Inspired by this question, and I don't know much about insider trading beyond it.
The title pretty much says it all. Let's say I make software that picks up on patterns of insider trading. (For example, short sales that happen just before big news comes out that causes people to trade). I use this software to identify insider trades and make the same trades. Have I committed a crime?
A cautious "no." Public information is just that, public. If you are able to data mine and use that information to create a buy signal, you are legally able to trade on that signal. Since nothing is ever 100%, your signals would likely just exhibit a very high correlation to stocks being traded on inside information. Regardless of why those trades happened, the fact that they did is public, milliseconds after the trade.
Cautious, because you might still be investigated. As long as you have no ties to the real insiders at these companies, and are genuinely running software to create these signals, you should be fine.
Nothing at all wrong about that. Be careful that especially before big news, it's rather common that there are huge swings because (a) the market makers pull/widen their quotes, (b) others already do what you are describing and (c) other actors try to exploit the situation by moving the market in one direction chosen at random and taking the profit before the actual news hits, so it doesn't even matter to them which side they bet.
If you spot your pattern you can't know for certain if the cause is actual insider trading or (c) amplified by (b). You don't know, so you take an educated guess and make a bet. That's trading, not insider trading.
Edit: It would possibly be a slightly different case if you could write software that identifies insider trades with a 100% guarantee, which nobody else has been able to do so far. In that case sell it to market regulations or the DOJ for a few millions and retire early and risk free.
I think the question hangs on "am I insider trading", because the answer depends on who you ask. To a human jury of your peers, the answer is probably "no". You could make a strong case that mimicry is not the same as insider-trading. But to any program that detects insider trading, including your own, the answer would obviously be "yes" because that is essentially what you are trying to do. Mimic insider trading.
And I can foresee this going horribly wrong...
Any programmer worth their salt will make sure to blacklist themselves from insider-trading-detection, else you will create a positive-feedback loop of faux-insider-trading. But unfortunately you cannot blacklist other mimics - after all they look and act just like the real thing. Then a human on any of those bot's lists of insider-traders could control all the bots in a very predictable way.
