Source Code Theft Prosecutions In Usa
1. United States v. Sergey Aleynikov (2010, 2nd Cir.)
Facts:
Sergey Aleynikov was a computer programmer at Goldman Sachs, where he helped develop the company’s high-frequency trading (HFT) platform — a highly proprietary and valuable source code.
Before leaving to join a new firm in Chicago, Aleynikov uploaded portions of Goldman’s confidential source code to a server in Germany and later downloaded it to his personal computer.
Charges:
He was charged under:
18 U.S.C. § 2314 (interstate transportation of stolen property), and
18 U.S.C. § 1832 (the Economic Espionage Act - EEA).
Outcome:
Initially convicted and sentenced to 8 years in prison in 2010.
On appeal (2012), the Second Circuit Court of Appeals reversed the conviction, holding that:
The EEA only applied to products “produced for or placed in interstate commerce,” and Goldman’s trading system was an internal tool — not sold or licensed.
Therefore, the EEA did not cover purely internal proprietary source code at that time.
Impact:
This case exposed a loophole in the EEA, leading Congress to amend the law in 2012 to include internal trade secrets (the “Theft of Trade Secrets Clarification Act”).
2. United States v. Anthony Levandowski (2020, N.D. Cal.)
Facts:
Anthony Levandowski, a former Google engineer, worked on Waymo’s self-driving car project. Before leaving Google to join Uber, he downloaded over 14,000 confidential design files, including LIDAR source code and circuit board layouts.
Charges:
Charged under 18 U.S.C. § 1832 for theft and attempted theft of trade secrets.
Outcome:
Levandowski pleaded guilty in 2020 to one count of trade secret theft.
He was sentenced to 18 months in prison and ordered to pay $756,499 in restitution.
Later, in January 2021, President Donald Trump pardoned him.
Impact:
The case highlighted the tremendous commercial value of source code in emerging tech industries (autonomous vehicles) and set a precedent for prosecuting engineers who steal data for competitor startups.
3. United States v. Yu Xue et al. (GlaxoSmithKline Case, 2016–2022, E.D. Pa.)
Facts:
Yu Xue, a biochemist at GlaxoSmithKline (GSK), and several co-defendants were accused of stealing proprietary source code and drug formula data to establish a competing biopharmaceutical company in China.
The stolen data included confidential algorithms and source code for drug research platforms.
Charges:
Conspiracy to steal trade secrets under 18 U.S.C. § 1832.
Wire fraud and economic espionage charges.
Outcome:
In 2022, Xue pleaded guilty to one count of conspiracy.
Sentenced to 8 months of home confinement and 3 years of probation.
Her co-defendants received similar penalties.
Impact:
This case expanded the understanding of “trade secret” to include scientific and computational source code in biotech R&D, reinforcing the broad prosecutorial reach of the EEA.
4. United States v. Xu Jiaqiang (IBM Source Code Case, 2015–2017, S.D.N.Y.)
Facts:
Xu Jiaqiang, a Chinese national and former IBM software developer, stole portions of IBM’s proprietary source code for its file system management software (ILP system).
He intended to benefit Chinese companies and government agencies by using the stolen code to develop competing software.
Charges:
Theft of trade secrets under the EEA,
Economic espionage for the benefit of a foreign government.
Outcome:
Xu pleaded guilty in 2017.
Sentenced to 5 years in federal prison.
Impact:
This was a landmark example of foreign-directed source code theft being prosecuted under the economic espionage provisions of the EEA, strengthening the U.S. stance against China-linked IP theft.
5. United States v. Biswamohan Pani (Intel Source Code Case, 2012, D. Mass.)
Facts:
Biswamohan Pani was an Intel engineer who accepted a new job at Advanced Micro Devices (AMD) but continued to download confidential Intel source code and design documents while still employed.
He copied thousands of pages of source code and microprocessor designs worth hundreds of millions of dollars.
Charges:
Theft of trade secrets under 18 U.S.C. § 1832,
Wire fraud.
Outcome:
Convicted and sentenced to 3 years in prison (2012).
Ordered to pay $17,500 in fines.
Impact:
Reinforced that intention to benefit oneself or a competitor, even without actual use of the data, constitutes theft under the EEA.
6. United States v. David Kent & Timothy Lloyd (Omega Engineering Case, 1996–2002)
Facts:
Timothy Lloyd, a former network administrator at Omega Engineering, was fired and later planted a malicious code (“logic bomb”) in Omega’s manufacturing systems.
The attack deleted proprietary source code, causing over $10 million in damages.
Charges:
Computer Fraud and Abuse Act (CFAA) violations,
Wire fraud and intentional damage to protected computers.
Outcome:
Lloyd was convicted in 2002 and sentenced to 41 months in prison.
He was also ordered to pay $2 million in restitution.
Impact:
This case illustrated how malicious deletion or sabotage of source code by insiders is treated as theft and destruction of intellectual property, not merely a technical violation.
7. United States v. Suibin Zhang (Marvell Semiconductor Case, 2010, N.D. Cal.)
Facts:
Suibin Zhang, an engineer at Marvell Semiconductor, downloaded thousands of source code files and proprietary design documents belonging to his previous employer, Netgear, and used them at Marvell.
Charges:
Trade secret theft under 18 U.S.C. § 1832.
Outcome:
Convicted after trial.
Sentenced to 3 months in prison and 3 years of supervised release.
Ordered to pay $75,000 in restitution.
Impact:
Confirmed that copying source code from one employer to use at another constitutes trade secret theft even without commercial sale — intent to benefit a competitor is sufficient.
Summary Table
| Case | Year | Defendant | Company Affected | Key Issue | Outcome |
|---|---|---|---|---|---|
| U.S. v. Aleynikov | 2010–2012 | Sergey Aleynikov | Goldman Sachs | HFT source code | Conviction reversed; led to law amendment |
| U.S. v. Levandowski | 2020 | Anthony Levandowski | Google (Waymo) | Self-driving car code | Guilty plea; 18-month sentence; pardoned |
| U.S. v. Yu Xue | 2016–2022 | Yu Xue | GSK | Biotech algorithms | Guilty plea; probation |
| U.S. v. Xu Jiaqiang | 2017 | Xu Jiaqiang | IBM | Foreign espionage theft | 5 years imprisonment |
| U.S. v. Pani | 2012 | Biswamohan Pani | Intel | CPU source code | 3 years imprisonment |
| U.S. v. Lloyd | 2002 | Timothy Lloyd | Omega Engineering | Destruction of source code | 41 months imprisonment |
| U.S. v. Zhang | 2010 | Suibin Zhang | Netgear | Employer-to-employer theft | 3 months imprisonment |
Legal Takeaways:
Source code qualifies as a trade secret under U.S. law if it derives independent economic value from being confidential.
The Economic Espionage Act (EEA) and Computer Fraud and Abuse Act (CFAA) are the main statutes used in such prosecutions.
Intent to benefit oneself or another entity — even without actual use — is enough for conviction.
The Theft of Trade Secrets Clarification Act (2012) closed previous loopholes (e.g., internal-use software now protected).
Both domestic and foreign thefts of source code are treated severely as federal felonies.
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