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Stephen M. Byers

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Stephen M. Byers is a partner in the firm's White Collar & Regulatory Enforcement Group and serves on the group's steering committee. He is also a member of the firm's Government Contracts Group and E-Discovery & Information Management Group. Mr. Byers's practice involves counseling and representation of corporate and individual clients in all phases of white collar criminal and related civil matters, including: internal corporate investigations; federal grand jury, inspector general, civil enforcement and congressional investigations; and trials and appeals.

Mr. Byers's practice focuses on matters involving procurement fraud, health care fraud and abuse, trade secrets theft, foreign bribery, computer crimes and cybersecurity, and antitrust conspiracies. He has extensive experience with the federal False Claims Act and qui tam litigation, the Foreign Corrupt Practices Act, the Economic Espionage Act, and the Computer Fraud and Abuse Act. In addition to defense of government investigations and prosecutions, Mr. Byers has represented corporate victims of trade secrets theft, cybercrime, and other offenses. For example, he represented a Fortune 100 U.S. company in parallel civil and criminal proceedings that resulted in a $275 million criminal restitution order against a foreign competitor upon its conviction for trade secrets theft.

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On April 20, 2020, the Supreme Court granted cert in Van Buren v. United States, to resolve an important circuit split over the meaning of “authorized access” under the Computer Fraud and Abuse Act (CFAA). This is the Court’s first foray into analyzing the precise contours of CFAA liability. Van Buren may have far-reaching implications for any individual or business operating in the digital domain, as the scope of civil and criminal liability under the CFAA can impact just about any sort of relationship involving access to computer systems, whether it be employer-employee relationships or third-party relationships.

The CFAA was enacted in 1986 as a first-of-its-kind statute designed to combat computer-related crimes, and has become an important and powerful tool for not only for the government but any business seeking to protect its intellectual property and computer systems. The CFAA imposes criminal liability on any person who “intentionally accesses a computer without authorization” or “exceeds authorized access” and, in doing so, obtains information from any protected computer. The CFAA also provides a civil cause of action for similar conduct. See 18 U.S.C. §§ 1030(a)(2), 1030(a)(4), 1030(a)(5)(B)-(C).
Continue Reading “Authorized Access”: The Supreme Court’s First Foray Into The Computer Fraud and Abuse Act

On November 4, 2016, the U.S. Commodity Futures Trading Commission approved a supplemental notice of proposed rulemaking concerning its access to algorithmic trading source code in a 2-1 vote. The supplemental notice amends proposed Regulation AT and outlines a new mechanism by which the CFTC can obtain the source code and related records of the automated traders it regulates as part of its routine surveillance of the market.

Algorithmic source code is the foundation of an automated trader’s business model, and as such it is usually the most valuable asset and fiercely protected trade secret an automated trader has. Currently, the CFTC may obtain source code only by issuing a subpoena, which provides the subpoena recipient with certain procedural safeguards such as the ability to challenge the subpoena before a federal judge.
Continue Reading Flash Crash Fears Subvert Trade Secret Protection of Source Code

On July 5, 2016, the Ninth Circuit affirmed the conviction of David Nosal, an ex-employee of Korn/Ferry, an executive search firm, who left to start a competing firm. With Nosal’s knowledge and encouragement, two other former employees of Korn/Ferry used a current employee’s credentials to gain access to the Korn/Ferry database and take confidential information. U.S. v. Nosal, No. 14-10037, 2016 WL 3608752 at 6 (9th Cir. July 5, 2016).

The prosecutors charged Nosal with violating section 1030 (a)(4) of the Computer Fraud and Abuse Act (“CFAA”), which criminalizes “knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing]authorized access, and by means of such conduct further[ing] the intended fraud and obtain[ing] anything of value.”1 Having failed to state an offense that Nosal “exceeded authorized access” by violating the company’s internal use restrictions (decided in Nosal I), the government filed a superseding indictment alleging Nosal violated the “without authorization” prong of the CFAA after his login credentials were revoked through his co-conspirators’ use of his former executive assistant’s login information to access Korn/Ferry’s database.

The jury convicted Nosal on all counts. On appeal, the Ninth Circuit analyzed the meaning of the words “without authorization.” The Court held that the phrase was unambiguous and its plain meaning encompassed the situation in this case where the employer rescinded permission to access a computer and the defendant accessed the computer anyway.Continue Reading United States v. Nosal: Keep Your Friends Close, but Your Passwords Even Closer

The momentum for federal trade secrets legislation appears to be growing with last week’s introduction of the “Defend Trade Secrets Act of 2015” in both chambers of Congress. The bill, H.R. 3326 in the House and S. 1890 in the Senate, would create a uniform federal civil action for trade secret misappropriation, which is currently litigated exclusively in state courts and subject to the States’ various laws. Such a uniform federal civil action seeks to eliminate the splits of authority on trade secret law among the States and the resulting uncertainty about enforcement of trade secrets.  While this is not Congress’ first attempt at civil federal trade secret law, the stakes here are high:  it has been reported that publicly traded U.S. companies maintain a combined $5 trillion in trade-secret-related assets, with the annual economic loss attributable to trade secret theft estimated to be between $167 and $503 billion. These staggering numbers, combined with a recent surge in cyber-attacks and trade secret theft, have lawmakers considering the issue anew.
Continue Reading The Growing Momentum for Federal Trade Secrets Legislation

Sergey Aleynikov, the ex-Goldman Sachs computer programmer convicted of stealing high-frequency trading source code, has once again succeeded in reversing a criminal conviction related to his infamous code-copying acts. Federal prosecutors had previously charged, tried, and won a conviction of Aleynikov for violations of the federal National Stolen Property Act (NSPA) (18 USC § 2314) and Economic Espionage Act (18 USC § 1832). However, in 2012, the Second Circuit reversed both convictions. See United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). That in turn prompted Congress to amend the Economic Espionage Act to close the loophole that allowed Aleynikov to walk.
Continue Reading Twice Convicted, Twice Reversed: Another Aleynikov Code Theft Conviction Overturned

Department of Justice
[via Flickr user jbtaylor]

Editor’s Note: This is the third in a series of posts addressing how corporate victims of trade secrets theft can enforce their intellectual property rights through the criminal justice system.  Prior posts can be found here and here.

Once a criminal investigation of trade secrets theft is underway, it’s not just a matter of the corporate victim passively watching the government pursue the case.  Pro-active engagement is required to maximize the benefits of a criminal investigation and prosecution.  But going about that the right way is an art form – there are many variables, unwritten rules, and traps for the inexperienced.  Effectively managing such situations begins with an understanding of the corporate victim’s relationship with the government.Continue Reading Calling the Cops: Managing a Criminal Investigation and Prosecution of Trade Secrets Theft

Editor’s Note: This is the second in a series of posts addressing how corporate victims of trade secrets theft can enforce their intellectual property rights through the criminal justice system.  The introductory post can be found here.

FBI Building Entrance Large - Blog
[via Flickr user cliff1066]

The criminal enforcement landscape

The federal government has intensified its focus on intellectual property theft in recent years.  For example, there is now an Intellectual Property Enforcement Coordinator  in the White House, and an Intellectual Property Task Force within the Department of Justice. The Intellectual Property Rights Coordination Center spans some two-dozen federal agencies, and has public and stakeholder outreach as part of its mission.  The fact that more trade secrets cases are being prosecuted is a direct reflection of these efforts.  More agents and prosecutors have been made available, and the federal government has become more aggressive in going after foreign officials and state-owned entities despite the diplomatic implications.  Domestic enforcement is on the rise as well, with more high-profile criminal trade secrets cases being brought than ever before.Continue Reading Calling the Cops: Initiating a Government Investigation of Trade Secrets Theft

Sergey Aleynikov, the former Goldman Sachs computer programmer accused of stealing computer source code powering the bank’s high-frequency trading platform, has been convicted by a New York jury of a single count of Unlawful Use of Secret Scientific Material.  The jury hung on a second Unlawful Use count and acquitted Aleynikov on a third count of Unlawful Duplication of Computer-Related Material.

This is not the first time Aleynikov has been criminally convicted for this same conduct:  In 2010, Aleynikov was charged, tried and convicted in federal court of violating the federal National Stolen Property Act (“NSPA”) (18 USC § 2314) and Economic Espionage Act (“EEA”) (18 USC § 1832).  However, in 2012, the Second Circuit reversed both convictions.Continue Reading Split Verdict – Second Criminal Trial of Infamous Goldman Source-Code Thief Concludes

FBI Building Seal Cropped
[via Flickr user Gary Bartram]

One remarkable aspect of the resolution announced last week in the long-running DuPont-Kolon trade secrets dispute is the transfer of $275 million to our client DuPont through the criminal restitution process. This highlights an option for corporate victims of trade secrets theft that is too often overlooked – initiation of criminal proceedings in parallel with civil litigation.  In fact, in some cases, a criminal trade secrets theft investigation and prosecution may eliminate the need for costly civil litigation entirely.
Continue Reading Calling the Cops: Enforcing Trade Secret Rights Through Criminal Prosecution

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E.I. DuPont de Nemours & Co. settled its long-running trade secret dispute against Kolon Industries, Inc. over the theft of trade secrets related to DuPont’s flagship Kevlar® product. Crowell & Moring attorneys, in partnership with McGuireWoods LLP, represented DuPont in the six-year battle.

Kolon also pled guilty to one count of a conspiracy to convert trade secrets in the related criminal matter brought by the United States Department of Justice, and agreed to pay DuPont $275 million in restitution, along with $80 million in criminal fines. Previously, two former DuPont employees pled guilty to trade secret violations for their consulting work with Kolon. One of the employees served an 18-month prison term, and the other is awaiting sentencing.Continue Reading Bellwether DuPont-Kolon Trade Secrets Case Resolved Through Civil Settlement and Criminal Guilty Plea