11
Similarly, the Seventh Circuit has held that numerical 12
“Comdata codes” used by truckers to access money transfers 13
at truck stops constitute intangible property the theft of 14
which is not a violation of the NSPA. United States v. 15
Stafford, 136 F.3d 1109 (7th Cir. 1998). The court reasoned 16
that the codes themselves were not “goods, wares, or 17
merchandise,” but rather “information”; that the defendant 18
had not been charged with transporting pieces of paper 19
containing the codes; and that the only conduct charged was 20
“transferring the codes themselves, which are simply 21
sequences of digits.” Id. at 1114-15. 22

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16
The First Circuit has also concluded that the NSPA does 1
not criminalize the theft of intangible things: The NSPA 2
“does not apply to purely ‘intangible information,’ the 3
theft of which is punishable under copyright law and other 4
intellectual property statutes” but “does apply when there 5
has been ‘some tangible item taken, however insignificant or 6
valueless it may be, absent the intangible component.’” 7
United States v. Martin, 228 F.3d 1, 14-15 (1st Cir. 2000) 8
(quoting Brown, 925 F.2d at 1307, 1308 n.14). 9
The Government argues that a tangibility requirement 10
ignores a 1988 amendment, which added the words “transmit[]” 11
and “transfer[]” to the terms: “transport[], transmit[], or 12
transfer[].” The Government contends that the added words 13
reflect an intent to cover generally transfers and 14
transmissions of non-physical forms of stolen property. The 15
evident purpose of the amendment, however, was to clarify 16
that the statute applied to non-physical electronic 17
transfers of money. See United States v. Piervinanzi, 23 18
F.3d 670, 678 n.6 (2d Cir. 1994). Money, though it can be 19
intangible, is specifically enumerated in § 2314 as a thing 20
apart and distinct from “goods,” “wares,” or “merchandise.” 21
The addition to the possible means of transport does not 22

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17
bespeak an intent to alter or expand the ordinary meaning of 1
“goods,” “wares,” or “merchandise” and therefore does not 2
obviate the Government’s need to identify a predicate good, 3
ware, merchandise, security, or money that has been stolen. 4
5
B. 6
By uploading Goldman’s proprietary source code to a 7
computer server in Germany, Aleynikov stole purely 8
intangible property embodied in a purely intangible format. 9
There was no allegation that he physically seized anything 10
tangible from Goldman, such as a compact disc or thumb drive 11
containing source code, so we need not decide whether that 12
would suffice as a physical theft. Aleynikov later 13
transported portions of the source code to Chicago, on his 14
laptop and flash drive. However, there is no violation of 15
the statute unless the good is transported with knowledge 16
that “the same” has been stolen; the statute therefore 17
presupposes that the thing stolen was a good or ware, etc., 18
at the time of the theft. The wording “contemplate[s] a 19
physical identity between the items unlawfully obtained and 20
those eventually transported.” Dowling, 473 U.S. at 216. 21
The later storage of intangible property on a tangible 22

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18
medium does not transform the intangible property into a 1
stolen good. 2
The infringement of copyright in Dowling parallels 3
Aleynikov’s theft of computer code. Although “[t]he 4
infringer invades a statutorily defined province guaranteed 5
to the copyright holder alone[,] . . . he does not assume 6
physical control over the copyright; nor does he wholly 7
deprive its owner of its use.” Id. at 217. Because 8
Aleynikov did not “assume physical control” over anything 9
when he took the source code, and because he did not thereby 10
“deprive [Goldman] of its use,” Aleynikov did not violate 11
the NSPA. 12
As the district court observed, Goldman’s source code 13
is highly valuable, and there is no doubt that in virtually 14
every case involving proprietary computer code worth 15
stealing, the value of the intangible code will vastly 16
exceed the value of any physical item on which it might be 17
stored. See Aleynikov, 737 F. Supp. 2d at 187. But federal 18
crimes are “solely creatures of statute.” Dowling, 473 U.S. 19
at 213 (internal quotation marks omitted). We decline to 20
stretch or update statutory words of plain and ordinary 21
meaning in order to better accommodate the digital age. 22

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19
II 1
We next consider the sufficiency of the indictment as 2
to the EEA. As with the NSPA count, we conclude that the 3
indictment was insufficient as a matter of law. 4
5
A. 6
The EEA contains two operative provisions. The first 7
section (18 U.S.C. § 1831(a)), which is not charged in the 8
indictment, applies to foreign espionage and is expressed 9
broadly: “Whoever, intending or knowing that the offense 10
will benefit any foreign government, foreign 11
instrumentality, or foreign agent, knowingly . . . without 12
authorization . . . downloads, uploads, . . . transmits, 13
. . . or conveys a trade secret” is guilty of a federal 14
offense, and may be imprisoned for up to 15 years. 18 15
U.S.C. § 1831(a). 16
Aleynikov, however, was charged with violating 18 17
U.S.C. § 1832, which imposes the italicized limitation 18
(which is not found in § 1831): “Whoever, with intent to 19
convert a trade secret, that is related to or included in a 20
product that is produced for or placed in interstate or 21
foreign commerce, to the economic benefit of anyone other 22

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20
than the owner thereof, and intending or knowing that the 1
offense will, injure any owner of that trade secret, 2
knowingly . . . without authorization . . . downloads, 3
uploads, . . . transmits, . . . or conveys such information” 4
is guilty of a federal offense, and may be imprisoned for up 5
to 10 years. Id. § 1832(a) (emphasis added). 6
Thus there is a limitation--that products be “produced 7
for” or “placed in” interstate or foreign commerce--in the 8
statute Aleynikov is charged with violating, a limitation 9
that does not appear in the otherwise parallel foreign 10
espionage statute. “Where Congress includes particular 11
language in one section of a statute but omits it in another 12
section of the same Act, it is generally presumed that 13
Congress acts intentionally and purposely in the disparate 14
inclusion or exclusion.” Russello v. United States, 464 15
U.S. 16, 23 (1983) (internal quotation marks and alteration 16
omitted). The requirement that products be “produced for” 17
or “placed in” interstate or foreign commerce therefore must 18
be read as a term of limitation. 19
The legislative history confirms this. The version of 20
§ 1832 that appeared in the original Senate bill did not 21
contain the limiting language. It applied to any person who 22

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21
steals “proprietary economic information having a value of 1
not less than $100,000”; it did not specify whether that 2
economic information relates to a product produced for or 3
placed in interstate commerce, and instead contained a 4
categorical finding that “the development and production of 5
proprietary economic information involves every aspect of 6
interstate commerce and business.” S. 1556, 104th Cong. 7
§§ 2(a), 3 (2d Sess. 1996), reprinted in S. Rep. No. 104- 8
359, at 1, 3. The limiting language was introduced in the 9
House Bill. See H.R. Rep. No. 104-788, at 2 (1996), 10
reprinted in 1996 U.S.C.C.A.N. 4021, 4021. The words of 11
limitation in § 1832 were deliberately chosen. 12
The natural reading that takes account of the distinct 13
meaning of the paired phrases (“produced for” and “placed 14
in”) is that § 1832(a) identifies two separate but related 15
categories. Products “placed in” commerce have already been 16
introduced into the stream of commerce and have reached the 17
marketplace. Products that have not yet been “placed in” 18
commerce but are still being developed or readied for the 19
marketplace can properly be described as being “produced 20
for,” if not yet actually “placed in,” commerce. Reading 21
the statute in this way gives effect to both categories of 22

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22
product (those “produced for” commerce and those “placed in” 1
commerce), without making one a subset of the other. 2
This interpretation has the added virtue of construing 3
the two categories of product in relationship to one another 4
(a sequential or temporal relationship), and finds support 5
in the doctrine of statutory interpretation which instructs 6
that words in a statute are known by the company they keep. 7
See Gustafson v. Alloyd Co., Inc, 513 U.S. 561, 575 (1995) 8
(invoking this doctrine “to avoid ascribing to one word a 9
meaning so broad that it is inconsistent with its 10
accompanying words, thus giving unintended breadth to the 11
Acts of Congress” (internal quotation marks omitted)). The 12
statute would fall short of critical protections if it 13
applied only to the theft of trade secrets relating to those 14
products that had already been “placed in” the marketplace; 15
left vulnerable would be the class of trade secrets inhering 16
in products that have not yet been placed on the market, 17
such as prototypes--precisely the kinds of trade secrets 18
that are likely to attract espionage. Congress thus plugged 19
a gap by extending the statute’s coverage to include 20
products “produced for” commerce as well as those already in 21
the marketplace. 22

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23
The district court interpreted the phrase “produced 1
for” interstate or foreign commerce more broadly. It held 2
that the HFT system was “produced for” interstate commerce 3
because “the sole purpose for which Goldman purchased, 4
developed, and modified the computer programs that comprise 5
the Trading System was to engage in interstate and foreign 6
commerce” and because “Goldman uses the Trading System to 7
rapidly execute high volumes of trades in various financial 8
markets” and “[t]he Trading System generates many millions 9
of dollars in annual profits.” Aleynikov, 737 F. Supp. 2d 10
at 179. Under that interpretation, a product is “produced 11
for” interstate or foreign commerce if its purpose is to 12
facilitate or engage in such commerce. 13
The district court erred by construing the phrase-- 14
“produced for . . . interstate or foreign commerce”--“in a 15
vacuum.” See Davis v. Mich. Dep’t of Treasury, 489 U.S. 16
803, 809 (1989). “It is a fundamental canon of statutory 17
construction that the words of a statute must be read in 18
their context and with a view to their place in the overall 19
statutory scheme.” Id. That way, a statutory phrase 20
“gathers meaning from the words around it.” Jones v. United 21
States, 527 U.S. 373, 389 (1999) (internal quotation marks 22

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24
omitted). The district court’s broad interpretation of the 1
phrase “produced for” commerce becomes untenable in light of 2
the paired phrase “placed in” commerce. Since every product 3
actually sold or licensed is by definition produced for the 4
purpose of engaging in commerce, every product that is 5
“placed in” commerce would necessarily also be “produced 6
for” commerce--and the phrase “placed in” commerce would be 7
surplusage. This interpretation is inconsistent with “one 8
of the most basic interpretive canons, that a statute should 9
be construed so that effect is given to all its provisions, 10
so that no part will be inoperative or superfluous, void or 11
insignificant.” Corley v. United States, 556 U.S. 303, 314 12
(2009) (internal quotation marks and alteration omitted); 13
see also Duncan v. Walker, 533 U.S. 167, 174 (2001) (“It is 14
our duty to give effect, if possible, to every clause and 15
word of a statute.” (internal quotation marks omitted)). 16
“Judges should hesitate to treat statutory terms in any 17
setting as surplusage, and resistance should be heightened 18
when the words describe an element of a criminal offense.” 19
Jones v. United States, 529 U.S. 848, 857 (2000) (internal 20
quotation marks and alterations omitted; emphasis added). 21
22

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5 The only example provided by the Government of a
trade secret that affects interstate commerce but that is
beyond the purview of the EEA was a proprietary training
manual for stock brokers. But by the Government’s
explanation, such a trade secret would not be covered
because the broker to whom it relates is a person and not a
“product,” not because the training manual was not “produced
for . . . interstate or foreign commerce” as the Government
interprets that phrase.
25
Even construed in isolation, the phrase “produced for 1
. . . interstate or foreign commerce” cannot command the 2
breadth that the district court and the Government ascribe 3
to it. See generally Fed. Commc’ns Comm’n v. AT & T Inc., 4
131 S. Ct. 1177, 1184 (2011) (“[C]onstruing statutory 5
language is not merely an exercise in ascertaining ‘the 6
outer limits of [a word’s] definitional possibilities’ 7
. . . .” (quoting Dolan v. U.S. Postal Serv., 546 U.S. 481, 8
486 (2006)). At oral argument, the Government was unable to 9
identify a single product that affects interstate commerce 10
but that would nonetheless be excluded by virtue of the 11
statute’s limiting language. 5 And even if one could 12
identify one such example, or two, it would not be a 13
category that would demand the attention of Congress, or be 14
expressed in categorical terms. 15
If § 1832(a) was intended to have such a sweep, we 16
would expect to see wording traditionally understood to 17

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6 Lopez held that Congress may regulate three
categories of activity under its commerce power: [1] “the
use of the channels of interstate commerce”; [2] “the
instrumentalities of interstate commerce, or persons or
things in interstate commerce”; and [3] activities that
“substantially affect interstate commerce.” Id. It is the
third of the three categories that is at issue in this case.
26
invoke the full extent of Congress’s regulatory power under 1
the Commerce Clause. Notably, the EEA was enacted the year 2
after the Supreme Court issued its landmark decision in 3
United States v. Lopez, which held that Congress’s Commerce 4
Clause authority is limited to those activities that 5
“substantially affect interstate commerce.” 514 U.S. 549, 6
558-59 (1995). 6 The Supreme Court observes a distinction 7
between “legislation invoking Congress’ full power over 8
activity substantially ‘affecting . . . commerce’” and 9
legislation which uses more limiting language, such as 10
activities “‘in commerce,’” and thereby does not purport to 11
exercise the full scope of congressional authority. Jones, 12
529 U.S. at 856 (quoting Russell v. United States, 471 U.S. 13
858, 859-60 & n.4 (1985)). The temporal proximity between 14
the enactment of the EEA and the decision in Lopez makes 15
significant the omission from the EEA of the language 16
blessed in that case as invoking the outer limit of 17
Congress’s regulatory authority. 18

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27
B. 1
Goldman’s HFT system was neither “produced for” nor 2
“placed in” interstate or foreign commerce. Goldman had no 3
intention of selling its HFT system or licensing it to 4
anyone. Aleynikov, 737 F. Supp. 2d at 175. It went to 5
great lengths to maintain the secrecy of its system. The 6
enormous profits the system yielded for Goldman depended on 7
no one else having it. Because the HFT system was not 8
designed to enter or pass in commerce, or to make something 9
that does, Aleynikov’s theft of source code relating to that 10
system was not an offense under the EEA. 11
Even if we were to conclude that the phrase “produced 12
for . . . interstate or foreign commerce” is susceptible to 13
a broader reading than we think it will bear, it would at 14
most render § 1832(a) facially ambiguous, which would not 15
assist the prosecution. “[A]mbiguity concerning the ambit 16
of criminal statutes should be resolved in favor of lenity.” 17
Rewis v. United States, 401 U.S. 808, 812 (1971). And “when 18
choice has to be made between two readings of what conduct 19
Congress has made a crime, it is appropriate, before we 20
choose the harsher alternative, to require that Congress 21
should have spoken in language that is clear and definite.” 22

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28
United States v. Universal C.I.T. Credit Corp., 344 U.S. 1
218, 221-22 (1952). 2
The conduct found by the jury is conduct that Aleynikov 3
should have known was in breach of his confidentiality 4
obligations to Goldman, and was dishonest in ways that would 5
subject him to sanctions; but he could not have known that 6
it would offend this criminal law or this particular 7
sovereign. 8
9
CONCLUSION 10
For the foregoing reasons, the judgment of the district 11
court is reversed. 12
13

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1
CALABRESI, J., concurring: 1
I join the majority opinion in its description of the facts and history of this case, and in its 2
discussion in Part I, which deals with the National Stolen Property Act (“NSPA”). I also join Part 3
II, which considers the Economic Espionage Act (“EEA”), but as to that act I wish to add a few 4
thoughts. 5
I agree with the majority that the text of the EEA is such that it would require stretching 6
to cover Aleynikov’s acts. But texts must always be read in context, and context includes not 7
only the whole of the statute (well addressed by the majority), but also the “mischief” the law 8
was enacted to address. This is not the same as legislative history. It is significant that when 9
English courts were not allowed to look at Hansard (the account of the laws’ passage through 10
Parliament), they nevertheless could, and frequently did, consider the circumstances because of 11
which a law was introduced and passed. That is, they considered the situational context and 12
mischief. See Gorris v. Scott, (1874) 9 L.R. Exch. 125 (Eng.) (refusing to apply an order of the 13
Privy Council to a mischief different from that which prompted the issuance of the order); see 14
generally Heydon’s Case, (1584) 76 Eng. Rep. 637 (Exch.) 638; 3 Co. Rep. 7a, 7b (“[T]he office 15

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2
of all the Judges is always to make such construction as shall suppress the mischief, and advance 1
the remedy, and to suppress subtle inventions and evasions for continuance of the mischief . . . 2
.”). 3
The EEA was passed after the Supreme Court and the Tenth Circuit said the NSPA did 4
not cover intellectual property. See Dowling v. United States, 473 U.S. 207, 226 (1985); United 5
States v. Brown, 925 F.2d 1301, 1307-08 (10th Cir. 1991). While the legislative history can be 6
read to create some ambiguity as to how broad a reach the EEA was designed to have, it is hard 7
for me to conclude that Congress, in this law, actually meant to exempt the kind of behavior in 8
which Aleynikov engaged. See H.R. Rep. No. 104-788, at 6 (1996), reprinted in 1996 9
U.S.C.C.A.N. 4021, 4024-25 (citing Brown). I am not dissenting because I recognize the strength 10
of the majority’s analysis of the text and the legislative history, and because, as the majority 11
says, ambiguous criminal statutes must be read in favor of the defendant. Nevertheless, while 12
concurring, I wish to express the hope that Congress will return to the issue and state, in 13
appropriate language, what I believe they meant to make criminal in the EEA. 14

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