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U.S. v. GENOVESE

June 21, 2005.

UNITED STATES OF AMERICA,
v.
WILLIAM P. GENOVESE, JR., a/k/a "illwill," a/k/a "xillwillx@yahoo.com," Defendant.



The opinion of the court was delivered by: WILLIAM PAULEY, District Judge

MEMORANDUM AND ORDER

By Indictment dated January 3, 2005, the Government charged the defendant, William P. Genovese, Jr., with one count of unlawfully downloading and selling a trade secret in violation of 18 U.S.C. § 1832(a)(2). Genovese moves to dismiss the Indictment pursuant to Rule 12(b)(3)(B) of the Federal Rules of Criminal Procedure. Genovese contends that the statute criminalizing trade secret theft is facially overbroad in violation of the First Amendment and unconstitutionally vague as applied to him. For the reasons set forth below, Genovese's motion to dismiss the Indictment is denied.

BACKGROUND

  In February 2004, portions of Microsoft Corporation's source code for two of its computer operating systems, Windows NT 4.0 and Windows 2000, appeared on the Internet.*fn1 (Complaint, dated Nov. 4, 2004 ("Compl.") ¶¶ 3-4; Declaration of Sean Hecker, dated Mar. 16, 2005 ("Hecker Decl.") ¶¶ 3-4.)

  The Indictment charges Genovese with downloading, copying, selling and attempting to sell Microsoft source code without authorization. (Indictment ¶ 1.) Specifically, the Government contends that on February 12, 2004, Genovese posted a message on his website offering the code for sale: "win2000 source code jacked . . . and illmob.org got a copy of it . . . im sure if you look hard you can find it or if you wanna buy it ill give you a password to my ftp."*fn2 (Government's Memorandum in Opposition to Motion to Dismiss ("Govt. Mem.") at 4.) According to the Complaint, an investigator retained by Microsoft responded to the message later that month by sending Genovese an email that offered twenty dollars for the code. (Compl. ¶ 6.) After Genovese accepted the offer, the investigator transferred twenty dollars to Genovese through an online payment service. (Compl. ¶ 6.) Genovese then provided access to the source code through his FTP server. (Compl. ¶ 6.) Microsoft alerted the FBI. (Compl. ¶ 7.) In July 2004, an undercover Government agent contacted Genovese and purchased the Microsoft source code. (Compl. ¶¶ 7-8.) Genovese was arrested and charged with violating 18 U.S.C. § 1832(a)(2).

  DISCUSSION

  Section 1832 was enacted as part of the Economic Espionage Act of 1996, Pub.L. No. 104-294, 110 Stat. 3488 (the "EEA"). In relevant part, the statute applies to anyone who, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly . . . without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys such information.

 18 U.S.C. § 1832(a)(2). "Trade secret," in turn, is defined to encompass

 
all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.
18 U.S.C. § 1839(3). The statute carries a ten-year maximum term of imprisonment. 18 U.S.C. § 1832(a).

  A. Standard on a Motion to Dismiss the Indictment

  The allegations of an indictment are accepted as true on a motion to dismiss. See United States v. Nat'l Dairy Prods. Corp., 372 U.S. 29, 33 n. 2 (1963); Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 343 n. 16 (1952); United States v. Goldberg, 756 F.2d 949, 950 (2d Cir. 1985). "Contrary assertions of fact by the defendant? will not be considered." Goldberg, 756 F.2d at 950 (citing United States v. Von Barta, 635 F.2d 999, 1002 (2d Cir. 1980)). B. Overbreadth in Violation of the First Amendment

  Genovese argues that Section 1832 violates the First Amendment because it restricts protected speech and sweeps more broadly than necessary. A statute is unconstitutionally overbroad if there exists "a substantial risk that application of the provision will lead to the suppression of speech." Nat'l Endowment for the Arts v. Finley, 524 U.S. 569, 580 (1998); see Virginia v. Hicks, 539 U.S. 113, 118 (2003); accord Lerman v. Bd. of Elections in New York, 232 F.3d 135, 144 (2d Cir. 2000). "When a litigant challenges a statute on its face as overly broad, the prudential limitations against third party standing are relaxed, and the litigant may assert the rights of individuals whose interests might be affected by the statute but who are not before the court." Lerman, 232 F.3d at 144; see Broadrick v. Oklahoma, 413 U.S. 601, 610 (1973).

  While the First Amendment protects the formulation of source code and other types of trade secrets encompassed by the EEA, see Universal City Studios, Inc. v. Corley, 273 F.3d 429, 445-46 (2d Cir. 2001), the statute criminalizes their unauthorized copying, duplicating, downloading and uploading. 18 U.S.C. § 1832(a)(2). Moreover, the EEA limits its reach to such conduct that is done "with intent to convert a trade secret . . . to the economic benefit of anyone other than the owner thereof." 18 U.S.C. § 1832(a)(2). Such conduct is not protected speech. See United States v. Thompson, 76 F.3d 442, 452 (2d Cir. 1996) ("A prohibition against corrupt acts `is clearly limited to . . . constitutionally unprotected and purportedly illicit activity.'" (quoting United States v. Jeter, 775 F.2d 670, 679 (6th Cir. 1985))). Because Section 1832 is specifically targeted toward illegal activity and does not reach protected speech, the statute is not unconstitutionally overbroad. See Thompson, 775 F.2d at 452. Accordingly, Genovese's First Amendment challenge fails. C. Void for Vagueness

  The void-for-vagueness doctrine requires that a statute define the criminal offense with sufficient precision "that ordinary people can understand what conduct is prohibited." Kolender v. Lawson, 461 U.S. 352, 357 (1983); accord United States v. Ansaldi, 372 F.3d 118, 122-23 (2d Cir. 2004); United States v. Rahman, 189 F.3d 88, 116 (2d Cir. 1999). Courts must also "consider whether the law provides explicit standards for those who apply it." Chatin v. Coombe, 186 F.3d 82, 87 (2d Cir. 1999); see Kolender, 461 U.S. at 357. "[V]agueness challenges to statutes which do not involve First Amendment freedoms must be examined in ...


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