If you are not certain of whether you are entitled to a piece of software or digital content, beware of storing it in the cloud.

That is one lesson from the intriguing case of Sergey Aleynikov, a former computer programmer at Goldman Sachs who has been accused of stealing software used in Goldman’s automated trading programme by uploading it to a server in Germany.

Mr Aleynikov denies charges of theft of trade secrets and “transportation of stolen property in foreign commerce” and says that he only intended to transfer some open source files. He uploaded the files to the German server as a means of storing them temporarily, he says.

The FBI affidavit detailing the charges against Mr Aleynikov describes the server to which he uploaded material thus:

Based on a search of the website’s URL on a publicly-available database, it appears that the website is registered to an individual with an address in London, United Kingdom, and associated with a computer server located in Germany. Based upon information provided by financial institution representatives, it appears that the website, similar to an electronic document-management system, allows users to upload, save, and manage different versions of software code that the user is editing.

So the second charge results from Mr Aleynikov having stored the code on a remote server (known as “in the cloud”) rather than on, for example, a flash drive and the fact that this server happened to be in Germany.

I did not know this, but virtual border-crossing is thus similar to the physical crossing of state or national borders in that it compounds the original offence. This compounding effect is why US citizens accused of fraud are often accused of wire and mail fraud too.

Most of us store material “in the cloud” without knowing in which country the cloud happens to be, for example when we use a web-based email service. This case shows the additional legal jeopardy involved in doing so in the US.

July 6, 2009 8:33pm in Business, Technology | Comment