United States District Court, S.D. New York
June 21, 2005.
UNITED STATES OF AMERICA,
WILLIAM P. GENOVESE, JR., a/k/a "illwill," a/k/a "email@example.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
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).
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
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 the light of the facts of the case at hand." United
States v. Mazurie, 419 U.S. 544, 550 (1975); accord United
States v. Rybicki, 354 F.3d 124, 129 (2d Cir. 2003).
A statute need not define the offense with "mathematical
certainty." Grayned v. City of Rockford, 408 U.S. 104, 110
(1972). "[S]ome inherent vagueness" is inevitable and thus
permissible. Rose v. Locke, 423 U.S. 48, 49-50 (1975).
Nonetheless, the statute must provide "relatively clear
guidelines as to prohibited conduct." Posters `N' Things, Ltd.
v. United States, 511 U.S. 513, 525 (1994). "The underlying
principle is that no man shall be held criminally responsible for
conduct which he could not reasonably understand to be
proscribed." United States v. Harriss, 347 U.S. 612, 617
Genovese does not contend that Section 1832(a)(2) imprecisely
describes the prohibited act (i.e., that an individual is
guilty if he "copies, duplicates, sketches, draws, photographs,
downloads, uploads, alters, destroys, photocopies, replicates,
transmits, delivers, sends, mails, communicates, or conveys" a
trade secret). Rather, he maintains that Section 1839(3)'s
definition of "trade secret" is unconstitutionally vague as
applied to the facts of this case and does not afford due
process. Specifically, Genovese argues that having found the source code on the Internet after it had been released to the
general public by a third-party, he could not have known that it
was "not . . . generally known to . . . the public" and that
Microsoft had taken "reasonable measures" to safeguard it.
1. "Not . . . generally known to . . . the public"
Genovese maintains that "he had every reason to believe the
code had become publicly available" when he found it on the
Internet. (Defendant's Memorandum in Support of Motion to Dismiss
("Def Mem.") at 12.) However, a trade secret does not lose its
protection under the EEA if it is temporarily, accidentally or
illicitly released to the public, provided it does not become
"generally known" or "readily ascertainable through proper
means." 18 U.S.C. § 1839(3)(B). Genovese merges these two
standards and, in so doing, elevates the standard for trade
secret status to one of absolute secrecy. This formulation
impermissibly writes the critical modifier "generally" out of the
statutory definition and attempts to inject a vagueness otherwise
absent from the facts of this case.
Indeed, a reasonable inference from Genovese's website posting
is that he knew that the source code derived independent value
because it was not "generally known." The Government alleges that
he described the code as "jacked" and indicated that others would
have to "look hard" to find it elsewhere.*fn3 (Govt. Mem. at
4.) As such, Genovese was on notice that Microsoft had not
publicly released the code and recognized its public scarcity.
Moreover, because Genovese offered the code for sale and successfully sold
it, he was on notice that it derived value from its relative
obscurity, notwithstanding that it was available from other
sources. See United States v. Hsu, 40 F. Supp. 2d 623, 630-31
(E.D. Pa. 1999) (rejecting a similar challenge to the definition
of "trade secret" where the evidence showed that the defendant
"knew (or at a minimum believed) that the . . . information he
was seeking to acquire was not `generally known to' or `readily
ascertainable through proper means by, the public").
A statute may also be unconstitutionally vague if it
"authorize[s] and even encourage[s] arbitrary and discriminatory
enforcement." City of Chicago v. Morales, 527 U.S. 41, 56
(1999); see Kolender, 461 U.S. at 357. In this regard,
Genovese argues that the statute provided no guidance to law
enforcement officials to determine whether the source code
constituted a trade secret. However, just as Genovese's
announcement and conduct reflect his belief that the "jacked"
source code was valuable because it was not generally known, it
provided the FBI reason to believe that Genovese was trafficking
in Microsoft's trade secret.
2. "Reasonable measures"
With respect to the "reasonable measures" element of the EEA's
"trade secret" definition, Genovese contends that he "was in no
position to make a determination about whether Microsoft took any
measures to protect the secrecy of its source code, let alone
whether those measures were `reasonable.'" (Def. Mem. at 17.)
Once again, Genovese's website posting belies any claim that he
was a casual Internet browser who happened upon the source code
without knowledge of its owner or the manner in which the code
entered the public domain. As discussed above, the posting
reveals that Genovese knew that a third-party had "jacked" the
source code from Microsoft. Having acknowledged both that the source code was proprietary to
Microsoft and that someone else penetrated whatever safeguards
Microsoft enlisted to protect it, Genovese cannot now argue that
the statute was insufficient to put him on notice that the source
code constituted a trade secret under the EEA. For Section
1839(3)'s "trade secret" definition to survive a vague-as-applied
challenge, a "defendant need not have been aware of the
particular security measures taken by" the trade secret's owner,
as long as the "defendant knew the information was proprietary."
United States v. Krumrei, 258 F.3d 535, 539 (6th Cir. 2001)
(noting that the defendant "was aware that he was selling
confidential information to which he had no claim"); see also
Hsu, 40 F. Supp. 2d at 628 (defendant was told that "the taxol
technology in question was proprietary"). In this case, one can
infer that Genovese knew not only that the source code was
proprietary, but that any protective measures by Microsoft had
been circumvented. At a later stage in this proceeding, Genovese
may choose to argue to this Court or to a jury that Microsoft's
measures were not "reasonable," or that Genovese could not have
known what, if any, measures Microsoft maintained. For purposes
of his vagueness challenge, however, Genovese's knowledge that
the source code belonged to Microsoft and that others had stolen
it was sufficient for him to "reasonably understand" that the
conduct alleged in the Indictment was proscribed by Section
1832(a)(2). Harriss, 347 U.S. at 617.
As such, Section 1839(3) defines "trade secret" with
"sufficient definiteness" so that an ordinary person in
Genovese's position could understand that trafficking in the
Windows source code was prohibited by law. Kolender,
461 U.S. at 357. As applied to the facts of this case, the statute is not
so vague that it violates the defendant's due process. CONCLUSION
For the foregoing reasons, Genovese's motion to dismiss the
Indictment is denied.