New York Law Journal "Court Examines Theft of Computer Code in 'Aleynikov'" by Steve Kramarsky

May 25, 2018

Technological advances, for all the good they bring to the world, often bring with them significant challenges for existing legal structures. As the pace of technological change accelerates, it can be difficult for the law to keep pace, and the jurisprudence of the printing press—or even the fax machine—may be a poor fit for the internet age. Nowhere are those challenges more apparent than in the realm of criminal law. Criminal statutes have life-changing consequences, and must be strictly interpreted. And in that context, courts have sometimes struggled to apply fit “pre-internet” statutes to conduct that occurs in the electronic realm.

 

For example, more than a decade ago New York courts faced the issue of whether the tort of conversion—the civil action for misappropriation of tangible property—should apply to files stored on a computer. The issue was unsettled in New York, and the U.S. Court of Appeals for the Second Circuit certified the question, which noted that the “‘ancient doctrine’ has gone through a great deal of evolution” since it appeared in the 15th century, see Thyroff v. Nationwide Mut. Ins., 8 N.Y.3d 283, 286 (N.Y. 2007) (internal citations omitted). With that in mind, the court held that, in the modern age, there was no good reason to limit the tort to tangible property. Because “it generally is not the physical nature of a document that determines its worth, it is the information memorialized in the document that has intrinsic value” and “the tort of conversion must keep pace with the contemporary realities of widespread computer use” the court held that theft of electronic records stored on a computer could be the basis for a civil claim of conversion.

 

But the criminal law—perhaps appropriately—moves more slowly. And courts continue to struggle with issues around criminal liability for theft of property stored in electronic form. Many criminal statutes proscribing theft were drafted with “physical” or “tangible” property in mind. They were drafted at a time when it was unimaginable that vast amounts of sensitive data—developed at great expense and having enormous commercial value—would be stored in something called the “cloud.” Without delving into the metaphysical, it is not clear to what extent such information is within the scope of traditional criminal laws prohibiting the theft of “tangible” property. But a series of recent criminal cases against a single defendant, tried in both the Southern District of New York and New York Supreme Court, highlights the challenges presented by the theft of “intangible” property. After substantial disagreement among the lower courts (and across the federal and state courts) the recent decision of the New York Court of Appeals provides some clarity and is worth a review.

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