Court of Appeals calls into question the ability of the Economic Espionage Act to protect trade secrets

On April 1, The U.S. Court of Appeals for the Second Circuit overturned defendant Sergey Aleynikov’s conviction under the Economic Espionage Act. Aleynikov was charged with taking sensitive (trade secrets) computer code from Goldman Sachs.

Early analysis of the case focused on the Court’s reasoning that the defendant did not deprive the copyright owner of the use of the software by taking physical control over it. A more detailed reading of the case calls into question the statute’s ability to protect trade secrets at all.

The Court ruled the software taken by Aleynikov while he was at Goldman did not violate the federal statute because it was to be used for internal purposes only, not placed “in interstate or foreign commerce,” as defined under Section 1832 (a)

Trade secrets, as a rule, would not be placed into interstate commerce. Therefore, does the EEA protect trade secrets at all? To what extent is the value of an organization’s trade secrets affected by this ruling?