Vol. 8, No. 1, Pg. 37. Stolen Software, Data Files and the National Stolen Property Act.

• Author: By Chad A. McGowan

South Carolina Lawyer

1996.

Vol. 8, No. 1, Pg. 37.

Stolen Software, Data Files and the National Stolen Property Act

37Stolen Software, Data Files and the National Stolen Property ActBy Chad A. McGowanIn the first quarter of 1995, prepackaged software sales in North America totaled more than 52 billion, according to the October 1995 CD-ROM Professional.

38 With an industry that generates that amount of revenues, crime focusing on the object of the industry-the software and its source codes-is bound to become increasingly more important to the sophisticated criminal defense practitioner. This article gives a brief overview of computer software and the applicability of the National Stolen Property Act (Act), 18 U.S.C. § 2311 et seq., to crimes involving the interstate transportation of stolen software and data files.

Programs such as WordPerfect, Lotus and Windows are all examples of prepackaged software. Another large segment of the software market is custom software. With custom software, a company contracts with a computer firm to design and implement a software system to accomplish the company's goal. Banks, insurance companies and law firms frequently use custom designed software to maintain and provide accounts, records, e-mail and reports.

Whether the software is prepackaged or custom, all software designers put a premium on efficient coding of the instructions. This coding allows the computer to work more quickly with less errors and allows the program to take up less space on a hard drive and in memory. This is due to the way the computer actually processes the instructions.

With more efficient coding, fewer instructions are required. Therefore, the program occupies less space. Efficient coding saves space and time, two key commodities in every computer system.

Efficient coding is often the result of extensive hours of work by computer designers, as well as the occasional spark of insight. For the company who pays the designers for their coding, that code is a closely guarded trade secret. Moreover, proprietary computer instructions can be the basis for competing businesses. Computer codes, therefore, are very valuable property.

The same applies to computer based data files. Companies store tremendous amounts of data on their systems that is very valuable as a source of information for the company itself, such as internal sales data, or to a company's competitors, such as a list of all the customer's accounts. These data files are generally trade secrets of the companies that maintain them.

Problems arise when an employee or a computer hacker makes unauthorized copies of software and data files and the company complains to the federal government of the theft of computer data.

Typical examples include those where a computer hacker gains remote access to another's computer system via modem. The hacker, if he or she gains entry into another system, has broad access to information. The hacker can delete, move and copy files from the other person's system to his or her own system. This situation actually occurred in U.S. v. Riggs, 739 F. Supp. 414 (N.D. Ill. 1990), which will be discussed below.

Another typical situation is where an employee of one firm goes to work at another competing firm. The employee takes proprietary computer files to his or her new employer. The former employer then contacts the government in order to instigate prosecution of the employee. This situation occurred in U.S. v. Brown, 992 F.2d 1029 (10th Cir. 1991)...