The People, Respondent,v.Sergey Aleynikov, Appellant.BriefN.Y.March 27, 2018To be Argued by: KEVIN H. MARINO, ESQ. (Time Requested: 30 Minutes) APL-2017-00078 New York County Clerk’s Indictment No. 4447/12 Court of Appeals of the State of New York THE PEOPLE OF THE STATE OF NEW YORK, Respondent, – against – SERGEY ALEYNIKOV, Defendant-Appellant. BRIEF FOR DEFENDANT-APPELLANT KEVIN H. MARINO JOHN D. TORTORELLA JOHN A. BOYLE EREZ J. DAVY MARINO, TORTORELLA & BOYLE, P.C. Attorneys for Defendant-Appellant 888 Seventh Avenue, 9th Floor New York, New York 10019 Tel.: (212) 307-3700 Fax: (212) 262-0050 – and – 437 Southern Boulevard Chatham, New Jersey 07928 Tel.: (973) 824-9300 Fax: (973) 824-8425 Date Completed: June 1 , 2017 i STATUS OF RELATED LITIGATION Defendant-Appellant, Sergey Aleynikov (“Aleynikov”), has not been sentenced or moved for a new trial in the Supreme Court, New York County Criminal Term, Part 95, in this case, People v. Aleynikov, Indictment No. 4447/2012 (the “State Proceeding”). The conduct underlying this appeal was the subject of a federal criminal case, United States v. Aleynikov, No. 10-cr-96 (S.D.N.Y.) (the “Federal Proceeding”), which ended in Aleynikov’s acquittal by the Second Circuit Court of Appeals, United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). This case is related to an indemnification action, Aleynikov v. The Goldman Sachs Group, Inc. No. 12-cv-5994 (D.N.J.), and a Bivens action, Aleynikov v. McSwain, No. 15-cv-1170 (D.N.J.), both pending in the District of New Jersey, and an advancement action in the Delaware Court of Chancery, see Aleynikov v. The Goldman Sachs Group, Inc., C.A. No. 10636-VCL (Del. Ch. July 13, 2016), aff’d, Aleynikov v. The Goldman Sachs Group, Inc., No. 366, 2016 (Del. Jan. 20, 2017). ii TABLE OF CONTENTS STATUS OF RELATED LITIGATION .................................................................... i TABLE OF AUTHORITIES .................................................................................... iv PRELIMINARY STATEMENT ............................................................................... 1 QUESTIONS PRESENTED ...................................................................................... 7 JURISDICTIONAL STATEMENT .......................................................................... 7 STATEMENT OF THE CASE .................................................................................. 8 A. The History Of The Unlawful Use Statute And Subsequent Legislative Efforts To Criminalize Computer-Related Crimes Beyond That Statute’s Scope. .................................................................... 8 1. The Genesis Of The Unlawful Use Statute And Its Inclusion In The Revised Penal Law. ................................................... 9 2. The 1986 Passage Of A Comprehensive Statutory Scheme Designed To Criminalize Unauthorized Access To And Duplication Of Computer Data. .............................................12 3. The 2013 Task Force Report And The Cybercrime Bills Currently Pending Before The Legislature. ........................................13 B. Aleynikov’s Successive Prosecutions By Two Sovereigns. ....................15 1. The Federal Proceeding. ......................................................................15 2. The State Proceeding. ..........................................................................17 ARGUMENT ........................................................................................................... 23 I. THE FIRST DEPARTMENT ERRED AS A MATTER OF LAW IN HOLDING THAT SAVING DATA TO A COMPUTER HARD DRIVE CONSTITUTES MAKING A “TANGIBLE REPRODUCTION OR REPRESENTATION.” ........................................... 25 A. The First Department’s Holding That Computer Data Saved To A Hard Drive Is A “Tangible Reproduction Or Representation” Of That Data Conflicts With The Statute’s Plain Language And Disregards Prior Decisions Of This Court. ..............................................25 iii B. The First Department’s Expansive Interpretation Of The Unlawful Use Statute Ignores Its Limiting Language, The Context And History Of Its Enactment, And The Legislature’s Subsequent Recognition Of Its Limited Scope. ...........................................................35 II. THE FIRST DEPARTMENT ERRED AS A MATTER OF LAW IN HOLDING THAT ALEYNIKOV ACTED WITH THE INTENT TO “APPROPRIATE” THE “USE” OF GOLDMAN’S SOURCE CODE. ....... 44 A. The First Department Erred As A Matter of Law In Holding That One Can Intend To “Appropriate” Property Without Intending To Dispossess The True Owner Of That Property. .......................................46 B. The First Department Compounded Its Erroneous Construction Of Penal Law § 155.00(4) By Failing to Recognize That One Who Did Not Exercise Virtually Permanent Control Over The Use Of Property Could Not Have Exercised Permanent Control Over Its Use. ...........................................................................................................51 III. THE PLAUSIBILITY OF THE TRIAL COURT’S INTERPRETATION OF THE UNLAWFUL USE STATUTE COMPELLED ALEYNIKOV’S ACQUITTAL UNDER THE RULE OF LENITY. .................................................................................................. 55 CONCLUSION ........................................................................................................ 57 iv TABLE OF AUTHORITIES Cases Almeida v. Holder, 588 F.3d 778 (2d Cir. 2009) .......................................................................... 48, 49 Am. Online, Inc. v. St. Paul Mercury Ins. Co., 207 F. Supp. 2d 459 (E.D. Va. 2002) ...................................................................28 Am. Online, Inc. v. St. Paul Mercury Ins. Co., 347 F.3d 89 (4th Cir. 2003) ..................................................................................26 AMCO Ins. Co. v. Carpet Direct Corp., 157 F. Supp. 3d 1018 (D. Colo. 2016) .................................................................26 Bell v. United States, 462 U.S. 356 (1983) .............................................................................................37 Capitol Comm’n, Inc. v. Capitol Ministries, No. 11-cv-00214, 2013 U.S. Dist. LEXIS 142542 (E.D.N.C. Oct. 1, 2013) .......27 Cincinnati Ins. Co. v. Prof’l Data Servs., No. 01-cv-2610, 2003 U.S. Dist. LEXIS 15859 (D. Kan. July 18, 2003) ...........27 Computer Assocs. Int’l v. East Providence, 615 A.2d 467 (R.I. 1992)......................................................................................27 Crocker v. Crocker, 438 P.2d 772 (Ariz. Ct. App. 1968) .....................................................................40 DaimlerChrysler Servs. v. Summit Nat’l, No. 02-cv-71871, 2006 U.S. Dist. LEXIS 53780 (E.D. Mich. Aug. 3, 2006) ....................................................................................27 Dallas Cent. Appraisal Dist. v. Tech Data Corp., 930 S.W.2d 119 (Tex. App. Dallas May 30, 1996) .............................................27 Devon Energy Corp. v. Westacott, No. 09-cv-1689, 2011 U.S. Dist. LEXIS 30786 (S.D. Tex. Mar. 24, 2011) ........32 District of Columbia v. Universal Computer Assocs., 465 F.2d 615 (D.C. Cir. 1972) .............................................................................27 Dodd v. United States, 545 U.S. 353 (2005) .............................................................................................23 Dowling v. United States, 473 U.S. 207 (1985) ................................................................................ 37, 38, 41 v Eye Care & Eye Wear Ctr. of Me. v. Enables It, No. 14-cv-55, 2015 Me. Super. LEXIS 227 (Me. Super. Ct. Nov. 16, 2015) ............................................................................27 Gilreath v GE, 751 So.2d 705 (Fla. Dist. Ct. App. 2000) .............................................................29 Henson v. Santander Consumer USA Inc., No. 16-349, 2017 U.S. LEXIS 3722 (U.S. June 12, 2017) ........................... 22, 23 In re Cadwallder, No. 06-br-36424, 2007 Bankr. LEXIS 2260 (Bankr. S.D. Tex. June 28, 2007) .........................................................................27 In re Protest of Strayer, 716 P.2d 588 (Kan. 1986).....................................................................................27 In re Reinaldo O., 250 A.D.2d 502 (1st Dep’t 1998) .........................................................................53 Jones v. Bill, 10 N.Y.3d 550 (2008) ...........................................................................................24 Kremen v. Cohen, 337 F.3d 1024 (9th Cir. 2003) ..............................................................................32 Lifesize, Inc. v. Chimene, No. 16-cv-1109, 2017 U.S. Dist. LEXIS 64033 (W.D. Tex. Apr. 26, 2017) ...................................................................... 29, 31, 34 Lucent Tech., Inc. v. Bd. of Equalization, 193 Cal. Rptr. 3d 323 (App. Div. 2015) ........................................................ 29, 35 McCourt v People, 64 N.Y. 583 (1876) ........................................................................................ 46, 47 Northeast Datacom, Inc. v. Wallingford, 563 A.2d 688 (Conn. 1989) ..................................................................................27 People ex rel. Dudley v. West, 87 Misc. 2d 967 (Sup. Ct., Kings Cty., 1976) ........................................................ 9 People v Headley, 37 Misc. 3d 815 (Sup. Ct., N.Y. Cty., 2012) ........................................................48 People v Kenney, 135 A.D. 380 (1st Dep’t 1909) .............................................................................47 vi People v. Aragon, 28 N.Y.3d 125 (2016) ...........................................................................................25 People v. Bailey, 13 N.Y.3d 67 (2009) .............................................................................................24 People v. Bayron, 66 N.Y.2d 77 (1985) .............................................................................................34 People v. Concepcion, 17 N.Y.3d 192 (2011) .............................................................................. 24, 43, 44 People v. Golb, 23 N.Y.3d 455 (2014) .................................................................................... 24, 55 People v. Goodfriend, 64 N.Y.2d 695 (1984) ............................................................................................. 7 People v. Jennings, 69 N.Y.2d 103 (1986) .................................................................................... 43, 47 People v. Kent, 19 N.Y.3d 290 (2012) .................................................................................... 32, 33 People v. Lammerts, 164 N.Y. 137 (1900) .............................................................................................46 People v. Litto, 8 N.Y.3d 692 (2007) ..................................................................................... passim People v. Pabon, 28 N.Y.3d 147 (2016) ...........................................................................................24 People v. Schulz, 67 N.Y.2d 144 (1986) ...........................................................................................50 People v. Sprint Nextel Corp., 26 N.Y.3d 98 (2015) .............................................................................................34 People v. Thompson, 26 N.Y.3d 678 (2016) .................................................................................... 24, 55 RIHGA Int’l U.S.A. v. New York State Liquor Auth., 84 N.Y.2d 876 (1994) ...........................................................................................43 Rodriguez v. United States, 480 U.S. 522 (1987) .............................................................................................23 vii Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) .............................................................................................50 State Auto Prop. & Cas. Ins. v. Midwest Computers & More, 147 F. Supp. 2d 1113 (W.D. Okla. 2001) ............................................................29 State v. Henry, 752 A.2d 40 (Conn. 2000) ....................................................................................48 State v. Schuller, 843 N.W.2d 626 (Neb. Feb. 21, 2014) .......................................................... 27, 34 Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283 (2007) ..................................................................................... passim United States v. Agrawal, 726 F.3d 235 (2d Cir. 2013) ......................................................................... passim United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012) .................................................................... 2, 3, 15, 16 United States v. Aleynikov, 737 F. Supp. 2d 1734 (S.D.N.Y. 2010) ......................................................... 16, 37 United States v. Bottone, 365 F.2d 389 (2d Cir. 1966) ......................................................................... passim United States v. Brown, 925 F.2d 1301 (10th Cir. 1991) ............................................................................26 United States v. Martin, 228 F.3d 1 (1st Cir. 2000) ....................................................................................26 United States v. Stafford, 136 F.3d 1109 (7th Cir. 1998) ....................................................................... 26, 28 United States v. Steele, 595 F. App’x 208 (4th Cir. 2014) .........................................................................26 United States v. Zhang, 995 F. Supp. 2d 340 (E.D. Pa. 2014)....................................................................29 Vigilante.com, Inc. v. ArgusTest.com, Inc., No. 04-cv-413, 2005 U.S. Dist. LEXIS 45999 (D. Or. Sept. 6, 2005) ................29 Ward General Ins. Services, Inc. v. Employers Fire Ins. Co., 114 Cal. App. 4th 548 (Cal. App. 2003) ..............................................................27 viii Statutes 17 U.S.C. § 101 ........................................................................................................39 Computer Fraud and Abuse Act, 18 U.S.C. § 1030 ..................................................................................................16 Conn. Gen. Stat. § 53a-119 ......................................................................................49 CPL § 450.90 ............................................................................................................. 7 Economic Espionage Act of 1996, 18 U.S.C. §§ 1831 to 1839 ...................................................................................16 L. 1964, ch. 727 ......................................................................................................... 9 L. 1965, ch. 1030 ............................................................................................. passim L. 1967, ch. 791 .......................................................................................................10 L. 1981, ch. 602 .......................................................................................................50 L. 1986, ch. 514 .......................................................................................................41 National Stolen Property Act, 18 U.S.C. § 2314 .......................................................................................... passim Penal Law § 155.00 ................................................................................................3, 8 Penal Law § 155.00(1) .............................................................................................11 Penal Law § 155.00(4) .............................................................................................53 Penal Law § 155.05 ..................................................................................................11 Penal Law § 155.20(3) .............................................................................................11 Penal Law § 155.30 ..............................................................................................9, 11 Penal Law § 156.30 ................................................................................. 4, 13, 41, 54 Penal Law § 165.05 ..................................................................................................50 Penal Law § 165.06 ..................................................................................................50 Penal Law § 165.07 .......................................................................................... passim Penal Law § 165.17 ..................................................................................................54 Penal Law § 263.16 ..................................................................................................33 Theft of Trade Secrets Clarification Act of 2012, Pub. L. No. 112-236, 126 Stat. 1627 ....................................................................17 ix Legislative Materials A5496A, A. Reg. Sess. 2017-2018 (N.Y. 2017) ........................................ 15, 42, 55 A8149, A. Reg. Sess. 2015-2016 (N.Y. 2015) ........................................................15 Bill Jacket, L. 1964 ch. 727 ....................................................................................... 9 Bill Jacket, L. 1967, ch. 791 ............................................................................. 10, 36 Bill Jacket, L. 1986, ch. 514 ............................................................................ passim McKinney’s Consol. Laws of N.Y. Annotated, Revised Penal Law, Effective September 1, 1967, Including Penal Code Commission’s Staff Comments (1965) ......................................................... 10, 36 New York State Legislative Annual (1967) ............................................... 10, 11, 37 Proposed New York Penal Law, (Study Bill, 1964 Senate Intro. 3918, 1964 Assembly Intro. 5376), including Staff Comments ..........................................9, 47 S2406A, S. Reg. Sess. 2017-2018 (N.Y. 2017) .......................................... 15, 42, 55 S4072B, S. Reg. Sess. 2015-2016 (N.Y. 2015) .......................................................15 Journals & Treatises Denzer & McQuillan, Penal Law § 165.07, Practice Commentary ........................11 Donnino, Practice Commentary, McKinney’s Consol. Laws of N.Y., Penal Law § 155.00 ........................................................................................................46 McKinney’s Consol. Laws of N.Y., Book 1, Statutes § 124 ...................................24 Oliver Wendell Holmes, The Common Law (1881) ................................................46 Other Authorities Black’s Law Dictionary (10th ed. 2014) .................................................................25 Collins Online Dictionary ........................................................................................26 Cyrus R. Vance, Jr., New York White Collar Crime Policy in 2013: Too Late to Enter the 21st Century?, May 20, 2013 ........................................... passim Merriam-Webster Online Dictionary .......................................................................26 Oxford English Dictionary (2d ed. 1989; reprinted 1991) ...............................................................................25 RCA, An Historical Perspective (1978) ..................................................................40 Report of the New York State White Collar Crime Task Force (2013) .......... passim x Webster’s Third New Int’l Dictionary of the English Language Unabridged 2337 (1993)...........................................................................................................26 William D. Smith, N.Y. Times, R.C.A. Unveils Electronic Typesetter, June 3, 1966 ..................................................................................................................40 Xerox, Xerox History Timeline, available at https://www.xerox.com/about- xerox/history-timeline/1950-decade/enus.html ....................................................40 1 PRELIMINARY STATEMENT This case presents two critical issues of statutory interpretation—the meaning of “tangible” and the meaning of “appropriate” in a criminal theft statute—and an even more important jurisprudential question: May courts update criminal statutes to accommodate social and technological changes, or must that task be left to the Legislature? Sergey Aleynikov’s extraordinary odyssey through our justice system has presented this fundamental question to both the federal and state courts of New York. The federal court’s answer to the question was emphatic: finding that the statutes of conviction as written did not proscribe Aleynikov’s conduct, the Second Circuit ordered him acquitted and released from prison on the very day his appeal was argued. The trial court here (the Honorable Daniel Conviser, A.J.S.C.) ultimately gave the same answer, finding, in a comprehensive, 72-page opinion, that the prosecution failed on not one but two essential elements of the crime charged—(1) making a tangible reproduction or representation; and (2) intent to appropriate. The First Department, by contrast, breezily treated the criminal statute in question as though it were the common law of torts, arrogating the legislative function to re- write that outmoded 50-year-old statute to suit the needs of the digital age and resurrecting Aleynikov’s conviction because it would be “incongruous to allow [him] to escape criminal liability.” (Appdx19.) 2 That arrogation of the legislative function originated with the Manhattan District Attorney’s decision to contort Penal Law § 165.07, Unlawful Use of Secret Scientific Material (the “Unlawful Use” statute)—an antiquated larceny statute passed in 1967 and not modified since—to cover Aleynikov’s 2009 digital transfer of computer source code owned by his then-employer, Goldman, Sachs & Co. The People’s decision to prosecute Aleynikov under this inapplicable law was particularly remarkable given the Second Circuit’s earlier rejection of the federal government’s attempt to extend an analogous federal larceny statute, the National Stolen Property Act, 18 U.S.C. § 2314 (“NSPA”), to the same conduct. Aleynikov was convicted of that offense and spent nearly a year in prison before the Second Circuit held that the NSPA did not proscribe his conduct. In so ruling, the court found, inter alia, that his digital duplication of data was not the transfer of a tangible good within the meaning of the NSPA, expressly declining to rewrite the statute. See United States v. Aleynikov, 676 F.3d 71, 79 (2d Cir. 2012) (“We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age.”). The bedrock principle that statutes are written by legislatures, not courts— which Justice Conviser embraced but the First Department disregarded—guided the federal court’s decision-making in those closely-related proceedings. Had the First Department adopted the Second Circuit’s appropriate judicial approach in this case, 3 it would easily have concluded that the Unlawful Use statute, like the NSPA, was not designed for—and could not even have contemplated—the realities of today’s digital age, in which data can be transferred instantaneously and intangibly, without ever taking tangible form and without its rightful owner ever relinquishing control over its use. The only “unlawful use” of secret scientific material the Unlawful Use statute proscribes is (1) making a “tangible reproduction or representation” of such material through the means enumerated in that 50-year-old statute (2) with the “intent to appropriate” its use. “Appropriate” under that larceny statute—which appears in Title J of the Penal Code, “Offenses Involving Theft”—is specifically defined to require proof of intent to “exercise control” over property “permanently” (which perforce entails acquisition of its entire economic value or benefit) or for so extended a period or under such circumstances as to acquire “the major portion” (i.e., most) of its economic value or benefit. Penal Law § 155.00(4). It is undisputed that (a) as the Second Circuit would explain in United States v. Agrawal, 726 F.3d 235, 251 (2d Cir. 2013), the source code at issue in Aleynikov “was intangible and remained so as it was transmitted from Goldman Sachs’s servers to a server in Germany and then to defendant’s own computer”; and (b) Goldman did not lose and could not possibly have lost control over the source code Aleynikov transferred for even one minute, and instead continued to deploy that code and profit from its use after 4 Aleynikov’s copying exactly as it had done before. As a result, the notion that Aleynikov made “a tangible reproduction or representation” of that source code or had the intent to “appropriate” its use within the meaning of Title J—two essential elements of the Unlawful Use statute—is flatly erroneous. Indeed, it has long been clear that the Unlawful Use statute does not proscribe the computer copying in which Aleynikov engaged. Less than twenty years after that statute was enacted, there was widespread recognition that this State’s larceny laws “do not address” the improper purposes for which criminals could employ “modern technology in the area of computers.”1 Bill Jacket, L. 1986, ch. 514, at 15. As a result, the Legislature adopted a “comprehensive statutory scheme,” id. at 35, that added “computer data” and “computer property” to the larceny definition of “property,” id. at 25, and included a new anti-duplication statute, Penal Law § 156.30, that eliminated (i) the tangibility requirement found in the Unlawful Use statute, instead proscribing the unlawful copying, reproduction, or duplication of computer data “in any manner”; and (ii) the need to prove intent to appropriate the use of computer data, instead requiring proof of appropriation or deprivation of a value exceeding $2,500. 1 All bill jackets and other historical materials relevant to the passage of the Unlawful Use statute and related legislation are included in Defendant-Appellant’s Compendium of Legislative and Other Materials. 5 That the Unlawful Use statute—limited as it is by the traditional larceny law requirements of a tangible reproduction or representation and an intent to appropriate—does not apply to the digital duplication of computer data is also reflected in current legislative efforts to update New York’s cybercrime laws. Those efforts were spearheaded by District Attorney Vance himself, who has declared that this State’s larceny laws left prosecutors “nearly helpless in dealing with theft of intangible property, such as computer source code.” Cyrus R. Vance, Jr., Remarks at the New York City Bar Association’s Second Annual White Collar Institute, New York White Collar Crime Policy in 2013: Too Late to Enter the 21st Century? (May 20, 2013) (“White Collar Crime Policy”).2 That recognition led Mr. Vance to assemble a panel of experts, including representatives of his office, to propose revamping the Penal Law to proscribe such offenses. That blue-ribbon panel, the White Collar Crime Task Force (the “Task Force”), produced a report in 2013 (the “Task Force Report”),3 which explained that the current Penal Law does not address much of the computer-related misconduct possible today. As a result, the Task Force recommended that the Legislature both eliminate the requirement of a tangible reproduction or representation and redefine appropriation for computer crimes. The 2 Available at http://manhattanda.org/sites/default/files/5.20.13%20NYC%20Bar%20 Assn%202nd%20Annual%20White%20Collar%20Crime%20Institute.pdf. 3 The Task Force Report is included in Defendant-Appellant’s Compendium and available at http://www.manhattanda.org/sites/default/files/WCTF%20Report.pdf. 6 Legislature has since introduced Senate and Assembly bills implementing the Task Force’s recommendations, confirming that existing larceny laws such as the Unlawful Use statute do not proscribe Aleynikov’s conduct. See People v. Litto, 8 N.Y.3d 692, 697, 706-07 (2007) (discerning a statute’s legislative purpose based on the Legislature’s subsequent understanding of what that statute covered). Justice Conviser’s painstaking approach to interpreting a criminal statute stands in stark contrast to the First Department’s superficial treatment of the subject. Without serious consideration of Aleynikov’s arguments or the trial court’s thoughtful disquisition, the First Department blithely reversed the Trial Order of Dismissal and re-instated Aleynikov’s conviction, reimagining both elements of the Unlawful Use statute to encompass today’s technology and proscribe Aleynikov’s conduct. Giving short shrift to the trial court’s compelling analysis, the appellate panel simply expanded the Unlawful Use statute’s scope, disregarding its tangibility requirement and re-writing the Penal Law definition of “appropriate,” which applies to all larceny statutes in this State. In so doing, the First Department misapplied or ignored numerous axioms of construction, including the rule of lenity, which requires that an ambiguity in a criminal statute must be resolved in a defendant’s favor. These errors demand correction. 7 QUESTIONS PRESENTED 1. Does a digital transfer of computer source code create a “tangible reproduction or representation” of such data within the meaning of the Unlawful Use statute? The trial court correctly answered no; the First Department erroneously answered yes. 2. Can one “appropriate” the use of computer source code within the meaning of the Unlawful Use statute without depriving the owner of at least the major portion of the economic benefit or value of its use? The trial court correctly answered no; the First Department erroneously answered yes. 3. Was it plausible to answer “no” to either Question 1 or Question 2, thus compelling Aleynikov’s acquittal under the rule of lenity? The trial court correctly answered yes; the First Department erroneously answered no. JURISDICTIONAL STATEMENT This Court has jurisdiction pursuant to CPL § 450.90 because it granted Aleynikov leave to appeal the First Department’s January 24, 2017 order (Appdx3), which (a) reversed the Trial Order of Dismissal on the law, (Appdx4, 26); and (b) was adverse to Aleynikov. See CPL § 450.90(1); People v. Goodfriend, 64 N.Y.2d 695, 697 (1984). The questions presented were preserved below. (Appdx12-25, 28, 55-98.) 8 STATEMENT OF THE CASE A. The History Of The Unlawful Use Statute And Subsequent Legislative Efforts To Criminalize Computer-Related Crimes Beyond That Statute’s Scope. To understand why the Unlawful Use statute does not proscribe Aleynikov’s source code copying, it is helpful to review the statute’s genesis, the concurrent development of the Revised Penal Law in which it became operative, and the Legislature’s subsequent efforts to update this State’s cybercrime laws. The statute, found in Title J, provides: A person is guilty of unlawful use of secret scientific material when, with intent to appropriate to himself or another the use of secret scientific material, and having no right to do so and no reasonable ground to believe that he has such right, he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material. Penal Law § 165.07. Penal Law § 155.00(4) defines “appropriate” in Title J statutes such as the Unlawful Use statute to mean “to exercise control over [property], or to aid a third person to exercise control over it, permanently or for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit.” 9 1. The Genesis Of The Unlawful Use Statute And Its Inclusion In The Revised Penal Law. In 1961, the New York State Temporary Commission on Revision of the Penal Law and Criminal Code (the “Bartlett Commission” or “Commission”) was created to study and revise this State’s Penal Law. See People ex rel. Dudley v. West, 87 Misc. 2d 967, 968 (Sup. Ct., Kings Cty., 1976). In 1964, the Commission produced a study bill proposing an extensive overhaul of New York’s existing criminal code. See 1964 Proposed New York Penal Law (Study Bill, 1964 Senate Intro. 3918, 1964 Assembly Intro. 5376) (the “1964 Study Bill”). That bill proposed recodifying the Penal Law’s larceny statutes in a new Title J and adding a section to define certain terms, including “appropriate.” See id. at 94-99, 351. The same year, the Legislature amended § 1296 of the existing Penal Code to make it second-degree larceny to steal “secret scientific material.” L. 1964, ch. 727. That law, which was not included in the Study Bill, was passed in response to a high- profile case involving the theft of microorganisms and confidential records from Lederle Laboratories. See Bill Jacket, L. 1964 ch. 727, at 7, 17-18, 33-41. In 1965, the Legislature passed the Revised Penal Law, which was to take effect on September 1, 1967. See L. 1965, ch. 1030. The Revised Penal Law implemented the Study Bill with several revisions. One such revision amended § 155.30 of the Penal Law to incorporate the 1964 law outlawing the theft of secret 10 scientific material. See McKinney’s Consol. Laws of N.Y. Annotated, including Commission Staff Comments 285 (1965) (“1965 Staff Comments”). The Commission explained that, by incorporating this 1964 law, the Revised Penal Law made it third-degree larceny to steal “tangible property” consisting of “secret scientific material.” Id. Another revision extended the larceny definitions in Title J to other theft-related offenses within that Title. See L. 1965, ch. 1030, § 155.00. After the Penal Law was passed but before it took effect, the Commission continued to analyze perceived deficiencies in that law and, in 1967, proposed a bill amending it. See Bill Jacket, L. 1967, ch. 791, at 9. The bill passed in 1967 and became effective on September 1, 1967, the same day as the Revised Penal Law. L. 1967, ch. 791. Among the amendments in the 1967 bill was the Unlawful Use statute, which was codified in Title J and thus subject to the Revised Penal Law’s larceny definitions. As a Commission memorandum explained, that statute was passed in response to United States v. Bottone, 365 F.2d 389 (2d Cir. 1966), an NSPA prosecution arising from the same Lederle Laboratories theft that inspired the 1964 law. See 1967 Legislative Annual, at 20-21 (citing Bottone, 365 F.2d 389). The Bottone prosecution exposed a gap in the Revised Penal Law. The defendants argued that their conduct did not violate the NSPA because they did not transport stolen documents, only photocopies of them, and therefore did not transport stolen property. Id. The court rejected that argument, finding that the 11 photocopies were tangible objects that qualified as converted goods. Id. But the court stressed that, “where no tangible objects were ever taken or transported, a court would be hard pressed to conclude that ‘goods’ had been stolen and transported within the meaning of [the NSPA].” Id. Although the Second Circuit rejected the argument that “photocopies are not stolen goods” under the NSPA, the Legislature passed the Unlawful Use statute one year later to foreclose that argument under New York law: Section 165.07: This section, dealing with the unlawful use of secret scientific material, is designed to cover a situation not within the scope of §155.20(3) [sic— §155.30(3)] since the subject of the theft is not “property” as that term is defined in §155.00(1). See United States v. Bottone, 1966, 365 F.2d 389. Thus, for example, a person who steals the blueprints of a secret process, commits larceny. But one who surreptitiously makes a photographic copy of such blueprint, leaving the original in its proper place, does not commit larceny because he is not stealing “property”. To make this latter type of conduct subject to criminal sanction, §165.07 is proposed. Legislative Annual, 1967, p. 20-21. See also Denzer & McQuillan, Penal Law § 165.07, Practice Commentary (explaining that the 1964 law criminalized the theft of a “document reciting a secret scientific formula” but did not “embrace one who with the same larcenous intent photographs or copies such a document, since such conduct does not constitute a taking of property so as to constitute larceny (§ 155.05 12 [1]),” and noting that the Unlawful Use statute was designed to “plug the indicated gap”). 2. The 1986 Passage Of A Comprehensive Statutory Scheme Designed To Criminalize Unauthorized Access To And Duplication Of Computer Data. Less than two decades after the Unlawful Use statute was passed, there was widespread recognition that the Revised Penal Law—and, in particular, its larceny provisions—had not kept pace with technological advancements, and did not criminalize unlawful access to and duplication of computer data. See Bill Jacket, L. 1986 ch. 514, at 35 (noting that “the problems created by the criminal misuse of the computer have either been inadequately dealt with by the Penal law, or not dealt with at all”); see also id. at 14 (noting that “current statutes relating to larceny are insufficient” for “prosecuting computer crime”); id. at 15 (noting that “existing penal statutes … do not address” the improper purposes for which criminals could employ “modern technology in the area of computers”); id. at 28 (describing existing law as “woefully inadequate”). As a result, the Legislature created a “comprehensive statutory scheme,” id. at 35, to provide state authorities “for the first time” with an “efficient mechanism for prosecuting computer crime, as current statutes relating to larceny are insufficient.” Id. at 14; id. at 35 (explaining that the bill helped “address the legal void that now exists with respect to such computer mischief”). To achieve this 13 purpose, the bill amended Title J’s definition of “property,” Penal Law § 155.00(1), to include “computer data” and “computer program.” Bill Jacket, L. 1986, ch. 514, at 31. The bill also added § 156.30, which proscribed copying, reproducing or duplicating computer data “in any manner” and thereby depriving or appropriating from the owner of such data an economic value in excess of $2,500. The Legislature thus dispensed with any tangibility requirement and any need to prove intent to appropriate the full use of the duplicated data, so that any unauthorized duplication of computer data that caused a loss in that minimal amount would henceforth be a crime. 3. The 2013 Task Force Report And The Cybercrime Bills Currently Pending Before The Legislature. Concern over the failure of New York’s criminal laws to keep pace with technology has resurfaced in recent years. As D.A. Vance explained in 2013, with few exceptions—notably the 1986 computer-crime law—state prosecutors faced with computer misconduct have had to rely on “the laws recommended by the Bartlett Commission in 1965” and as a result have been “nearly helpless in dealing with theft of intangible property, such as computer source code.” White Collar Crime Policy at 1, 5. After carefully considering that problem, the Task Force recommended that the Legislature (a) define “obtain” for purposes of computer data to exclude any tangibility requirement; and (b) redefine “appropriation” for 14 computer crimes to exclude the need to prove loss to the owner inherent in the existing Title J definition. See Task Force Report at 38 (recommending that “obtain” be defined to include “duplicating, recording, copying, downloading, uploading or printing out the information, data, or program, or obtaining a physical object containing such information.”); id. at D-1-2 (proposing a unique definition of “appropriate” for computer data—“to acquire the ability to use it or dispose of it to the economic benefit of oneself or a third person or to the economic detriment or damage of an owner.”). While the People were prosecuting Aleynikov in this case, the Task Force was using his source code copying to exemplify conduct not proscribed by the State’s existing larceny laws, and proposing legislation to remedy the statutory definitions that doomed his prosecution: Another example illustrates the shortcomings of current law with respect to computer data. Suppose a bank’s computer programmer develops and maintains its proprietary trading system. The bank spent several million dollars to build, improve and maintain this extremely valuable system. Eventually, a competitor lures the programmer away from the bank with the promise of riches in exchange for a copy of the trading program’s source code. The programmer has taken from his employer—any layperson would say “stole”—property worth well over $1 million, the threshold for Grand Larceny in the First Degree, a Class B felony. But because the deprivation was not permanent—the programmer, by definition, only copied the code, leaving the original on the bank’s network—he cannot be charged with 15 Larceny…. [H]e would face only Class E felony charges of Unlawful Duplication of Computer Related Material [of which Aleynikov was acquitted] or Computer Trespass. Id. at 36 (emphasis added). Bills adopting the Task Force’s recommendations are now moving through the Assembly and the Senate. See A5496A §§ 1(2), (4); S2406A §§ 1(2), (4).4 The current Assembly bill, A5496A, was amended and recommitted to the Codes Committee just days ago, on June 12, 2017; the Senate bill, S2406A, was amended and recommitted to that Committee two weeks ago, on June 1, 2017. The People’s prosecution of Aleynikov under one of the Penal Law’s larceny statutes even as the Task Force argued that those statutes did not proscribe his conduct is but one unfathomable aspect of his tortuous and torturous eight-year journey through our federal and state judicial systems. B. Aleynikov’s Successive Prosecutions By Two Sovereigns. 1. The Federal Proceeding. Aleynikov is a former Goldman programmer who developed computer source code for its high frequency trading (“HFT”) system. Aleynikov, 676 F.3d at 74. In April 2009, he accepted an offer to work at Teza Technologies LLC (“Teza”), a Chicago-based startup founded by HFT pioneer Misha Malyshev. Id. On June 1 4 Both bills are substantially similar to the then-pending bills Aleynikov cited to the First Department, S4072B-2015 and A8149A-2015. 16 and June 5, 2009, before leaving Goldman, Aleynikov transferred lines of its HFT source code outside the company via computer-to-computer transfer. Aleynikov, 676 F.3d at 74; Appdx27. The following month, he was charged with violating the NSPA and the Economic Espionage Act, 18 U.S.C. § 1831 et seq. (“EEA”), by making those digital transfers.5 He was subsequently convicted of both charges and sentenced to 97 months in federal prison. Aleynikov, 676 F.3d at 75. But after he had served approximately one year of that sentence, the Second Circuit reversed his conviction on the day it heard his appeal, holding that the source code he transferred never assumed tangible form and thus did not constitute a converted or stolen good within the meaning of the NSPA. Id. at 78. The court further held that Aleynikov did not violate the EEA because Goldman’s HFT system was not a product intended for interstate commerce. Id. at 80-82. In reversing Aleynikov’s convictions, the court stated, “We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age.” Id. at 79. Shortly thereafter, as Judge Guido Calabresi urged in his concurring opinion, id. at 82-83, Congress amended the EEA to address the limitations identified in the Second 5 Aleynikov was also indicted for violating the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”). The court dismissed that charge prior to trial. See United States v. Aleynikov, 737 F. Supp. 2d 173, 194 (S.D.N.Y. 2010). 17 Circuit’s decision. See Theft of Trade Secrets Clarification Act of 2012, Pub. L. No. 112-236, 126 Stat. 1627. 2. The State Proceeding. In August 2012, six months after the Second Circuit acquitted Aleynikov and ordered him released from prison, New York authorities charged him with both Unlawful Use and Unlawful Duplication of Computer-Related Material (“Unlawful Duplication”) based on the same transfers underlying his federal prosecution. (Appdx12; Appdx167.) The following month, the grand jury indicted him on those charges. (Appdx99-101.) After conducting a Huntley-Mapp-Dunaway hearing, Justice Ronald Zweibel suppressed certain evidence against Aleynikov, finding that he had been arrested without probable cause. (Appdx142-212.) Justice Zweibel explained that the arresting agent “could not have had a reasonable belief” that Aleynikov violated the NSPA because the data he transferred was “intangible property.” (Appdx178.) Justice Zweibel affirmed that decision on reconsideration, noting that “it has been clear for years that the NSPA does not apply to intangible property such as the source code that defendant is alleged to have stolen.” (Appdx218.) The largely uncontested facts elicited during Aleynikov’s trial were accurately described in the trial court’s opinion. (Appdx28-50.) Those facts, viewed in the light most favorable to the People, included that: 18 • “‘[C]omputer source code does not have physical form.’” (Appdx62 (quoting Appdx573; see also Appdx512-14, 573 (testifying that source code cannot be touched or felt).) • “There was no evidence during the trial that the source code Aleynikov duplicated could be touched.” (Appdx56; see also Appdx249-50, 517- 18 (testifying that Aleynikov never printed the code).) • “Goldman continued to possess the code [Aleynikov transferred] and never lost a single line of it” and “never lost any income by virtue of Aleynikov’s actions.” (Appdx30; see also Appdx379, 407-09, 414, 530-31.) • “There was no evidence Aleynikov ever sold or attempted to sell the source code he transferred to anyone,” and no evidence that Teza “was motivated to hire Aleynikov because of Aleynikov’s unauthorized transfer of the code.” (Appdx30-31; accord Appdx424, 522; Appdx589-90, 600, 602-03.) • Teza forbade use of source code from external sources and “never earned any income from the source code Aleynikov obtained.” (Appdx31; Appdx451, 454-58, 597-600, 602-03.) • At the time of Aleynikov’s source-code transfers, Teza “had not yet determined what kind of high-frequency trading it would conduct,” (Appdx31; accord Appdx450, 455, 596-97), and until it did so, one could not even “‘remotely’” know whether the transferred data could have assisted it or could have been plugged in to its systems, (Appdx44- 45 (quoting Appdx456-57)). • Operating the source code that Aleynikov transferred would have required a “‘successful and complex integration of hardware, software, data feeds, system design and connectivity, as well as expert personnel.’” (Appdx48 (quoting Appdx562).) The People never established the value of the source code Aleynikov transferred. (Appdx86; Appdx385-86; accord Appdx519-20).) (That was not surprising 19 because, as Justice Conviser correctly observed, the People “did not believe” they were required to prove that fact at trial. (Appdx93.)) At the conclusion of the People’s case, Aleynikov moved for a trial order of dismissal. In response, the People (a) argued that in the Unlawful Use statute, “tangible” does not mean something perceptible by touch, but rather—according to one definition they would later convince the court to place before the jury—anything “capable of being understood by the mind,” (Appdx56-58; Appdx95); (b) claimed that Aleynikov intended to acquire “the major portion” of the source code’s economic value, which they interpreted to mean only some portion, (Appdx75-76); and (c) attempted to prevent the jury from seeing the language of the charged statutes and, initially, from having a copy of the judge’s instructions, (Appdx34 & n.10). After lengthy deliberations, 23 jury notes, and the dismissal of two jurors amid bizarre accusations of food tampering (Appdx33-34), the jury (a) acquitted Aleynikov of the Unlawful Duplication count—unsurprising, as Goldman retained and continued to earn the same amount of money with its HFT code after Aleynikov’s copying as it did before; and (b) deadlocked on the first Unlawful Use count while convicting him on the second—quite surprising, as the People never contended or presented proof that Aleynikov’s source code copying was done any differently, or with any different intent, on June 1 and June 5, 2009, the two dates charged in those counts. (Appdx27.) 20 On July 7, 2015, Justice Conviser issued a 72-page opinion granting Aleynikov’s renewed motion for a trial order of dismissal and acquitting him of the single charge of conviction. (Appdx27-98.) Examining the language and history of the Unlawful Use statute, relevant case law, and numerous principles of construction, Justice Conviser concluded that the undisputed evidence did not establish that Aleynikov made a “tangible reproduction or representation” of Goldman’s source code. (Appdx52-75.) In so ruling, the court acknowledged its error in instructing the jury that “tangible” could mean “capable of being understood by the mind.” (Appdx94.) The court also concluded that Aleynikov’s conduct could not have entailed an intent to appropriate the use of the transferred code—i.e., an intent to exercise control over its use permanently or for so long or under such circumstances as to acquire the major portion of its economic value or benefit. (Appdx77-93.) In reinstating the jury’s verdict, the First Department disregarded the wording of the Unlawful Use statute; ignored the trial court’s sound analysis of that statute and the legal principles and authorities that informed it; failed to apply settled tenets of statutory construction; and did not consider the plausibility of the trial court’s interpretation of the statutory requirements, which should have triggered the rule of lenity. Apparently, the First Department found no ambiguity in the statute although seven different judges—five on the Second Circuit and two on the New York 21 Supreme Court—found (consistent with the rulings of many other courts and commentators) that Aleynikov’s source code transfers did not result in a “tangible” reproduction or representation of that computer data. If the view expressed by those seven jurists and many others was even plausible—or, alternatively, if it was even plausible that, as Justice Conviser held, copying computer source code without depriving Goldman of at least the major portion of the economic value or benefit of its use did not meet the Title J definition of “appropriate” embedded in the Unlawful Use statute—Aleynikov was entitled to acquittal under the rule of lenity. But the First Department did not tarry long with those issues. Instead, the court ruled as a matter of law that Aleynikov (i) made a “tangible reproduction” because the source code was saved to a physical medium (i.e., a hard drive); and (ii) intended to appropriate the use of the code, regardless of the economic value or benefit of its use or the impact of his copying on Goldman, because he did not intend to return the copies. (Appdx13-25.) The First Department thus paid no heed to either (a) the intangible nature of Aleynikov’s digital transfers of Goldman’s computer source code; or (b) the fact that those transfers evinced no “intent to appropriate” the use of Goldman’s property within the statute’s meaning because they could not conceivably have enabled Aleynikov to acquire at least the major portion of the economic value or benefit of such use. 22 The heart of the First Department’s ruling is revealed in its observation that it would be “incongruous to allow defendant to escape criminal liability merely because he made a digital copy of the misappropriated source code instead of printing it onto a piece of paper.” (Appdx19-20.) The court clearly believed that because the Unlawful Use statute was designed to prevent trade secret theft, the 1967 Legislature would not have included a tangibility requirement in that statute had it foreseen that, decades later, it would be possible to make an intangible reproduction or representation of another’s trade secrets. The First Department’s approach stands in stark contrast to that of the Second Circuit, which observed in Agrawal that while there may be little to distinguish the moral culpability of one who steals “intangible property in a purely intangible form” and one who steals such property “in the tangible form of thousands of sheets of paper,” “it is Congress’s task, not the courts’, to define crimes and prescribe punishments.” 726 F.3d at 252-53. The court’s reasoning also runs afoul of the fundamental distinction between the judicial and legislative functions, which the United States Supreme Court reiterated earlier this week in Henson v. Santander Consumer USA Inc., No. 16-349, 2017 U.S. LEXIS 3722, at *16 (U.S. June 12, 2017). Refusing to stretch the wording of a federal statute to cover the conduct before it, the Henson Court reiterated that “it is never our job to rewrite a constitutionally valid statutory text under the banner of speculation about what 23 Congress might have done had it faced a question that, on everyone’s account, it never faced… Indeed, it is quite mistaken to assume … that ‘whatever’ might appear to ‘further[] the statute’s primary objective must be the law.” Id. at *16 (quoting Rodriguez v. United States, 480 U.S. 522, 526 (1987)). Thus, the Court explained, “we will not presume with petitioners that any result consistent with their account of the statute’s overarching goal must be the law but will presume more modestly instead ‘that [the] legislature says ... what it means and means … what it says.’” Henson, 2017 U.S. LEXIS 3722, at *17 (quoting Dodd v. United States, 545 U.S. 353, 357 (2005)). In ignoring the Unlawful Use statute’s express requirement of a tangible reproduction or representation and an intent to appropriate, the First Department flouted these core principles and performed a decidedly legislative function, rewriting the statute to accomplish what the court believed was its primary objective. Aleynikov timely sought leave to appeal, which Judge Fahey granted on April 20, 2017. (Appdx3.) ARGUMENT In reviewing a trial order of dismissal, this Court must determine whether, “viewing the facts in the light most favorable to the People, there exists a valid line of reasoning or permissible inference from which a rational jury could have found the elements of the crime proved beyond a reasonable doubt.” People v. Bailey, 13 24 N.Y.3d 67, 70 (2009). Where, as here, this determination turns on questions of statutory interpretation, the standard of review is de novo. See Jones v. Bill, 10 N.Y.3d 550, 553 (2008). The Court begins by analyzing the statute’s plain meaning, interpreted “‘in the light of conditions existing at the time of its passage and construed as the courts would have construed it soon after its passage.’” Litto, 8 N.Y.3d at 697. “Next, in construing a statute, the courts frequently ‘follow the course of legislation on the subject,’” and “additionally look[] to the purposes underlying the legislative scheme.” Id. (quoting McKinney’s Consol. Laws of N.Y., Book 1, Statutes § 124, at 255 and explaining that the legislation’s course “‘illuminate[s] the intent of the legislature’”). This interpretation must account for the statutory scheme as a whole, giving effect to every word to the extent possible. See People v. Pabon, 28 N.Y.3d 147, 152 (2016). The Court cannot “refashion [a] statute’s settled meaning with the freedom [it] enjoy[s] in matters of common law.” People v. Concepcion, 17 N.Y.3d 192, 201 (2011). And, where “two constructions of [criminal statutes] are plausible,” “‘the one more favorable to the defendant should be adopted in accordance with the rule of lenity.’” People v. Thompson, 26 N.Y.3d 678, 687-88 (2016) (quoting People v. Golb, 23 N.Y.3d 455, 468 (2014)). 25 I. THE FIRST DEPARTMENT ERRED AS A MATTER OF LAW IN HOLDING THAT SAVING DATA TO A COMPUTER HARD DRIVE CONSTITUTES MAKING A “TANGIBLE REPRODUCTION OR REPRESENTATION.” In its quest to hold Aleynikov accountable for copying Goldman’s computer data, the First Department disregarded the Unlawful Use statute’s plain meaning, its historical context, and settled maxims of construction. Instead, the court adopted a contra-textual and ahistorical interpretation of the statute that entailed not judicial interpretation but intrusion upon the Legislature’s province. A. The First Department’s Holding That Computer Data Saved To A Hard Drive Is A “Tangible Reproduction Or Representation” Of That Data Conflicts With The Statute’s Plain Language And Disregards Prior Decisions Of This Court. The First Department’s first and most significant error was its failure to abide the plain meaning of the phrase “tangible reproduction or representation.” “Tangible” means capable of being touched or perceived by the senses. This definition follows from the word’s etymology—from the Latin for “to touch” or “may be touched”—and is referenced in numerous dictionaries, see People v. Aragon, 28 N.Y.3d 125, 128 (2016) (looking to dictionary definitions for the “‘most natural and obvious meaning’ of a term”), which uniformly include being perceptible by touch. See, e.g., Oxford English Dictionary 610 (2d ed. 1989; reprinted 1991) (“capable of being touched; affecting the sense of touch; touchable”); Black’s Law Dictionary (10th ed. 2014) (“Capable of being touched and seen; perceptible to the 26 touch”); Merriam-Webster Online Dictionary (“capable of being perceived especially by the sense of touch”); Collins Online Dictionary (“capable of being touched or felt; having real substance”).6 By this definition, computer data is, and when stored on a computer hard drive remains, intangible. This Court and many others have found that computer data “stored on [a] computer hard drive[]” is “intangible property.” Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283, 284-85, 289-93 (2007); Aleynikov, 676 F.3d at 78 (finding that computer source code was “purely intangible property” (citing, inter alia, United States v. Stafford, 136 F.3d 1109, 1114-15 (7th Cir. 1998); United States v. Martin, 228 F.3d 1, 14-15 (1st Cir. 2000); and United States v. Brown, 925 F.2d 1301, 1305, 1309 (10th Cir. 1991)); Agrawal, 726 F.3d at 251-52 (reaffirming that the computer code Aleynikov transferred was “intangible property” that “remained so as it was transmitted from Goldman Sachs’s servers to a server in Germany and then to defendant’s own computer”).7 So has D.A. Vance. See White Collar Crime 6 See also Am. Online, Inc. v. St. Paul Mercury Ins. Co., 347 F.3d 89, 94 (4th Cir. 2003) (“‘Taking tangible’ to have its usual and ordinary meaning, … we understand the term to mean ‘capable of being touched: able to be perceived as materially existent esp. by the sense of touch: palpable, tactile’” (quoting Webster’s Third New Int’l Dictionary of the English Language Unabridged 2337 (1993)); AMCO Ins. Co. v. Carpet Direct Corp., 157 F. Supp. 3d 1018, 1022 & n.5 (D. Colo. 2016) (defining “tangible property” as property that is “‘capable of being handled, touched, or physically possessed,’” and noting that “[t]his same definition appears to have been universally adopted by courts which have considered the matter.”). 7 See also, e.g., United States v. Steele, 595 F. App’x 208, 215 (4th Cir. 2014) (noting that computer data that was “intangible” could be the subject of larceny based only on a statute that expressly 27 Policy, at 5 (“[C]omputer source code” is “intangible property”); id. at 6 (it is a “physical impossibility” to deprive someone of “computer code”). The First Department did not contest this premise, (Appdx21 (acknowledging that Thyroff “described electronic data as ‘intangible’”)), but refused to accept the conclusion it compels: that just as computer data saved to a hard drive is intangible, electronic transmission of that data to another computer or hard drive does not create a tangible reproduction or representation of that data. The court thus parted company with the five federal judges who sat on the Second Circuit panels in Aleynikov and applied to “computer data”); District of Columbia v. Universal Computer Assocs., 465 F.2d 615, 618 (D.C. Cir. 1972) (“knowledge stored on computer cards, tapes, or discs” consists of “intangible intellectual property”); Capitol Comm’n, Inc. v. Capitol Ministries, No. 11-cv-00214, 2013 U.S. Dist. LEXIS 142542, at *12-13 (E.D.N.C. Oct. 1, 2013) (“As a matter of law, electronic data and computer software is intangible property.”); In re Cadwallder, No. 06-br-36424, 2007 Bankr. LEXIS 2260, at *38-39 (Bankr. S.D. Tex. June 28, 2007) (an electronic docket entry was not a “statement” within the meaning of the bankruptcy code because it did not “exist in tangible form,” but rather was merely “a series of symbols of computer code that must be interpreted and made visible to humans by a computer program”); DaimlerChrysler Servs. v. Summit Nat’l, No. 02-cv- 71871, 2006 U.S. Dist. LEXIS 53780, at *6 (E.D. Mich. Aug. 3, 2006) (noting, for purposes of a quantum meruit claim, that source code was “intangible”); Cincinnati Ins. Co. v. Prof’l Data Servs., No. 01-cv-2610, 2003 U.S. Dist. LEXIS 15859, at *21 (D. Kan. July 18, 2003) (neither a software program “nor the data incorporated therein constitute tangible property”); State v. Schuller, 843 N.W.2d 626, 634 (Neb. Feb. 21, 2014) (“computer files” were “intangible objects”); Computer Assocs. Int’l v. East Providence, 615 A.2d 467, 469 (R.I. 1992) (customized software programs “constituted intangible personal property”); Northeast Datacom, Inc. v. Wallingford, 563 A.2d 688, 692 n.8 (Conn. 1989) (“[C]omputer software constitutes intangible property” (collecting authorities)); In re Protest of Strayer, 716 P.2d 588, 594 (Kan. 1986) (same); Ward General Ins. Services, Inc. v. Employers Fire Ins. Co., 114 Cal. App. 4th 548, 556 (Cal. App. 2003) (rejecting the argument that computer data “can be said to have a material existence, be formed out of tangible matter, or be perceptible to the sense of touch.”); Dallas Cent. Appraisal Dist. v. Tech Data Corp., 930 S.W.2d 119, 123 (Tex. App. Dallas May 30, 1996) (concluding that “computer application software” was not “‘tangible personal property’”); Eye Care & Eye Wear Ctr. of Me. v. Enables It, No. 14-cv-55, 2015 Me. Super. LEXIS 227, at *13 (Me. Super. Ct. Nov. 16, 2015) (“[T]he loss of computer data is a loss of intangible property.”). 28 Agrawal and the two Supreme Court justices who entered rulings in this case, all of whom found that the data transmitted by Aleynikov was intangible and remained so when transferred between computers. See Aleynikov, 676 F.3d at 78 (“By uploading Goldman’s proprietary source code to a computer server in Germany, Aleynikov stole purely intangible property embodied in a purely intangible format… . The later storage of intangible property on a tangible medium does not transform the intangible property into a stolen good.”); Agrawal, 726 F.3d at 253 (“[A]t the moment of the code’s theft in Aleynikov, its form was intangible and remained so as it was transmitted from Goldman Sachs’s servers to a server in Germany and then to defendant’s own computer.”); Appdx178 (finding that the source code “remained in a purely electronic intangible state.”); Appdx67 (explaining that computer data is intangible and “does not become tangible merely because it is contained in a computer.”).) These decisions echo the findings of many courts in various contexts that intangible computer data does not take on tangible form when transmitted over the Internet or saved to a tangible medium such as a hard drive. See, e.g., Am. Online, Inc. v. St. Paul Mercury Ins. Co., 207 F. Supp. 2d 459, 467 (E.D. Va. 2002) (“Computer data can be transmitted and stored in a variety of ways, but none of them renders the data capable of being touched.”), aff’d 347 F.3d 89, 95-96 (4th Cir. 2003) (holding that computer data is intangible despite being saved to a hard drive); Lucent 29 Tech., Inc. v. Bd. of Equalization, 193 Cal. Rptr. 3d 323, 340 (App. Div. 2015) (“The fact that placing a computer program on storage media physically alters that media does not thereby transmogrify the software itself into tangible personal property; the media is tangible, the software is not.”).8 But the First Department chose not to ask what Aleynikov made when he copied invisible data (the intangible bits and bytes that constitute computer source code) onto a computer hard drive, which was undeniably an intangible reproduction of intangible property. Instead, the court focused on the tangible medium (the hard drive) on which he made that copy. (Appdx19.) But the Unlawful Use statute does not proscribe making an intangible reproduction of secret scientific material, which is what occurs when intangible property such as source code is copied to a tangible hard drive. Rather, the Unlawful Use statute proscribes making a tangible reproduction or representation of such property, whether accomplished by writing, 8 See also, e.g., Lifesize, Inc. v. Chimene, No. 16-cv-1109, 2017 U.S. Dist. LEXIS 64033, at *30- 32 (W.D. Tex. Apr. 26, 2017) (computer data saved on a laptop was “intangible property” that could not be the subject of a conversion claim); United States v. Zhang, 995 F. Supp. 2d 340, 350 (E.D. Pa. 2014) (“Bits transmitted over the Internet are intangible information”); State Auto Prop. & Cas. Ins. v. Midwest Computers & More, 147 F. Supp. 2d 1113, 1116 (W.D. Okla. 2001) (“Although the medium that holds the information can be perceived, identified or valued, the information itself cannot be. Alone, computer data cannot be touched, held, or sensed by the human mind; it has no physical substance. It is not tangible property.”); Vigilante.com, Inc. v. ArgusTest.com, Inc., No. 04-cv-413, 2005 U.S. Dist. LEXIS 45999, at *44-45 (D. Or. Sept. 6, 2005) (plaintiff failed to state a conversion claim for “downloading” source code because the code was not “tangible property”); Gilreath v. GE, 751 So. 2d 705, 709-10 (Fla. Dist. Ct. App. 2000) (“‘[T]he fact that tangible property is used to store or transmit the software’s binary instructions does not change the character of what is fundamentally a classic form of intellectual property’” that is, in fact, “intangible property.”). 30 photographing, drawing, mechanically or electronically reproducing or recording it. The reproduction or representation must be tangible, not the medium on which it is found. Limiting the unlawful use of secret scientific material to making tangible reproductions or representations of such material not only encompassed the kinds of copies that were possible fifty years ago, when the Unlawful Use statute was passed; it also comported with the time-honored common-law notion that larceny entailed the theft of something tangible. Computer source code saved to a hard drive is simply not of that character. Unlike the written lines of human readable symbols that are themselves plainly visible to the naked eye and thus readily perceivable on a paper printout of computer source code—and are for that reason, as the Second Circuit held, in a tangible state—computer data that is transmitted and stored on a hard drive remains invisible and unperceivable to humans, unable to be seen or touched. Unlike a reader looking at a piece of paper bearing written symbols that instruct him what characters to input into a computer, one looking at a computer hard drive could not possibly tell whether intangible computer source code was present on that hard drive. The hard drive is tangible, but the computer source code it might or might not hold—imperceptible, invisible data—surely is not. Today, anyone with access to a computer can transmit intangible property—computer source code— without it ever assuming tangible form. That explains why the Task Force has 31 recommended that the Legislature revise the Penal Law to eliminate the requirement of a tangible reproduction or representation where the property at issue is computer data. But the fact that intangible property can now be transmitted does not mean that the resulting reproduction or representation of such data is tangible. That the act of storing intangible data to a hard drive does not create a tangible reproduction or representation of that data was confirmed in Thyroff, where this Court analyzed whether “electronic records and data” that were “stored on [a] computer hard drive[],” 8 N.Y.3d at 284-85, could be the subject of a conversion claim, the common-law analogue to larceny, id. at 286-87 (tracing the development of the tort of conversion to “the appeals of robbery and larceny”). To answer that question, the Court considered whether such data satisfied the common law’s historical “merger” test, under which intangible property could be the subject of a conversion claim if it merged with a physical item that represented it. Id. at 289. This Court held that it did not. Id. at 290 (finding that computer data “does not strictly satisfy the merger test.”). The Court then invoked its authority to reshape the common law—which it cannot do with a statute—to change that result. Id. at 291-92. Thyroff therefore confirms that a hard drive is not a tangible representation of the data saved to it.9 9 See also Lifesize, Inc. v. Chimene, No. 16-cv-1109, 2017 U.S. Dist. LEXIS 64033, at *32-33 32 This Court confirmed Thyroff’s premise—that while a hard drive is tangible, computer data saved to it is not—in People v. Kent, 19 N.Y.3d 290 (2012). In Kent, the Court agreed with the approach of federal courts holding that “for digital images to constitute evidence of knowing possession of child pornography, such images must be connected to something tangible (e.g., the hard drive) as they are when stored in a cache, and that the defendant must be aware of that connection.” Id. at 301. The very structure of that sentence reflects the Court’s view that while the hard drive itself is tangible, the digital images saved to it are not. Judge Graffeo made this clear in her concurring opinion, in which she explained that digital images are “intangible” and that in finding “knowing possession,” the majority meant only that saving an intangible image to a tangible vessel enabled one to control the image. See id. at 307 (Graffeo, J., concurring) (“Since child pornography on the Internet is digital in format, it is intangible in nature and therefore cannot be ‘possessed’ as that term is currently defined by the Penal Law.”); id. at 308 (“It is certainly possible to control something that is intangible—a fact that the majority concedes in accepting (W.D. Tex. Apr. 26, 2017) (following Thyroff to hold that, absent a change in the common law, computer data stored on a laptop could not be the subject of a conversion claim); Devon Energy Corp. v. Westacott, No. 09-cv-1689, 2011 U.S. Dist. LEXIS 30786, at *27 (S.D. Tex. Mar. 24, 2011) (a plaintiff could not state a conversion claim for the deletion of electronic files saved to a hard drive because there was no “physical object” with which such data was merged); cf. Kremen v. Cohen, 337 F.3d 1024, 1032 (9th Cir. 2003) (a Rolodex did not satisfy the historical merger rule because it did not “represent[] a property interest,” but rather was a “means of recording information”). 33 that Penal Law § 263.16 applies to the saving or downloading of child pornography onto a computer hard drive.”). Indeed, the majority equated “knowing possession” with “constructive possession.” Id. at 301 (“The exercise of ‘[d]ominion or control is necessarily knowing, and such “constructive possession” may qualify as knowing possession.’”). In finding that Thyroff and Kent supported its conclusion, the First Department misread those authorities. Rather than grapple with Thyroff’s holding, the First Department ignored it altogether, stating that it “does not appear that the parties in Thyroff actually litigated the question of whether electronic data is tangible or not” and that, in any event, “the fact that [Thyroff] described electronic data as ‘intangible’ does not undermine our conclusion here.” (Appdx21.) But Thyroff’s holding was predicated on its finding that computer data is “intangible,” and that saving such data to a hard drive does not qualify as a tangible “representation” of that data. Had the Thyroff court not resolved these issues, there would have been no basis for it to change this State’s common law of conversion. The First Department similarly misapprehended Kent’s statement that the “knowing possession” test was conceptually distinct from the one espoused by federal courts, “as it does not rely on the tangibility of the image (i.e., its permanent placement on the defendant’s hard drive and his ability to access it later) but on the fact that the image was, at one time, knowingly accessed and viewed.” Kent, 19 34 N.Y.3d at 302. This use of “tangibility,” as Judge Graffeo’s concurrence made clear, was shorthand for the acts of control that could sustain a conviction. See id. at 307- 08 (Graffeo, J., concurring) (explaining how “intangible” images could be controlled). See also Schuller, 843 N.W.2d at 634-35 (finding it “difficult to see how a person could actually possess, that is, physically possess, a computer file,” but holding that such images could be possessed constructively through the act of “control”). Beyond contravening the settled understanding that an electronic transmission does not result in a “tangible” copy, the First Department’s interpretation of the phrase “tangible reproduction or representation” violates the rule of construction against rendering statutory terms superfluous. See People v. Sprint Nextel Corp., 26 N.Y.3d 98, 110 (2015) (refusing to interpret a statute to render a term “superfluous”); People v. Bayron, 66 N.Y.2d 77, 82 (1985) (eschewing an interpretation that would “read out of the statute [an] unambiguous legislative prerequisite”). That is because, as Justice Conviser recognized, every reproduction of computer data requires a physical medium. (Appdx60.) See also Lifesize, 2017 U.S. Dist. LEXIS 64033, at *32 (rejecting the argument that computer data becomes “tangible” when stored in a storage medium because “[i]t is difficult to imagine any digital data that can exist independently of a tangible storage medium”). If the invariable existence of a tangible medium were enough to render a reproduction tangible, there would be no 35 difference between a reproduction and a tangible reproduction—and the word tangible would serve no purpose in the Unlawful Use statute. To bolster its erroneous conclusion, the First Department cited trial testimony that source code “takes up space” on a hard drive; that it is “physically present” on a hard drive; and that data can be “‘visible’” in the “‘aggregate’” when stored on a medium such as a compact disk. (Appdx17.) But that testimony concerned the physical properties of a hard drive. As one court recently noted, in terms directly applicable here, “[t]he fact that placing a computer program on storage media physically alters that media does not thereby transmogrify the software itself into tangible personal property; the media is tangible, the software is not.” Lucent, 193 Cal. Rptr. 3d at 340 (emphasis added). And as Justice Conviser noted, the People’s own witnesses testified that “‘computer source code does not have physical form’”—which undeniably established that it is not tangible under the plain meaning of the term—and “[t]he jury did not learn anything more about the subject.” (Appdx62 (quoting Appdx573).) B. The First Department’s Expansive Interpretation Of The Unlawful Use Statute Ignores Its Limiting Language, The Context And History Of Its Enactment, And The Legislature’s Subsequent Recognition Of Its Limited Scope. The First Department defended its expansion of the Unlawful Use statute by reasoning that the law was drafted with “broad generalized language” that “fits 36 squarely into today’s digital world.” (Appdx19.) It was not. The court’s assertion ignores the statute’s limiting language, the context of its enactment, and the Legislature’s subsequent recognition that it does not cover the unlawful duplication of computer data. The 1967 statute was drafted by the Bartlett Commission, see Bill Jacket, L. 1967, ch. 791, at 8, 9, experts in criminal law who fully understood the traditional limitation of larceny to “tangible property” and the Revised Penal Law’s definition of “appropriate,” which they drafted and made applicable to all of Title J. See 1965 Staff Comments, at 285 (explaining that the 1964 law criminalizing the theft of “secret scientific material” was aimed at “tangible property”); L. 1965, ch. 1030 § 155.00 (extending the larceny definitions throughout Title J). With that knowledge, they chose not one but two constrictive terms—that the proscribed reproduction or representation be “tangible” and that it be made with the intent to “appropriate the use” of the duplicated material. It is easy to discern why the Unlawful Use statute’s drafters chose the limiting word “tangible” given that at common law, larceny necessarily involved the taking of tangible property. Thus, while it was not larceny at common law to steal another’s idea, it was larceny to steal a piece of paper that embodied that idea. See Thyroff, 8 N.Y.3d at 288 (explaining that conversion and its common-law antecedents, including larceny, “were directed against interferences with or misappropriation of 37 ‘goods’ that were tangible, personal property.”); accord People v. Borriello, 154 Misc. 2d 529, 531-32 (Sup. Ct., Kings Cty., 1992) (“At common law intangible property was not the subject of larceny.”); Bell v. United States, 462 U.S. 356, 360 (1983) (“[C]ommon-law larceny was limited to thefts of tangible personal property.”). This historical limitation was echoed in the Second Circuit’s 1966 statement in Bottone—which guided the Unlawful Use statute’s drafters, see 1967 Legislative Annual, at 20-21)—that the NSPA, a larceny statute, would not apply to intangible property. When Congress wished to proscribe the theft of items that did not take the form of tangible goods, it did so explicitly. Thus, when the NSPA was enacted, its drafters specifically included “securities” and “money” (in addition to goods, wares, and merchandise) because those items can be either tangible or intangible. NPSA, 48 Stat. 794 (1934). Further clarifying this proscription, Congress amended the NSPA in 1988 to include the word “transmits” and thereby codify decisions holding that the statute “applie[d] to money wire transfers, where the only interstate transportation took place electronically, and where there was no transportation of any physical property.” Aleynikov, 737 F. Supp. 2d at 188. This was an appropriate use of Congress’ legislative power. But as the Second Circuit suggested in Bottone, the Supreme Court held in Dowling v. United States, 473 U.S. 207 (1985), and the Second Circuit held in Aleynikov and Agrawal, the interstate transportation of 38 physical goods that were not themselves stolen, although they contained stolen intangible property, does not violate the NSPA. These decisions made clear that it was not the province of the courts to amend the NSPA to cover that conduct. Thus, contrary to the First Department’s reasoning, (Appdx22), it was highly significant that the Second Circuit in Aleynikov, relying on Dowling and Bottone, held that Aleynikov’s computer-to-computer transfers—the same transfers at issue in this case—never took the form of a tangible “good” despite being saved to a computer hard drive. Also critical is the fact that one year later, in Agrawal, the Second Circuit upheld the defendant’s NSPA conviction because, unlike Aleynikov, he stole and transported across state lines physical documents on which he had printed his employer’s source code. See Agrawal, 726 F.3d at 252. The Unlawful Use’s shared ancestry with the NSPA thus leaves no doubt that its drafters sought to restrict liability—just as the NSPA’s drafters did—to the taking of tangible property. This conclusion is confirmed by the settled rule that a statute must be interpreted “‘in the light of conditions existing at the time of its passage and construed as the courts would have construed it soon after its passage.’” Litto, 8 N.Y.3d at 697. When the Unlawful Use statute was passed, computers “were at a very primitive stage of development,” (Appdx61), and the Internet was decades away. See White Collar Crime Policy, at 2 (stating that in 1986 the World Wide Web was “still seven years away”). Nor was there any evidence that the Unlawful 39 Use statute’s drafters considered criminalizing the theft of computer data. To the contrary, when the Unlawful Use statute was enacted, the term “property” did not include “computer data” or “computer programs.” L. 1965, ch. 1030, § 155.00(1). Indeed, the state of technology was so primitive at that time that the only theft of intangible information the Bottone court could conjure was one in which the thief stored trade secrets “in the recesses of [his] thievish mind.” 365 F.2d at 393. (Of course, the ideas stored in that thievish mind, like the computer data on a hard drive, are stored in a tangible medium—the thief’s head.) Just as the 1966 Bottone court could not envision the interstate transfer of stolen intangible property, the Unlawful Use statute’s drafters could not envision making an intangible copy of secret scientific material—including, for example, making a computer-to-computer transfer of that intangible property. Nor, despite the First Department’s assertion, did they use broad, open-ended language that could accommodate such unforeseen technology. Compare 17 U.S.C. § 101 (defining a “copy,” for copyright purposes, as a material object “in which a work is fixed [in a tangible medium of expression] by any method now known or later developed.”) (emphasis added). The First Department sidestepped these linguistic and historical constraints by suggesting that the phrase “electronic reproduction” encompassed today’s digital technology. (Appdx19.) But when the Unlawful Use statute was enacted in 1967, 40 the phrase “electronic reproduction” was associated with publishing innovations. Those innovations included the Xerox 914 plain paper copier, introduced in 1959, which made it easy and inexpensive to make a tangible electronic reproduction. See Xerox, Xerox History Timeline (1950s).10 The electronic reproduction options available in 1967 also included a publishing innovation through which an “electronic reproduction of characters” could be made by means of an “electronic type- composition system.” William D. Smith, N.Y. Times, R.C.A. Unveils Electronic Typesetter, June 3, 1966; see also RCA, An Historical Perspective, at 28 (describing printing products that “electronically produced the four basic color separations needed in full-color printing.”); see also Crocker v. Crocker, 438 P.2d 772, 774 (Ariz. Ct. App. 1968) (concerning the illegibility of an interlocutory decree produced by means of an “electronic reproduction of some type”). That the Unlawful Use statute’s drafters did not intend the statute to apply to (and could not have foreseen) the duplication of digital data is confirmed by the Legislature’s recognition, less than two decades later, that the Revised Penal Law “does not address” crimes relating to the unlawful duplication of and access to computer data. Bill Jacket, L. 1986, ch. 514, at 15 (emphasis added); see also id. at 35 (“It is generally conceded that the problems created by the criminal misuse of the 10 Available at https://www.xerox.com/about-xerox/history-timeline/1950-decade/enus.html. 41 computer have either been inadequately dealt with by the Penal Law, or not dealt with at all.”); id. at 28 (acknowledging that existing laws were “woefully inadequate”). As a result, the 1986 Legislature enacted a “comprehensive statutory scheme” to criminalize such conduct, id. at 32, and “adapt New York’s statutes to the realities of the computer age.” Id. at 28. To do so, this scheme, among other things, amended Title J’s definition of “property” to include “computer data” and “computer program”; added an entire new article—Article 156—that specifically addressed “offenses involving computers”; and included a new statute that criminalized the “duplication of computer related material.” Id. at 34; L. 1986, ch. 514. This anti-duplication provision dispensed with any “tangibility” limitation, instead prohibiting the unlawful copying, reproduction, or duplication of “computer data or [a] computer program” “in any manner.” Penal Law § 156.30 (emphasis added). This 1986 law is powerful evidence that the Unlawful Use statute did not cover the duplication of computer data because, if a “tangible reproduction or representation” had been understood to encompass such conduct, “the Legislature would have had no reason to add” such a statute. Litto, 8 N.Y.3d at 706 (discerning a statute’s legislative purpose based on the Legislature’s subsequent understanding of what the statute covered); see also Dowling, 473 U.S. at 226 (rejecting an 42 interpretation that would have ascribed to Congress “an indirect but blunderbuss solution to a problem treated with precision when considered directly”). By 2013, despite the Unlawful Duplication law, D.A. Vance lamented that the People remained “nearly helpless in dealing with theft of intangible property, such as computer source code.” White Collar Crime Policy, at 5. To remedy this problem, the bills currently moving through the Legislature include a tailor-made definition of “obtain” when the property at issue is “computer data” or a “computer program” that encompasses “duplicating,” “downloading,” or “uploading” data. A5496A § 1(2); S2406A § 1(2). Under either of these bills, one would commit larceny by merely “obtaining” computer data through tangible or intangible means. See Penal Law § 155.05(1). The new legislation reflects the Task Force’s recognition that Aleynikov’s digital duplication is not proscribed by the Unlawful Use statute. See Litto, 8 N.Y.3d at 707 (bolstering the court’s conclusion that the statutory term “intoxicated,” which had been part of the statutory scheme for decades, did not include drug-related impairments based on legislation passed “[o]nly last year”). The First Department did not base its decision on a reasoned analysis of the Unlawful Use statute’s text and purpose, but on the court’s instinct that “[i]t would be incongruous to allow defendant to escape criminal liability merely because he made a digital copy of the misappropriated source code instead of printing it onto a 43 piece of paper.” (Appdx19-20.) But there is nothing “incongruous” about applying the Unlawful Use statute as written and abiding the results of a larceny scheme that, as originally enacted in 1967, expressly preserved the historical distinction between tangible and intangible property. See Litto, 8 N.Y.3d at 707 (noting that any “gaps” in the criminal law were part of the legislative design and could not be bridged by the courts). That is especially so considering that any “gaps” in criminal liability exposed since 1967 were intended to have been addressed in the “comprehensive” computer-crime scheme enacted in 1986, Bill Jacket, L. 1986 ch. 514, at 9, and once again in the cybercrime bills currently pending before the Legislature. And if there were unintended “gaps” in this statutory scheme, it would be the prerogative of the Legislature, not the courts, to fill them in. See RIHGA Int’l U.S.A. v. New York State Liquor Auth., 84 N.Y.2d 876, 879 (1994) (“[E]ven if the statute was adopted some years ago, it is for the Legislature, not respondent or the courts, to update its provisions and restrictions.”); Concepcion, 17 N.Y.3d at 201 (“Legislative inaction … is not a license for us, in effect, now to tell the Legislature ‘Never mind,’ and refashion the statute’s settled meaning with the freedom we enjoy in matters of common law.”); People v. Jennings, 69 N.Y.2d 103, 121 (1986) (reiterating this Court’s “long-held view that criminal liability cannot be extended beyond the fair scope of the statutory mandate” (internal quotation marks omitted); see also Henson, 2017 U.S. LEXIS 3722, at *16 (“[I]t is never our job to rewrite a 44 constitutionally valid statutory text”); Aleynikov, 676 F.3d at 79 (“We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age.”); Agrawal, 726 F.3d at 253 (“[I]t is Congress’s task, not the courts’, to define crimes and prescribe punishments.”). That the First Department disregarded this basic principle and performed a legislative function is made plain by its reliance upon Thyroff to remedy this perceived “incongruity.” (Appdx19.) Thyroff drew upon the courts’ well- recognized power to conform the common law to current societal norms. 8 N.Y.3d at 291 (“‘[I]t is the strength of the common law to respond, albeit cautiously and intelligently, to the demands of commonsense justice in an evolving society.’”). Courts do not have that power with respect to statutory law. Concepcion, 17 N.Y.3d at 201 (expressly noting that the court cannot refashion the statute’s settled meaning with the freedom it enjoys in matters of common law). The First Department’s revision of the Unlawful Use statute to remove its tangibility requirement was therefore error. II. THE FIRST DEPARTMENT ERRED AS A MATTER OF LAW IN HOLDING THAT ALEYNIKOV ACTED WITH THE INTENT TO “APPROPRIATE” THE “USE” OF GOLDMAN’S SOURCE CODE. The undisputed evidence introduced at trial, as meticulously catalogued by the trial court, demonstrated that Aleynikov’s digital duplication was not intended to and did not deprive Goldman of a single line of source code or a single dollar of 45 profit. (Appdx30.) The trial court also correctly observed that there was no evidence (i) of the source code’s value; or (ii) that Aleynikov’s new employer was willing or able to use that code, and thus that Aleynikov could have “possibly ha[d] the conscious objective or purpose (other than as a product of fantasy) to obtain most of the value of Goldman’s HFT code for himself or his new company.” (Appdx30-31, 90.) There was thus no evidence that Aleynikov intended to exercise control over the duplicated data’s use for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit. The First Department’s ruling did not challenge these undisputed facts. Instead, it concluded that the People’s failure to prove that Aleynikov intended to use the source code in a way that deprived Goldman of at least the major portion of its economic value was irrelevant because (i) one can appropriate the use of property without dispossessing its owner of that use; and (ii) one can appropriate the use of property permanently without intending to acquire at least the major portion of its economic value or benefit. These conclusions are wrong on their face. They conflict with the plain language of Penal Law § 155.00(4) and the settled fact that every “appropriation” entails a “deprivation.” They also effectively read the word “appropriate” out of the Unlawful Use statute, thereby contorting it into a pure anti-use statute, which the drafters could have enacted but did not. That the First Department misinterpreted 46 the “appropriation” element of the Unlawful Use statute is underscored by (a) the Legislature’s 1986 decision to ease the People’s burden to prove a traditional “appropriation” when the property at issue is computer data; and (b) the statutory modifications urged upon the Legislature by the Task Force. A. The First Department Erred As A Matter of Law In Holding That One Can Intend To “Appropriate” Property Without Intending To Dispossess The True Owner Of That Property. The First Department misread the Unlawful Use statute in holding that under that statute, one can “appropriate” the “use” of property—here computer source code—without intending to dispossess its owner of the use of that property. That holding reflects a fundamental misunderstanding of the law of larceny, which has always been defined as an act that takes something away from an owner. See McCourt v. People, 64 N.Y. 583, 587 (1876) (describing the “general definition of larceny” as the “taking of the personal property of another, without his consent, and appropriating it to [one’s] own use with design to deprive the owner of it.”); William C. Donnino, Practice Commentary, McKinney’s Consol. Laws of N.Y., Penal Law § 155.00 (quoting Oliver Wendell Holmes, The Common Law 70-74 (1881), for the proposition that “‘it is not larceny to take for a temporary use without intending to deprive the owner of his property.’”). Thus, an “appropriation” has long been defined as an act that dispossesses the property’s true owner. See People v. Lammerts, 164 N.Y. 137, 144 (1900) 47 (“Appropriate is defined as ‘taking from another to one’s self with or without violence; to take to one’s self to the exclusion of others.’”); McCourt, 64 N.Y. at 587 (equating “appropriate” with “deprive”); People v. Kenney, 135 A.D. 380, 382-83 (1st Dep’t 1909) (“If a person takes the property of another with intent to deprive or defraud the owner of his property, or of the use and benefit thereof, he is guilty of larceny. What evidently was intended was such a permanent appropriation of the property as would deprive the owner of the property itself or of its use and benefit. A taking of property without such an intent is not larceny.” (emphasis added)). The Bartlett Commission captured this understanding by defining “appropriation” as the exercise of control over property “permanently or for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit.” L. 1965, ch. 1030, § 155.00(4). In so doing, the Commission clarified, but made no substantive change to, the preexisting understanding of “appropriation.” 1964 Commission Staff Notes, at 351 (“This [definitional section] is designed to clarify several terms employed in the definition of larceny, and to permit briefer definition of the crime.”). Thus, after the Revised Penal Law went into effect, this Court explained that both an “appropriation” and a “deprivation” connote a purpose “‘to exert permanent or virtually permanent control over the property taken, or to cause permanent or virtually permanent loss to the owner of the possession and use thereof.’” Jennings, 69 N.Y.2d at 118; see also 48 People v. Headley, 37 Misc. 3d 815, 827 (Sup. Ct., N.Y. Cty., 2012) (dismissing larceny charges where the People presented “no evidence of injury or loss … from which an intent to deprive the [owner] of property could be inferred”). Indeed, D.A. Vance himself has acknowledged that “New York’s larceny statutes require that a victim be ‘deprived’ of the actual property.” White Collar Crime Policy, at 6. That the Revised Penal Law’s definition of “appropriate” requires a deprivation was also made clear by the Second Circuit’s decision in Almeida v. Holder, 588 F.3d 778 (2d Cir. 2009). In Almeida, the court analyzed whether a larceny conviction under Connecticut law—whose criminal code was “modeled after the New York Penal Code,” State v. Henry, 752 A.2d 40, 45 (Conn. 2000), and included the identical definitions of “appropriate” and “deprive”—was a theft offense under the Immigration and Nationality Act, defined as “any taking of property where ‘there is criminal intent to deprive the owner of the rights and benefits of ownership, even if such deprivation is less than total or permanent.’” Almeida, 588 F.3d at 784. The Second Circuit said yes, explaining that one cannot intend to “appropriate” the property of another without also intending to deprive the owner of that property: Connecticut defines “deprive” for purposes of its larceny statute by reference to an owner’s loss of his right to actual possession of its property…. The state defines “appropriate” to reach further, making larcenous actions that deny an owner constructive possession of his 49 property, i.e., his ability “to exercise control over it.” … In either case, the law expects the taking to be permanent or sufficiently permanent to cause the owner to lose or the thief to acquire, “the major portion of [the property’s] economic value or benefit.” Id. at 787-88 (emphasis added); see also id. at 789 (“We conclude that each of the intent provisions of Conn. Gen. Stat. § 53a-119 requires proof of a generic intent to deprive a person of some rights and benefits of property and thus falls within the BIA’s broad construction of ‘theft offense.’”). “As a practical matter,” the Court explained, “a person cannot, without authorization, ‘acquire the major portion’ of the ‘economic value or benefit’ of another’s property … without intending to deprive the owner of some of ‘the rights and benefits of ownership.’” Id. at 788. Although Almeida’s zero-sum game analysis of appropriation is directly applicable here, the First Department ignored it. And the People have never explained how that court’s reasoning can be reconciled with Almeida other than to observe, irrelevantly, that one form of property “appropriation” recognized in Almeida was the dispossession of a property owner’s “right to exclude others.” 588 F.3d at 788. But the Unlawful Use statute does not proscribe the intent to appropriate the “right to exclusive use” of secret scientific material, it proscribes the intent to appropriate the “use” of that material. By failing to recognize that every “appropriation” requires deprivation, the First Department treated Penal Law § 165.07 as though it proscribed any use of 50 property, regardless of its impact on the property’s owner. But the statute’s drafters were the same drafters who composed the Revised Penal Law. They were intimately familiar with the larceny definition of “appropriate,” which they drafted and extended to all Title J statutes, see L. 1965, ch. 1030 § 155.00 (“The following definitions are applicable to this title”). When, by contrast, these same drafters wanted to craft a pure anti-use statute—such as Penal Law § 165.05, the statute immediately adjacent to Penal Law § 165.07 at the time both statutes became effective on September 1, 196711—they did not use the word “appropriate.” Compare L. 1965, ch. 1030 § 165.05(1) (“A person is guilty of unauthorized use of a vehicle when: 1. Knowing that he does not have the consent of the owner, he takes, operates, exercises control over, rides in or otherwise uses a vehicle”; id. § 165.05(2) (proscribing the “intentional use” of a vehicle). That these same drafters used such differing formulations in adjoining, contemporaneously enacted statutes “clearly indicates an intent that the two statutes be interpreted differently.” People v. Schulz, 67 N.Y.2d 144, 150 (1986); see also id. at n.3 (“We note that both statutes were amended contemporaneously by the Legislature in 1976 … and conclude that the use of different language was purposeful.”); Sosa v. Alvarez-Machain, 542 U.S. 692, 711 n.9 (2004) (“‘[W]hen the 11 The statute that currently separates these two, Penal Law § 165.06, was passed in 1981. See L. 1981, ch. 602. 51 legislature uses certain language in one part of the statute and different language in another, the court assumes different meanings were intended.’”). B. The First Department Compounded Its Erroneous Construction Of Penal Law § 155.00(4) By Failing to Recognize That One Who Did Not Exercise Virtually Permanent Control Over The Use Of Property Could Not Have Exercised Permanent Control Over Its Use. As the Task Force Report acknowledged in its passage describing this case, making a copy with no intent to return it does not constitute exercising control permanently over the use of the owner’s property within the meaning of the existing statutory definition of “appropriate” because the length of time the appropriating party controls the property in question is only relevant if it entails depriving the owner of such control. Task Force Report, at 36 (“the deprivation was not permanent—the programmer, by definition, only copied the code, leaving the original on the bank’s network.”). As the statute states, in addition to appropriating property by controlling it permanently, one can appropriate it by exercising control over it for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit. The key is the exercise of control over the property’s use. By likening the permanent exercise of control over the use of property to the exercise of control that, while less than permanent, happens for so long or in such a way that it can fairly be deemed an appropriation (and thus a deprivation) of the major portion of the 52 economic value or benefit of the property’s use, the New York Legislature—like its counterpart in Connecticut, which adopted the same definition—made clear that only one party at a time can control the use of property. One who intends to exercise control over the use of an owner’s property “permanently” intends, by definition, to appropriate the use of that property from the owner. Where one intends to do so less than permanently, whether he intends to “appropriate” the use of the property from the owner turns on whether the length or circumstances of his intended control of the property’s use entails seizing that control from the true owner. The statute was obviously written this way to address the scenario in which a defendant, while not necessarily intending to make permanent use of another’s property (and thus to acquire its full economic value or benefit), clearly intended to use it for so long or in such a way as to deprive the owner of the major portion of its economic value or benefit. Thus, that Aleynikov intended to permanently retain (i.e., did not intend to return) the copy he made of Goldman’s source code did not mean, as the First Department erroneously concluded, that he intended to appropriate the use of that property; his retention of a copy of that source code in no way entailed the exercise of permanent control over the use of the property or the appropriation of the major portion of its economic value or benefit. Nothing about keeping a copy of that source code would remove the use of that code from Goldman’s control, which is why 53 Goldman’s use was never interrupted, and why it continued to earn all the money it would otherwise have earned with its HFT system (more than $300 million a year) despite Aleynikov’s act of copying some of the source code to that system. In the typical larceny case, the property at issue is indivisible, and both the “permanent” and “virtually permanent” analysis is straightforward: When the thief has the property, its owner does not. Here, the property at issue—computer source code—is divisible, meaning that both Aleynikov and Goldman could have made economic “use” of the property at the same time. This conceptual nuance did not relieve the People of their burden to prove an intent to appropriate. Rather, they were required to prove that Aleynikov acted with the intent to acquire at least “the major portion” of the duplicated code’s economic value or benefit. Penal Law § 155.00(4). The same comparative analysis applies when, for example, a thief is charged with stealing a line of credit. To prove that the thief intended to “appropriate” the credit line, the People must prove that he intended to acquire at least the major portion of that line. See In re Reinaldo O., 250 A.D.2d 502, 503 (1st Dep’t 1998) (holding that there was sufficient evidence that the defendant acted with the larcenous intent to steal a credit card because his acquisition of the credit card number permitted him to make purchases “up to the credit limit.”). When, by contrast, the Legislature wants to criminalize a simple “use” of a credit card, it 54 eliminates the “appropriation” element altogether. See Penal Law § 165.17 (“A person is guilty of unlawful use of credit card, debit card or public benefit card when in the course of obtaining or attempting to obtain property or a service, he uses or displays a credit card, debit card or public benefit card which he knows to be revoked or cancelled.”). That the First Department misconstrued the “appropriation” statute and its operation with respect to divisible property such as the use of computer data is confirmed by the Legislature’s passage of the 1986 computer-crime bill and the People’s recent efforts to revise this State’s cybercrime laws. When the 1986 Legislature passed Penal Law § 156.30, the anti-duplication statute, it chose not to criminalize the intent to “appropriate the use” of computer data, but rather the act of “appropriating” or “depriving” the owner of computer data of an economic value or benefit in excess of $2,500. In so doing, the Legislature not only dispensed with the comparative economic analysis embedded within the Unlawful Use statute, but also confirmed that “appropriating” and “depriving” are acts that harm the computer data’s owner (by taking an economic value or benefit “from” him). That the plain meaning of “appropriate” requires a comparative economic analysis is also confirmed by the recommendations of the Task Force Report and the bills it engendered. That Report and the proposed legislation would alter the definition of “appropriate” for purposes of computer data to require only that the 55 People prove that a defendant intended “to obtain [computer data] under such circumstances as to acquire the ability to use it or dispose of it to the economic benefit of oneself or a third person or to the economic detriment or damage of an owner.” Task Force Report, at D-1-2 (emphasis added); accord A5496A § 1(4); S2406A § 1(4). Thus, where the property at issue is another’s computer data, it is possible to use that property to one’s advantage without appropriating its use in the sense of acquiring it permanently or near permanently (and hence depriving the owner of its use), as Title J now requires. That explains the Task Force’s proposed amendment to the meaning of appropriate where computer data is concerned. But it does not transform the intent to use another’s property as Aleynikov did into the exercise of control required to transgress the Unlawful Use statute. The First Department erred in concluding otherwise. III. THE PLAUSIBILITY OF THE TRIAL COURT’S INTERPRETATION OF THE UNLAWFUL USE STATUTE COMPELLED ALEYNIKOV’S ACQUITTAL UNDER THE RULE OF LENITY. Where “two constructions of [a criminal statute] are plausible, the one more favorable to the defendant should be adopted in accordance with the rule of lenity.” Thompson, 26 N.Y.3d at 687-88 (quoting Golb, 23 N.Y.3d at 468). Justice Conviser found that the overwhelming weight of authority compelled the conclusion that (1) a digital transfer of computer data is not a “tangible reproduction or representation” within the meaning of the Unlawful Use statute; and (2) the “intent to appropriate” 56 the use of property under that statute requires the intent to acquire from the owner at least the major portion of the economic benefit or value of its use. But if either of those conclusions was even plausible—which, for all of the reasons set forth above, they undeniably were—Aleynikov should have been acquitted under the rule of lenity. The First Department ignored that rule, noting instead the truism that courts should “‘dispense with hypertechnical or strained interpretations’” of criminal statutes. (Appdx16.) But there is nothing hypertechnical or strained about saying “tangible” means “perceptible by touch” and “intent to appropriate” means “intent to take something away from an owner.” To the contrary, those conclusions are eminently plausible by anyone’s lights. Beyond being wrong as a matter of law with respect to both tangibility and intent to appropriate, the First Department’s Order should therefore be reversed for the additional reason that it violates the rule of lenity. CONCLUSION If this Court agrees either that (1) Aleynikov's transfers of Goldman's source code did not constitute a tangible reproduction or representation; or (2) those transfers did not evince an intent to appropriate the use of that property; or (3) it was plausible that those transfers did not constitute a tangible reproduction or representation; or ( 4) it was plausible that those transfers did not evince an intent to appropriate the use of that property, the First Department's judgment should be reversed and the Trial Order of Dismissal reinstated. Dated: June 15, 2017 Chatham, New Jersey Respectfully submitted, MARINO, TORTORELLA & BOYLE, P.C. By:_~----- Kevin H. Marino, Esq. 437 Southern Boulevard Chatham, New Jersey 07928-1488 (973) 824-9300 Attorneys for Defendant-Appellant Sergey Aleynikov 57 NEW YORK STATE COURT OF APPEALS CERTIFICATE OF COMPLIANCE I hereby certify pursuant to 22 N.Y.C.R.R. parts 500.1(j) and 500.13(c) that the foregoing brief was prepared on a computer using Microsoft Word. Type. A proportionally spaced typeface was used, as follows: Name of typeface: Times New Roman Point size: 14 Line spacing: Double Word Count. The total number of words in the brief, inclusive of point headings and footnotes, and exclusive of the pages containing the status of related litigation, table of contents, table of authorities, questions presented, proof of service, certificate of compliance, or any authorized addendum, is 13,926. Dated: June 15, 2017 Kevin H. Marino, Esq. 437 Southern Boulevard Chatham, New Jersey 07928-1488 (973) 824-9300 Attorneys for Defendant-Appellant Sergey Aleynikov