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Software The Courts

Court Rules Code Not Physical Property 125

Posted by timothy
from the took-them-this-long-to-notice dept.
An anonymous reader writes with this excerpt from Wired: "Former Goldman Sachs programmer Sergey Aleynikov, who downloaded source code for the investment firm's high-speed trading system from the company's computers, was wrongly charged with theft of property because the code did not qualify as a physical object under a federal theft statute, according to a court opinion published Wednesday." Adds the submitter: "The RIAA's definitely got to give Goldman Sachs their secret recipe ..."
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Court Rules Code Not Physical Property

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  • by SirBitBucket (1292924) on Thursday April 12, 2012 @01:12PM (#39660319)
    Code can only be created by intellectuals, like /. readers; therefore, it is Intellectual Property, not some ho-hum, run-of-the-mill property...
    • Code can only be created by intellectuals, like some /. readers; therefore, it is Intellectual Property, not some ho-hum, run-of-the-mill property...

      FTFY.

      (Side note; my coding knowledge is limited to web coding, so I'm not in the 'some.' That's mainly because my job is in investments, not tech!)

      • sweet, so we got a php hack (not to be confused with hacker) playing with forces beyond his comprehension to affect the distribution of wealth. i'll have a coke.
        • by Anonymous Coward
          Sweet, so we got a computer scientist. Have fun in your software sandbox, kid. The men are busy making hardware.
          • by Anonymous Coward
            Hardware? Real men design and build automatons to grow and build hardware for them.
            • Re: (Score:2, Funny)

              by Anonymous Coward

              Most men skip the design stage and go straight to the 'build and grow' stages. If successful, we tend to call the men "parents," but good luck getting the new automatons to actually mow the lawn.

              • by Anonymous Coward
                Get off of my lawn, you pesky automatons! :)
                • by Anonymous Coward

                  I for one welcome our new not-lawn-mowing pesky automatons.

        • Yup, I'm utterly useless as a coder, but if you got a project that needs VC to get off the ground... ;)
    • by icebike (68054) * on Thursday April 12, 2012 @01:34PM (#39660815)

      Code can only be created by intellectuals, like /. readers; therefore, it is Intellectual Property, not some ho-hum, run-of-the-mill property...

      Seems like your attempt at snark was almost as successful as your spelling in the title.

      But, perhaps by accident you've hit the nail on the head. This should have been charged with a copyright or trade secrets violation, or some security breach, not theft of property. Most states have laws covering criminal use of computers, as does the federal government. There was never a need to base these charges on the theft statutes.

      In California (by way of example) there are specific laws concerning taking information [findlaw.com] from a computer in an unauthorized way. (Penal Code Section 499c 2.) [onecle.com]

      But the bigger question is how many others have been charged with simple Property Theft under federal law in the past for this same sort of breach (downloading source code) and paid the penalty or served the time?

      To what extent does this change the landscape for computer break-ins?

      • Code can only be created by intellectuals, like /. readers; therefore, it is Intellectual Property, not some ho-hum, run-of-the-mill property...

        Seems like your attempt at snark was almost as successful as your spelling in the title.

        But, perhaps by accident you've hit the nail on the head. This should have been charged with a copyright or trade secrets violation, or some security breach, not theft of property. Most states have laws covering criminal use of computers, as does the federal government. There was never a need to base these charges on the theft statutes.

        In California (by way of example) there are specific laws concerning taking information [findlaw.com] from a computer in an unauthorized way. (Penal Code Section 499c 2.) [onecle.com]

        But the bigger question is how many others have been charged with simple Property Theft under federal law in the past for this same sort of breach (downloading source code) and paid the penalty or served the time?

        To what extent does this change the landscape for computer break-ins?

        Probably not many (given that the same ruling would have occurred before.) It was a stupid blunder to have prosecuted this as property theft since (as you pointed out correctly) there are effectives laws for this type of crime already.

    • by cpu6502 (1960974)

      I am the great-great-great-great-great-great-great-great-great-great-great-great grandson of William Shakespeare. I claim his works as formerly his, and now my, "intellectual property". I will be sending a cease-and-desist letter shortly.

    • by flyneye (84093)

      That's right imaginary property is special.
      You can imagine it belongs to someone instead of just being concepts,thoughts and ideas.
      We all know you can't touch these and information longs to be free like water seeks its lowest point.
      I predict when you have the ability to catch a fart, paint it purple and put it in a box for market then you will be able to get everyone on the same page with this intellectual property fairy tale. Till then, it's going to be unmarketable, uncontainable chaos , making criminals

      • information longs to be free

        longs to be free?
        Oh! I know, perhaps it yearns for freedom!

        Or maybe it's just pining for the fields.

  • Procedural error (Score:5, Interesting)

    by girlintraining (1395911) on Thursday April 12, 2012 @01:16PM (#39660407)

    This is a procedural error, not a statement that 'stealing' code isn't a crime. Rest assured, legislation is being drafted that will ensure that stealing from a poor, innocent company, will earn you at least 30 years in jail and an 8 trillion dollar fine. Really, it would be less troublesome to just murder the CEO the way the laws are being written these days...

    • Re:Procedural error (Score:5, Interesting)

      by PPH (736903) on Thursday April 12, 2012 @01:31PM (#39660733)

      Correct. Not that what Aleynikov did wasn't wrong. But for our legal system to operate properly and fairly, we've go to stick to the rules. Now, I'm no legal scholar, but the judge evidently had reservations about exactly what the intent of Congress was when they wrote that federal statute. And that's a good thing. It will force them (Congress) to go back to the drawing board and address the different aspects of stealing/copying/damaging this class of property. And they very well may make a distinction between snatching a copy for yourself and depriving the original owner of the use of their property. And they might address the various ways that this deprivation can affect the owner, from an outright denial of service to the (imaginary or real) loss of potential market share. And each case could get its own legal treatment, which might end up being a good thing all around.

      • And each case could get its own legal treatment, which might end up being a good thing all around.

        Up until you said that, I pretty much agreed with your post. A major goal of our justice system is to create a fair and impartial judgement; Creating 'one offs' defeats that. The punishment for theft of code should be the same whether it's Microsoft's Windows 7 source code, or Linux. And even if the source code is publicly available, that doesn't release someone from following the licensing agreement, which brings us back to the problem of making violations of a licensing agreement a crime.

        That's why it ha

        • by rhook (943951)

          which brings us back to the problem of making violations of a licensing agreement a crime.

          EULA's are for the most part unenforceable.

          http://en.wikipedia.org/wiki/End-user_license_agreement#Enforceability_of_EULAs_in_the_United_States [wikipedia.org]

        • by DarkOx (621550)

          which brings us back to the problem of making violations of a licensing agreement a crime.

          The answer is of course it should never be a crime to violate a 'license' agreement. A license is a contract and should remain a strictly civil matter. Violating a license as in "I made copies I was not permitted to", "Ran this on more systems than was allowed", "Used that code in some other application where prohibited" are all things where the author has in some way made the code available to me in the first place.

          Theft of code might be a legitimate area of law for criminalization if the code was acquir

        • by rtb61 (674572)

          As long as they are actually stealing the code ie. taking the code and denying the original owner access to that code. Otherwise they are just copying that code.

          They could of course be charged with theft of the item upon which the code is stored be it paper, floppy disk, USB drive, electricity and bandwidth if electronically copied.

          Then there is the extent of code or in this case a unique algorithm use to automate stock purchases.

          Then the is the whole question of how many copies were reproduced, if i

      • Hahahahahaha, oh man, you crack me up.

        Like they're going to think about it that much.
      • "And they very well may make a distinction between snatching a copy for yourself and depriving the original owner of the use of their property." interesting statement. I don't know but the code may have been written by the fellow which muddies the water about the intent of the IP laws and companies being able to get you to sign over any of your IP to them. The copyright law is and has been to allow the intellectual creator a period of time to benefit from their IP, not it has been turned into a commodity

    • Re: (Score:3, Informative)

      by Anonymous Coward

      This is a procedural error, not a statement that 'stealing' code isn't a crime. Rest assured, legislation is being drafted that will ensure that stealing from a poor, innocent company, will earn you at least 30 years in jail and an 8 trillion dollar fine. Really, it would be less troublesome to just murder the CEO the way the laws are being written these days...

      'This' is exactly what people are complaining about when people call copyright infringement 'theft'. It's not. There are different laws governing the two. They are wholly different concepts. The more they are conflated, the more that stupid mistakes like this one will happen, and any decent defense lawyer will keep racking up victories when this happens.

    • Words mean things and using them improperly effects public opinion, and in turn legislation. ( just look at what happened to the term 'hacker' ).

      Its simply not 'theft' its 'infringement'.

      • Yes, it's not theft... That is until it involves [slashdot.org] GPL [slashdot.org] code [slashdot.org].

        • *sigh* We're talking factual matters, not bad article titles. Stop trying to paint false hypocrisy as others continue to try - it isn't working, unless your goal is to look dumb.
        • by nurb432 (527695)

          Even then, its still not theft. Its copyright infringement. its still a crime, but its a different crime.

          And those that try to call it the same are doing the entire Justice system, and our rights, a disservice.

    • by element-o.p. (939033) on Thursday April 12, 2012 @02:51PM (#39662481) Homepage
      "Credit fraud? My God, that's worse than murder!"

      It was funny when I heard that line in "Max Headroom" back when I was a kid...
  • Court Rules Code Not Physical Property

    Well, duh.

    Nice to see some intelligence in the courts now and then.

    • Nice to see some intelligence in the courts now and then.

      All they have done is stated that code is non-corporeal. They haven't said stealing it isn't a crime... It's mostly a case of "Oh, so I see you filed the blue form here, but you need to fill out the green form instead." "But it's the same thing!" "No, one is blue, the other is green."

      • by Fned (43219) on Thursday April 12, 2012 @01:40PM (#39660933) Journal

        All they have done is stated that code is non-corporeal. They haven't said stealing it isn't a crime...

        Who gives a shit if it's still a crime, do you realize what this means?!

        Now whenever someone says "copyright infringment is theft", instead of spending dozens of paragraphs pointing out the gigantic unpatchable holes in their spurious-ass inevitable failure of an argument, we can now just say, "Goldman-Sachs v. Aleynikov, your argument is invalid. STFU forever."

        This will save SO much time in the future.

        • by Grumbleduke (789126) on Thursday April 12, 2012 @02:28PM (#39662011) Journal

          Some of us have been able to do this for years, using Oxford v Moss [wikipedia.org] (there's also Boardman v Phipps [wikipedia.org] which is a House of Lords case, but on trusts, and the information != property point is kind of obiter).

          Of course, then they go "well, OK, it's not technically theft, but it's still taking someone else's stuff without paying for it" - remember, you don't have debates about copyright enforcement law, you have rants from either side; no one really seems to care about verifiable facts.

          • by lgw (121541)

            Nope, copyright infringment is theft. Simple as that. "Theft" is a broader term than taking physical property. Some copyright infringment is straightforward theft of services, but when we're talking about the bits of a book or DVD or somesuch, it's closer than you might think.

            If we're not talking about top-40 titles, most physical books and CDs and so on don't sell out - some are left over at the store and "remaindered" by some mechanism (which might invovle sending the unsold stock back, or might not).

              • Sadly not; all this ruling said was that the offence under the National Stolen Property Act of moving stolen stuff across state borders requires some physical goods (when not dealing with money). The judgment still talks about the "theft of intangible property" and so on. At least for the relevant jurisdictions.

            • Nope, copyright infringement is theft. Simple as that. "Theft" is a broader term than taking physical property. Some copyright infringement is straightforward theft of services, but when we're talking about the bits of a book or DVD or some such, it's closer than you might think.

              And how are you defining "theft"? In the legal sense, or colloquial? If legal, then in which jurisdiction? If colloquial, in which society? Your claim is kind of meaningless without specifying that. Or, at least, hard to rebut.

              Legally, in the US, theft isn't a federal offence, so it will vary from state to state, depending on each one's law. I can't be bothered to go through all 50 (or even 1) to find out how it works there. However, as you might have noticed from my post (to which you replied), or should h

              • by lgw (121541)

                Theft is "taking without paying". No "property" is required, since you can steal services too, only the expectation that you would normally pay for what you took. "Property" is more about controlling the use of something.

                • Are you trolling, or did you just not bother to read even the first sentence of what I wrote?

                  Where are you getting that definition of "theft" from? It's a rather silly one; for example, it would cover picking wild flowers from a public place or receiving gifts, but not taking a car from someone's house but leaving a $5 note behind.

                  That's why legal definitions tend to be a bit more complicated. Looking through some of them, most versions seem to require both property, and some element of dishonesty or fraud

                  • by lgw (121541)

                    Sure, if you want to be pedantic, "taking without paying when thereis an expectation of payment". That's what it means. Rationalize all you want, but that's theft.

                    Laws are of course more complicated, but /. discussions usually revolve around people lying to themselves that stealing copyrighted material is somehow morally OK. My favorite is "it wasn't very good, so it's OK that I copied it". There are far worse moral offenses in the worl, but facile rationalizations that what you want to to is somehow OK

                    • Your definition still doesn't quite work, as it then requires an expectation of payment - the whole "payment" thing is misleading; the important point is permission, not payment. Unless you're going into the area of compulsory purchases and all that.

                      And copyright infringement isn't theft, morally or legally (from where I'm sitting). It may be morally wrong, but that doesn't make it theft. Strangely enough there are more wrong things in the world than theft. And this discussion isn't about "facile rationalis

                    • by lgw (121541)

                      Well, rationalize all you want, I can't change the kind of person you are. But failing to live up to your end of the deal is still going to be morally wrong.

        • Until it's overturned on appeal.
    • Court rules that downloading binary bits does not qualify as theft.
  • by sohmc (595388) on Thursday April 12, 2012 @01:17PM (#39660435) Journal

    That's the difference between the RIAA and Goldman Sachs. The RIAA doesn't arrest anyone or even get the state to arrest anyone. They just file lawsuits. Goldman Sachs actually wanted criminal charges.

    I'm sure that Goldman Sachs will now file a copyright infringement lawsuit.

    But it begs the question if anyone has ever been jailed for copyright infringement. My google skills are lacking now that I'm in my post-lunch coma...

    • by am 2k (217885) on Thursday April 12, 2012 @01:26PM (#39660625) Homepage

      But it begs the question if anyone has ever been jailed for copyright infringement.

      Yep: Kino.to Admin Gets 2,5 Years Prison Sentence [torrentfreak.com].

      • But it begs the question if anyone has ever been jailed for copyright infringement.

        Yep: Kino.to Admin Gets 2,5 Years Prison Sentence [torrentfreak.com].

        That's not in the U.S., which I assume the GP was asking about. That said, it's yes here, too, under 17 U.S.C. 506:

        (a) Criminal Infringement. —
        (1) In general. — Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed —
        (A) for purposes of commercial advantage or private financial gain;
        (B) by the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or
        (C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

        And for a recent case, see NinjaVideo.net [arstechnica.com].

    • by jbengt (874751) on Thursday April 12, 2012 @02:14PM (#39661681)

      I'm sure that Goldman Sachs will now file a copyright infringement lawsuit.

      I'm not at all sure of that - a trade secret can't be copyrighted, can it?

  • by LostCluster (625375) * on Thursday April 12, 2012 @01:17PM (#39660437)

    This is as old as Napster and other file sharing technologies. The copyright holders would rather use the laws for "theft" than "copyright infringement" but that's just not going to work. Good lawyer work on the defense side I think.

  • Sounds like they just picked the wrong law for the charges.

    • by alen (225700)

      no its over

      in the US we have something called double jeopardy. it says you can't be charged for the same thing twice. this includes filing new charges for the same action/offense. once you are found not guilty the government can only charge you again for something else you do/did

  • They should have gone after him for misappropriation of trade secrets.
    There's no ambiguity in that case

  • by alen (225700) on Thursday April 12, 2012 @01:21PM (#39660519)

    if this was Windows or some other piece of sold software then he would still be in jail

    GS was using the code for internal use and not reselling it. interstate commerce does not apply then according to the court. because there was no commerce

    • by matunos (1587263)

      Wickard v. Filburn.

      This may not have been theft of property, but it's certainly violating some trade secrets laws.

  • looks like plaintiff lawyers screwed up

    • by Fned (43219)

      looks like plaintiff lawyers screwed up

      Yeah, by bringing the case in the first place. Nowhere in physical reality nor law is information directly equivalent to property.

  • So the prosecutor got the wrong criminal charge. Am I supposed to be impressed?

    Goldman Sachs can still go after him and ruin his life for theft of trade secrets, copyright infringement, violations of his employee agreement, and a host of other things. That will be before another judge in civil court, folks, with different laws entirely.

  • Let me see: the guy downloaded a copy of the code, he didn't remove the original, right? If code were physical property, the original would have magically and necessarily vanished from GS's system the moment he downloaded it. If it was still there, code cannot be physical property. It's as simple as that. Of course, it could still be considered intellectual property, but that's something entirely different and not what the Court had to decide.
  • Well, of course. Copyright violation isn't theft, no matter what the RIAA's commercials tell us. It's copyright violation. It may be breach of trust, and it may involve lots of stuff that can land the perpetrator in serious trouble, but it's not theft, and it's not piracy.

  • The RIAA (Score:3, Interesting)

    by nedlohs (1335013) on Thursday April 12, 2012 @02:38PM (#39662191)

    aren't stupid enough to go for a theft charge.

    Let's see they could try for a theft charge that the person stole 50 songs at 99c a song on itunes for under $50 wroth of theft.

    Or they chould try for a copyright infringment charge that the person aided in thousands of copies being made by sharing the files. With statutory damages of $150,000 up for grabs.

    Wow, hard choice...

  • This is just like the judge in the UK that ruled that an electronic key was quiet different to a physical one (the infamous Prestel hacking case) - where any "reasonable" person would say they perform the same function so they are the same.

    As Spock said "A difference that makes no difference, is no difference"
    • by julesh (229690)

      This is just like the judge in the UK that ruled that an electronic key was quiet different to a physical one (the infamous Prestel hacking case) - where any "reasonable" person would say they perform the same function so they are the same.

      As Spock said "A difference that makes no difference, is no difference"

      The difference made by this difference is that if you steal something physical, the original owner no longer has it. In this case, the original owner still had their code, hence it wasn't stolen.

      • by mjwalshe (1680392)
        the owner lost the exclusivity of use of the code and trade secrets - and the prestel case was about the equivalency or not of an electronic key vs a physical one
        • by jmcvetta (153563)

          When some douche stole my bicyle wheel the other day, I was not in the least concerned about having lost exclusivity of its use. Rather, I was concerned because the fucking wheel was gone and I had thus been deprived of its use altogether. See how real theft of physical property is different from "theft" of idea monopoly?

          • by mjwalshe (1680392)
            Not really

            take two examples

            1 some one embezels $1,000,000 from your company - which then goes bust
            2 some one takes company information (code data or what have you) goes to a competitor which then uses the info to
            compete and you company goes bust.

            Its the same end result - and yes I do know of cases where people have taken company information and been paid for it when they joined a competitor (I cant say which company for legal reasons)
    • It can't be "theft" if the original property is still in the hands of the original owner.

      If I photocopy a document and take the copy, it's not "theft". If I take a picture of a painting, it's not "theft". Similarly, if I duplicate a digital file, it can't possibly be "theft".

      • by mjwalshe (1680392)
        steeling trade secrets is stealing - sounds like a lot of ./'s are using this perverse judgement to validate their "sharing"
    • But at least Spock was smart enough to know the difference between a trivial distinction and a real one, unlike you. :P Seriously though, they are different, established by logic, and how the law works, no matter how much sticking-your-finger-in-your-ear-NANANANAing you do.
  • Everything is a collection of state in space.
    The property concept comes from the "shell" we perceive to surround a collection of state so that we can tell things apart; an egg is a property, but is it really no different from a file?

    When you download a file, an exclusive region of space must be reserved on your end to hold it, which is then synched to match the state of the source space.

    It's free, if you disregard the energy required to synch the state or keep it, but someone arranged the state to begin wit

    • Even if we posit your definition, it's not theft. The original bits on the server hard drive were not removed.

      • So, if I make a copy of a database with user names and passwords, then set the bits of the database to all zeroes on the server; it's theft? Because I now moved a "painting" from one area of space to another?

        The thing is, the original state was reconstructed somewhere else without the permission of the property owner (the one/ones who arranged the original state), and that's what theft is. It's the same as moving a painting (a collection of state) to another region of space, but it's not easy to replicate a

  • This is interesting because Vermont is trying to apply the sales tax to cloud computing. If code isn't physical property then Vermont my be up stick creek without an addler.

  • This is just the sort of affirmation GS needs;

    So, if code is not a physical object, and therefore stealing it is not theft, what dose that say about the digital currency (also non-physical) they trade every day...
    And how about loosing it(the money)?

    Back to the point, what if he printed the code...

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