Has Gizmodo broken the law with its iPhone story?

by Ian Betteridge on April 20, 2010

I am not a lawyer. But I do play one on the weekends.

More importantly, over the years I’ve become intimately familiar with the law as it affects journalists on both sides of the pond. I’ve covered cases like the “trade secrets” disputes between Apple and various news sources, and even had a couple of cases where companies (including one or two very big ones) have wanted to sue me. I’ve learned about this stuff because I’ve had to, in order to avoid ending up in court.

With that in mind, I’ve been looking through the various statutes which might just affect Gizmodo’s legal case over the putative new iPhone.

Trade secrets law

Jared Earle pointed me in the general direction of the Economic Espionage Act of 1996, which makes it an offence to steal or (and this is important) misappropriate a trade secret. There’s no doubt that a new iPhone prototype constitutes a trade secret – so isn’t Gizmodo guilty here?

I spent a long time looking at the issue of trade secrets back when the Think Secret/PowerPage case was going on, which gave me a little insight into the issue. And my take on it is no, Apple can’t claim violation of trade secrets because Gizmodo published the details of the phone.

Why not? Because in order to be classed as a trade secret, you need to “take reasonable steps” to keep it secret. In this case, unless the Apple employee had actually stolen the phone, by allowing it out in public Apple did not take reasonable steps – and hence cannot enjoy the full protection of trade secrets law.

The classic case law in this is all about cars. Car makers go to great lengths to keep the designs of new cars secret. However, inevitably, they want to test them on public roads – there’s only so much testing you can do on private tracks. So they drive them around on quiet roads, usually with some element of “disguise” like fake bodywork added. This is an exact parallel to what Apple did with the new iPhone. It disguised it, and allowed it out into public spaces.

When something is tested internally, it is a trade secret and you are not allowed to takes pictures of it and distribute them, or even write a description of it. There’s plenty of cases which make this clear.

However, if something is seen from a public space, it loses its trade secret protection. You can photograph it, describe it, or examine it in any way which doesn’t violate any other laws. You probably can’t open up a car and poke around in its innards, but that wouldn’t be because it was a trade secret – it would be because you can’t do that with someone else’s property.

So, in my view, neither Gizmodo nor the finder of the phone have a trade secrets case to answer. By testing the phone in public, even under a disguise, Apple lost its trade secret protection.

(UPDATE: Jonathan Ballerano has a good rejoinder to my points about trade secrets, with some insightful comments on how California law specifically affects the issue.)

Lost property law

In California, what you have to do with lost property is covered by the California Civil Code section 2080. Compared to many US laws, it’s actually a model of clarity, but there’s plenty of clauses and sub-clauses to trip the unwary.

The code sets out a pretty clear set of responsibilities for someone who finds lost property. First, within a “reasonable” amount of time, you have to contact the owner if you know or suspect who it is. Second, if you don’t know who it is or the owner “has not claimed the property”, you have to hand it over to the police – again, “within a reasonable time”.

In the Gizmodo case, assuming all statements made by Gizmodo are accurate, the finder attempted to contact Apple and hadn’t had a response within a few weeks. So far, he’s done the right thing. And note that while he has possession of the phone, the law says he has the rights and obligations of a “depositary for hire”. These are defined in section 1852 of the code as showing “at least ordinary care for the preservation of the thing deposited” – in other words, you can’t break it, dump it in the river, leave it lying in the street, and so on.

The legal problem that the finder will face in this case is showing that, in selling it, he was acting in accordance of the duties of a depositary for hire. I don’t think, in fact, that he can: selling property you know you don’t own when you are the depositary is analogous to you leaving something with a storage company for safe keeping and them selling it (storage companies are, in fact, literally “depositaries for hire”).

Secondly, by selling it, he clearly violated his secondary duty (after attempting to contact the owner) of giving it in to the police, which is established under section 2080.1. So there’s a double-oops here.

Theft and stolen property

But it also gets a lot worse – and our finder may have got himself into criminal trouble. Section 485 of the California Penal Code says that anyone who finds lost property and “appropriates such property to his own use, or to the use of another person not entitled thereto, without first making reasonable and just efforts to find the owner and to restore the property to him, is guilty of theft.”

Oh dear. Suddenly, we’ve moved from a civil matter between Apple and the finder to a criminal matter between the State of California and the finder. Oops.

Of course, were such a charge to be brought, everything would hinge on whether the actions taken by the finder amounted to being “reasonable and just”. Much will depend on exactly what he did. Personally, I think that “reasonable and just” would involve more than a couple of phone calls and raising an automated support ticket – I’d be driving over to One Infinite Loop and walking into reception demanding to see someone (and hoping I got a free new phone when they came out for my trouble).

Up till now, we’ve mostly been talking about the potential legal issues regarding the guy who found the phone. Gizmodo didn’t find the phone, so arguably doesn’t have the responsibilities of a finder with regard to lost property. As outlined, I also think they’re in the clear with regard to trade secrets.

But if Section 485 does, in fact, mean that the phone is stolen, Gizmodo is placing itself in the potential position of being in violation of California Penal Code section 496, which deals with receipt of stolen property. To be guilty, you must knowingly obtain the goods – being in receipt of stolen goods when you believe them to be legally-obtained is the classic defence.

On the face of it, this would be a good defence for Gizmodo. However, it may not be enough to cover them.

A classic example of how the courts test for this is the “back alley” thought experiment. If you buy an expensive watch from a shady-looking guy in a back alley, it’s reasonable to for the court to believe that you know it’s stolen, or at least strongly suspect it is. In this case, the circumstances make it impossible to believe you could have formed a reasonable judgement that the watch wasn’t hot.

In the Gizmodo case, a prosecutor would argue that the site should have known about the law on lost property, and in particular Section 485 of the Penal Code which makes it theft to appropriate lost property. We are, after all, talking about a multi-million dollar organisation that can, at the very least, afford some lawyers.

If successfully argued, that would make Gizmodo guilty of knowingly being in receipt of stolen property – at which point, some of them could end up going to jail for a year. Perhaps more painfully, Apple would be entitled to claim up to three times any losses it had suffered because of the theft and receipt – and I suspect it would argue that the losses it had suffered amounted to many millions of dollars. The bill would be far more painful to Gizmodo that any likely criminal sanctions.

Conclusions

This case is very much not like the earlier ones that Apple brought against Think Secret and PowerPage. There’s no issue about trade secrets here. Once that phone is out in public, even disguised, it’s no longer got much in the way of trade secret protection.

By my count, our unnamed iPhone finder has violated California’s lost property law in two different ways, and could easily be charged with theft because in doing so he misappropriated lost property pretty wilfully. On the statements that Gizmodo have made about the efforts he made to contact Apple, I’m pretty certain that he didn’t do enough, and even if he did, once he got no response he should have handed it over to the police rather than selling it.

Gizmodo, on the other hand, gets off relatively lightly by only being up for a potential charge of receiving stolen goods (assuming the theft charge is also brought). A year inside for Messers Denton and Chen, and a big enough set of damages to bankrupt the company may ensue.

Or it may not. In fact, I think the odds are that Apple will make no attempt to get criminal charges pressed (and it’s pretty unlikely the police would pick it up otherwise), and will take no civil action against the finder of the phone.

Why not? Because I don’t think there’s any benefit to them to doing so. Getting dragged into what would undoubtedly be a long-running case, involving a website which would undoubtedly play the “chilling effects” “press freedom” card wouldn’t benefit them.

But you can bet that Gawker won’t be getting any press access to anything from Apple soon.

Law and ethics

As a reporter – and make no doubt, Gizmodo is reporting here, actually doing journalism red in tooth and claw – you inevitably end up walking close to the edge of what’s legal every now and then. Whether it’s being in receipt of confidential information, publishing something that’s potentially defamatory, or standing closer to the front line of a protest than the police would like, you occasionally have to put yourself in some legally-risky positions.

What I’ve talked about here is purely the legal position. I’m not making any judgements about the ethics of it. In (potentially) breaking the law, has Gizmodo overstepped the line that journalists occasionally have to dance around? In paying $5000 for the iPhone, did it do something that isn’t justifiable?

I’ll save that for another post. Suffice to say, it’s complicated.

Tagged as: Apple, iPhone, law, Trade secret

http://jearle.eu/ @jearle

Seeing as our plucky thief had the name, place of employment and Facebook page of the guy who lost the phone on the night the phone was stolen, before it was remote-wiped, I don’t believe the assertion that he exhausted all avenues of returning the phone.

This event is the gift that keeps giving. Get the popcorn on.
http://www.shootingatbubbles.com Steven Hodson

Gotta hand it to you Ian that is a good post. Just curious if you have read the diatribe from Joe Wilcox yet – http://www.technovia.co.uk/2010/04/has-gizmodo-broken-the-law-with-its-iphone-story.html

I found myself exceedingly irritated with him using the old “only bloggers would stoop this low and journalists would never think of doing this type of thing” argument – http://www.inquisitr.com/70452/blogs-journalism-and-joe-wilcoxs-dream-world/

Thanks for bringing some balance to the “legal” end of the discussion and as you said the ethics are a different kettle of fish altogether.
ConnorJack

Interesting article definately. But I doubt Apple will press any kind of charges. If they have revealed a new iPhone that Apple wanted hidden, they aren’t going to look too good pressing charges. If I were Apple, i’d be downplaying the incident….

But in a nutshell of this article: he’s found lost property that’s been sold. I think returning it to Infinite Loop would have been more beneficial than payment.
Ian Betteridge

Thanks Steven. Yes, I’ve read Joe’s post – I don’t agree with Joe’s angle that it’s a UTSA (trade secrets law) issue. I’m not sure he’s really saying that “only bloggers would stoop so low”, but he certainly has a bee in his bonnet about the decline in general quality of journalism – as I do, to be honest. And I don’t see Gizmodo as “bloggers” anyway. When you’re turning over millions of dollars in ad revenue, you’re a long way from “blogging”, at least in any meaningful sense.

ConnorJack: Yes, I agree. I don’t think it will do Apple any good to press charges. But occasionally, Apple does the unpredictable…
bdh

The issue of “reasonable steps” with regard to trade secrets is much more nuanced than you’re letting on here. Disguising it physically, retaining the ability to remotely wipe it, and (importantly) not displaying it on a public road, but giving it only to selected employees under NDA, makes it obvious that some reasonable steps were taken (see DGC v DCC). The fact that someone had to commit a theft in order to discover the secret is not dispositive, but is a factor.
marcee

If Apple were to sue (though I don’t think they will) – the reality is, how did this cause a loss of millions of dollars? If anything, it’s tons and tons of free publicity. I’m confused on what grounds they could sue for, especially if Giz isn’t in violation of Trade Secret law.
Bill

BUT, in order for Gizmodo to publish photos, they had to first violate the Lost Property laws… those laws in this case might be all the protection Apple needs for those secrets. PLUS, Gizmodo opened the phone. Lets not forget ENGADGET, who were the first to publish photos.
Ian Betteridge

Marcee: Apple could sue the original finder (but probably not Gizmodo) for breaking the civil code on lost property. Damages come into play if Gizmodo was found to have received stolen property – which is a separate issue.

bdh: I can’t find any reference to a case called DGC v DCC. Got a link?
Ian Betteridge

Bill: Publishing photos doesn’t in and of itself violate any laws. For example, had the finder made best efforts to contact Apple and, in the meantime, published his own photos (or allowed others to take them), Apple would struggle to show that this isn’t consistent with being a “depositary for hire” – no damage is done to the property (taking it apart and photographing it is a different matter).

Engadget were, indeed, first to publish the photos – and I don’t think they did anything illegal in doing so.
JR

All hinges on the definition of ‘reasonable’.
bdh

Sure.

http://www.kentlaw.edu/perritt/honorsseminar/honorssemts2.htm

See note #22. Sorry for the abbreviation, try:

Data Gen. Corp. v. Digital Computer Controls
http://tollesonterry.net tolleson, terry

“You probably can’t open up a car and poke around in its innards, but that wouldn’t be because it was a trade secret – it would be because you can’t do that with someone else’s property.”

So… what kind of trouble, if any, would Gizmodo get into for dismantling the phone and publishing a photo of its innards, captioned, “The guts, the definitive proof”?
Chris

You automobile “mule” analogy only works if someone comes across said mule unattended with the keys in the ignition, drives off in it, and sells it to someone else.

That would certainly seem to qualify as a criminal act. Though I don’t play a lawyer on the weekends (or weekdays either).
Elian Gonzalez

Well, we’re all forgetting one thing: this is America, and no one is every wrong about anything or guilty about another, just fast on their way to making a lot of money. (This helps me explain why Gizmodo appears so openly arrogant and flaunting this as a big joke: they’re never going to get into trouble.)
Ian Betteridge

bdh – Thanks – I should have actually spotted that, as I remember reading about that case back when I was covering the Think Secret/PowerPage story.

You’re right that “reasonable steps” has nuances that I haven’t represented here, but I think the car analogy is still the closest one to the pickle that Gizmodo might find itself in. In fact, you could argue that the lack of proprietary notices on the iPhone was indicative of it not being a trade secret (I know, this sounds crazier than a box of frogs, but as the page you link to points out, such notices are “necessary, but not sufficient”).
Ian Betteridge

Terry: Let’s put it this way – I don’t think that helps Gizmodo’s case. Criminal damage? If it’s now completely non-functioning, that might be an issue…
bdh

Valid point, though I wouldn’t extrapolate too far. While that’s true of something going outside the company (to customers in that case), it doesn’t necessarily follow that it’s true for a product that was only intended to be handled and “seen” (for meaningful values of the word “seen”) by an employee under contract. I don’t pretend to have the answer to that one.
Pingback: iPhonegate: Lost, Stolen Or A Conspirecy? - Bits Blog - NYTimes.com
Ian Betteridge

Yeah, there’s always a danger when you simplify the complex legal stuff. In my defence, I think had I delved into trade secrets law too far, I’d still be writing this post…
David R. Greenberg

I fail to see how the car analogy applies in this case. The requirements of creating a new cell phone necessitates the testing of prototypes out “in the wild,” so that the mere presence of the phone in public should not constitute a failure to properly protect the phone. The phone remained under the guard of an NDA-bound employee until the time it was lost.

Further, although cars are photographed while testing despite the measures taken by manufactures to hide them, the public exposure is only the exterior design. The body design is the public-facing side of the car.

In the case of the iPhone prototype, Gizmodo did far more than photograph the exterior. They disassembled the prototype and revealed its internals. Such internals would never have been seen by the public even if the phone had been waved about flagrantly during testing. Further, by disassembling property that is know to belong to someone else, isn’t this an act of vandalism at the very least?

The damages here are more than just deflating Apple’s PR machine by jumping the gun on the launch. The tight integration of components into a handheld phone is difficult work and knowledge of the particular design choices made by Apple in this regard are of value to competitors. These competitors now have an extra 2 months of lead time on responding compared with having to wait to reverse-engineer a purchased unit.
Alan

A car is a not a phone. You said, it would be illegal to

“open up a car and poke around in its innards, but that wouldn’t be because it was a trade secret – it would be because you can’t do that with someone else’s property.”

Isn’t that what they did? If we’re going by the car example, then Gizmodo removed the “body work” (case), and went as far as to disassemble the phone. They also found, after taking the case off, that it was full of Apple barcodes. Had they simply taken the photos (and considering the phone was bricked by its owner), they would be okay. But, they bought it, tore it apart, and then splayed the contents out on the internet. If that’s not misappropriating trade secrets, I don’t know what is.
Niklas

You draw a conclusion that the phone was out in public, but could Apple argue that the restaurant/bar was a private establishment and therefore the phone was never used in a public space? Just thinking…
http://nerdvittles.com Ward Mundy

Like you said, you’re not a lawyer. I don’t think you’ll find many prosecutors that would touch this case with a ten-foot pole. No jury is going to convict after a person finding a cellphone attempts to contact the lawful owner… only to be ignored by the company if press reports are accurate.
Pingback: How Apple Screwed Up With the iPhone 4G
Ken Jackson

I agree with most of the article, except the reasonable effort portion. I’m not driving anywhere to return something I found, unless it was a lost child. And that’s probably more because having a child run around the house is a pretty big hassle.

I’ll call and let them know where to pick it up. But they need to pick it up on my terms. They lost the device, I was nice enough to find it and let you know I had it, but I’m not going to be any more inconvenienced as a result of it.

I think that should be the reasonable bar. You should apply enough effort such that if someone is looking for the lost item, should be able to retrieve it. Calling Apple is certainly sufficient effort.
Scott

I think the back alley metaphor is a tough sell here. The story of someone losing the phone in a bar at which point someone else picked it up is plausible. After all phones are small, people in bars often get drunk, a drunk person has a greater chance of losing their phone (all things being equal). Is there any evidence Apple even reported it as stolen?

Gizmodo’s cite even has a quote from an apple tech who confirms that someone called to report a lost possible prototype phone (http://gizmodo.com/5520729/why-apple-couldnt-get-the-lost-iphone-back).

The story does not sound like it has obvious holes, and some evidence supports the fact that someone tried to turn in such a phone. That sounds like enough reasonable doubt against a 496 claim to me.
Scott Case

Great post. Got to it from John Gruber @ Daring Fireball.

I was wondering the same thing about Gawker’s future access to Apple press events. Their live-blogging coverage of Apple events has always drawn the pageviews, myself included because it’s as close to real-time as you can get without it being broadcasted. I think I need an intervention because I still go watch the event after it’s posted on iTunes.

But the lifeblood of press is access and sources, and to presumably be either excommunicated or declared “persona non grata” by Cupertino through edict or otherwise would bode ill for their entire operation.
A1by

So if you run a blog, and then you monetize it with ads, that makes your blog not a blog? That logic doesn’t make a lot of sense to me, but hey you have your right to your opinion.

Secondly, depends on how you define “sold” if Gizmodo was going to return the device to Apple anyways, then all he was monetizing was allowing them to access it. Would it be selling stolen property if a reporter was willing to pay me $5K to look at the device for a week?

Just because the almighty Apple may or may not have slipped up does it mean that a blogger/journalist/someone who likes mac & cheese shouldn’t try to take the story and run with it
Ian Betteridge

A1by: “So if you run a blog, and then you monetize it with ads, that makes your blog not a blog”

Good question. I don’t go a whole bundle on there being a difference between “professional journalists” and “amateur bloggers”. I think the only difference is the resources at your disposal – and in this case, Gizmodo has the resources to do serious legal legwork.

“Secondly, depends on how you define “sold” if Gizmodo was going to return the device to Apple anyways,”

Yes – this would be a key question in any trial. However, it’s worth noting that Section 485 doesn’t require intent to steal something in order for it to be theft (something that was recently affirmed in a case called People v. Zamani). So “theft” in a 485 case is a little different to “theft” as we usually understand it.
Aaron

It may not matter if Apple wants to press charges. The local law enforcement (police and government attorneys) may want to pursue the crimes anyway. If I was the district attorney in the area, I’d have a hard time not pursuing such a high profile crime because it sends a message that as long as you can come up with some barely believable story, you can sell other people’s property.

I am an attorney (but not in California). My opinion on the above is that both the finder and Gizmodo committed a crime. I think Gizmodo knew that the guy didn’t have a right to possess the phone, nor sell it to them.
Ian Betteridge

Aaron – thanks for your input, it’s interesting to hear a “proper” legal opinion
bdh

Ward and Ken: the problem here is that the person didn’t call, and then just put the thing in a drawer. He called a generic helpline, rather than making a more direct contact (he had but didn’t use the contact info of the employee, for example). More importantly, he then turned around and sold it after (apparently) a few days. That necessarily fails the “reasonable” bar, because it’s a direct violation of the minimum “efforts” established in CA.
Kevin

I’m not a lawyer but a little common sense tells me Gizmodo should be in some sort of legal trouble for what they have done.

People speak of intent and it can not be proved Gizmodo intended to permanently deprive the rightful owner of their property. They say the fact that they returned it absolves them of any ill intent.

I believe their intent in acquiring possession of the phone and their actions once they obtained the phone proves their actual intent. Which was to obtain a device from an individual they knew was not the lawful owner, to disassemble the device, to analyze and document the device and to then to publish the results. They did this to generate traffic to their website in order to generate ad revenue and notoriety.

In doing this it could be argued that they have harmed Apple’s future financial success in numerous ways. First in photographing and measuring the external and internals of the device then publishing those photos and dimensions they have in effect given competitors of Apple a blueprint of an unreleased product and a means to manufacture a knockoff which could be released prior to Apples release of said product. Second in listing feature of the device such as larger rear camera with flash, front facing camera and higher resolution screen they are providing a list of feature to meet or beat not through speculation but from analysis of a nefariously obtained prototype. The implications of this are two fold, it locks Apple into meeting the prototype’s specifications with their shipping product. There are many reasons a shipping product might not meet the specs of a prototype. By disclosing a prototype’s specifications you risk a backlash if the shipping product lacks in any of those specifications. Realistically companies often have to cut proposed specifications to meet shipping dates or due to component constraints or design constraints. It is unfair to to disclose those unreleased specification as it may also harm a companies stock value if the shipping product does not meet those specifications. Speculation of supposed specifications is one thing what Gizmodo had done in disassembling someone else’s property is another.

I think it’s pretty clear Gizmodo’s intent was it’s own self interest and that Gizmodo did not consider the potential detrimental effects it’s actions could have on the rightful owner of the phone.
http://www.volitans-software.com Matt B

Don’t forget that Gizmodo can play the unknown phone card: “We didn’t know it was really an Apple made iPhone. We thought it might be a fake, but the only way to tell was to get our hands on that.” That eliminates the knowingly stolen goods angle.
http://www.volitans-software.com Matt B

Kevin- what detrimental interests to Apple? This will not in anyway whatsoever hurt them. This will in fact help them. A two month lead time isn’t going to help any of Apple’s competitors. It took two full YEARS for companies to catch up to the iPhone.
Ken Jackson

To be clear, in the Zamani case, Zamani refused to return the boards w/o payment ($8000 to $20000 depending on the date). He knew they were not his boards, but refused to return them w/o payment. That’s very different than this case.
Pingback: Has Gizmodo broken the law with its iPhone story? « Firesaw
Pingback: Has Gizmodo Broken the Law With Its iPhone Story? « Apple News Daily
Tom Ross

Think of it this way: What will happen next time if they don’t press charges now? Remember the break-in at Google’s? And do you realize what mindset staff at Gizmodo must be in to think their actions is justified — because it’s Apple and Apple is evil? Might we see an increasing radicalization at the Church of Open?
http://voice.sierratangowhiskey.net SierraTangoWhiskey

An interesting and valued analysis of the story, but I think it would be helpful to take your automobile analogy a bit further:

Let’s say a test engineer for the auto manufacturer left the disguised car parked in a space (with keys in the ignition and his wallet on the seat) that was blocking another car. The blocked driver comes out to his own vehicle and sees this predicament. Instead of simply moving the offending car out of the way, he waits for awhile, and then decides the car in disguise is a pretty nice ride and takes it home.

Over the next few days this guy calls up a couple of dealer’s service departments, and tells them he has something the manufacturer might be interested in getting back. They give him the brush off. He never tries to contact the person identified in the wallet, much less return the car to him. He also rips off the car’s disguise and realizes it’s the manufacturer’s super secret hot product that’s due to be released three months hence.

A couple weeks later he calls up a car magazine and offers to sell the car to them for $300,000 (10x the expected MSRP for the car). They buy it, bring it into their garage, photograph it with and without it’s disguise, publish a story about it, and then call up the manufacturer to say they have their product and want to return it.

If Gizmodo’s source had simply taken a photo of the device without removing it’s disguise and then sold it to the website, no harm no foul. The story that’s now being told goes well beyond that.
http://jballer.tumblr.com Jonathan Ballerano

Ian,

Thanks for the informative analysis.

I can’t help but feel that your dismissal of possible trade secret claim is conclusory – your analogy to automobiles is broken because, as a practical matter, you lose a car. Apple is a lot more concerned with protecting its new products than any car manufacturer, and it relies more heavily on trade secrets to regulate its marketing process than any other company.

While you are right in that something is no longer a trade secret once it’s exposed to the public, that doesn’t preclude a case for Apple here. The device itself wasn’t the trade secret; each difference between the iPhone 4G and the iPhone 3GS was a trade secret until it was discovered. The design of a new car that’s being road-tested is no longer a trade secret, but you can’t argue that, as a matter of fact, all latent internal components are also unprotected.

I did a little bit of research throughout the day, so I’ve got an unfair advantage with respect to case law… so know that I’m not arguing with you here as much as showing where your argument might have been deficient.

Misappropriation is a disclosure by a person who “[b]efore a material change of his or her position, knew or had reason to know that it was a secret and that knowledge of it had been acquired by accident or mistake.” Under Cal. Civ. Code § 3246.1(b)(2)(C). At first glance, I thought this meant that Gizmodo didn’t mean to acquire a trade secret (i.e. thought they were getting a Chinese knockoff) – but California Courts read that to mean that the “disclosure was a mistake” (Steinberg Moorad & Dunn, Inc. v. Dunn, C.D. Cal. 2002, WL 31968234). So Gizmodo’s “why we think this is the real deal” article is essentially a smoking gun under this test. If they maintained that they had no idea it was real, they might be able to escape the “should have known” requirement.

Nothing about this phone, other than a fuzzy photo giving an idea of the aesthetics, was widely known until Gizmodo published their article. Secrecy up until then was certainly evidence that Apple had been taking steps to protect this stuff. John Doe chose to continue to protect this secrecy for his personal financial gain, so that he could sell the “reveal” to the highest bidder. Gizmodo knew that Apple didn’t mean to disclose anything about that device.

Furthermore, I can’t see the “freedom of the press” argument getting very far, when you frame it as one corporation profiting from the disclosure another corporation’s trade secrets. There’s nothing “chilling” about maintaining secrecy that the law already protects.

Sorry for trolling… I’m actually creating a Tumblr right now so that I don’t ever do this again.

Jonathan
Ian Betteridge

Heh, Jonathan, none of that sounds like trolling to me – thanks for the input.
phil

When you have a prototype Iphone disguised to looked like a 3GS, I don’t think you can actually ascertain that it is an Apple product without opening it up.
Pingback: Corey Williams » Corey Williams
S. de Castell

The expectation that someone would need to “be driving over to One Infinite Loop and walking into reception demanding to see someone” to be in compliance with the lost property law is preposterous and based on thinking of Apple as some kind of deified company we all owe fealty to rather than a simple owner of goods (which is their real status under lost property law.) If you leave your wallet in a bar and the person tries to call you and writes you a letter and you continue to ignore them, they aren’t under any obligation to make a home delivery and bang on your door. I love Apple products too, but let’s remember they don’t get extra rights under the law because they have a nice finish on their laptops.
Ian Betteridge

S: Given the proximity, I don’t think that’s an unreasonable idea. I’d certainly have done it.
Hernan

Nice info, thanks. Ethics aside, the legal implications of this case are very interesting. I don’t think it would easy for Apple to prove that the efforts weren’t enough. You can’t expect that whoever finds something must presents herself at the owner’s door. While the sale is a different matter, again it would be very hard to prove that an illegal transaction took place. Can they prove it was in California? Demonstrate a sell and not “let-me-look-at-it-for-5-grands”?
Gunnar

This strikes me as a clear trade secrets case. The guy who found it recognized he had trade secrets in his possession, otherwise he wouldn’t have contacted Gizmodo to sell it. Gizmodo’s point in buying it, disassembling it, and publishing everything they could reverse-engineer out of it, was to profiit by revealing Apple’s trade secrets to the world. They don’t (and can’t) deny this.

A better analogy than cars would be this: a Google engineer leaves his briefcase at the airport, and inside is the source code to their most proprietary and valuable search algorithms. Someone finds it, recognizes exactly what it is, and sells it – not because it is a nice briefcase or because the code appears to.be useful, but because he knows it is proprietary information that can be exploited for a profit.
bdh

S. de Castell:

You’re right but it seems to me that the analogy is irrelevant. If you find a wallet in a bar you aren’t under any obligation to make a personal delivery, but if the person hasn’t explicitly said “keep it, it’s yours”, and the conditions in your state for abandonment have not yet been met (which they weren’t in this case)… and then you turn around and sell it instead of sticking it in the sock drawer or giving it to the police and letting it be there problem? That’s theft. For a good reason… it’d be too easy for you to “try to return” something by sending a letter and then being conveniently unavailable for a handover for a few weeks, and then say “sorry it’s mine”.
Amanda

Think we should note also that the report of the “finder” trying to contact Apple at all come only from Gizmodo and they have an obvious interest in showing this angle in the best light. This is why we have police in the first instance and then courts, to sift through such dissembling. The latest post about “why Apple couldn’t get the phone back” is a remarkable bit of ducking and weaving, glossing over the finder’s actions and putting it all on Apple. Hand it in at the bar, be on your way; the best thing to do both to get it back to its owner because its the first place they’ll check and secondly to relieve yourself of the individual burden of having to chase the person up. Why the “finder” didn’t do this should be explained long before Apple letting it off campus needs to be explained.

Thanks for the analysis, I’ve enjoyed your work in the past too. However I tend to think the relatively low key approach of Apple so far might be ominous, meaning they’re not going to send a simple takedown letter when other more serious legal avenues are already in progress. Even that formal request for the item’s return was pretty relaxed, not on legal firm letterhead etc …. it’s quiet, Gizmodo, Too quiet.