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

Doug

“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.”

In this case, he contacted my landlord (not me), and then sold my wallet to my rival – instead of turning it in to the police, which is required by California law.

Let’s not forget that selling something that isn’t yours is a crime.
Another lawyer

Traditional theft requires knowing and willful intent. Keeping lost property does not fall within that rubric. The common law rule is “finders keepers” as against all but the true owner, and the common law rule has no requirement that the finder seek out the owner. Sure, California’s statutes differ, but California’s statutes have some problems. It’s highly unlikely that a criminal conviction would withstand an appeal. Assuming the prosecutor could get a conviction (which is unlikely), the statute would be subject to a strong challenge for vagueness. Other challenges could be made as well. Maybe the guy should’ve tried a little harder to return the phone, but he shouldn’t be punished (civilly or criminally) for not trying.
Another lawyer

One more point … Gizmodo suggests that, initially, Apple wouldn’t even confirm that the phone belonged to Apple. Assuming Gizmodo’s telling the truth, Apple’s refusal to confirm ownership strengthens Gizmodo’s and the seller’s case for non-liability.
Amanda

@AnotherLawyer, if he’s punished it won’t be for not trying to return it surely, it’ll be for onselling it to the highest bidder within a couple of weeks.
S. de Castell

@Ian – I agree that someone might well choose to go the extra mile but the question is whether they’re legally obligated to do so.

@bdh – I don’t disagree at all with you but the specific question had to do with lost property obligations. I’m not in any way saying that the finder has a right to keep or profit from the property, only that they aren’t required to drive out to Apple’s headquarters after Apple has ignored their calls and messages.
Another lawyer

@Amanda, he almost certainly won’t be punished for “onselling [sic] it to the highest bidder within a couple of weeks.” The criminal code doesn’t forbid the selling of found property. The code merely requires “reasonable” and “just” efforts to return the property. A prosecutor’s going to be hard pressed to get a jury to convict the guy of acting unreasonably or unjustly. Even if a prosecutor gets a conviction, there’s a good chance the trial judge or appellate court will vacate the conviction on constitutional grounds.
Amanda

Well that’s a different interpretation of the statute than others lawyers’. We shall see I guess.
Athol

I think they’re in trouble now.

Apple clearly disguised the phone, the finder did not give the phone over to the police which already would put him in the guilty category. The laws quite clearly state what you need to do with stolen property.

Gizmodo has broken the law by dismantling the phone. Would it be any different if they dismantled a iPhone 3G they didn’t own? Destruction of someone else’s property would still be an offence and they would have known it. On the issue of trade secrets, as someone pointed out, even with the phone in public, it was disguised and no opposition companies would have access to the inner workings of the phone until release and Gizmodo have provided this to the opposition more than 60 days before the phone is due for release. Apple may even argue the employee was not allowed to take the phone offsite (a real possibility) in which case the whole trade secret issue becomes a whole new ball game because he could find himself in hot water as well.

I find it interesting that you think that Apple would do nothing. On the contrary, I think that Apple would do the exact opposite as a warning to other websites. If Apple successfully shuts down Gizmodo with a large lawsuit and associated criminal proceedings, don’t you think other websites would think twice before publishing information like this? I also suspect that it would not lose them many customers because of this.

As for the publicity, Apple gets enough publicity that I honestly don’t think they need this to gain popularity for their devices. They sold 50 Million iphones to date. On the contrary, by providing a partial blueprint to the competitors, Gizmodo just gave their competitors 60 days of breathing space in developing an opposition product which is a long time in a market with only a 1 year change between releases.
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Another lawyer

@Amanda, read the statutes yourself. I’ve pasted the statutory text below this comments.

There’s nothing in the criminal statutes that prohibits the selling of found property. The criminal statute criminalizes the selling of stolen property. Selling found property is not against the law.

The civil statutes were potentially violated because the phone wasn’t turned into the police. But a phone that no longer works is arguably not worth $100. The fact that the Gizmodo was willing to pay $5,000 for the phone on the off chance that the phone was something more than a broken iPhone 3G does not mean the phone was worth $100. A court will consider the phone’s value to be what the average person who found the phone would consider the phone to be worth. That value may or may not be more than $100, but the finder has a good argument that the average person would consider the phone to be less than $100 once the phone stopped working and Apple expressed no interest in retrieving the phone after the finder called Apple. Moreover, even if the finder’s conduct did violate the civil statute, what’s the penalty? There isn’t one to my knowledge (although I don’t purport to have read the entire California code, so I may have missed an existing penalty).

CRIMINAL:

§ 496: (a) Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a state prison, or in a county jail for not more than one year.

CIVIL:

§ 2080. Duties of finder Any person who finds a thing lost is not bound to take charge of it, unless the person is otherwise required to do so by contract or law, but when the person does take charge of it he or she is thenceforward a depositary for the owner, with the rights and obligations of a depositary for hire. Any person or any public or private entity that finds and takes possession of any money, goods, things in action, or other personal property, or saves any domestic animal from harm, neglect, drowning, or starvation, shall, within a reasonable time, inform the owner, if known, and make restitution without compensation, except a reasonable charge for saving and taking care of the property. Any person who takes possession of a live domestic animal shall provide for humane treatment of the animal.

§ 2080.1. Delivery to police or sheriff; affidavit; charges (a) If the owner is unknown or has not claimed the property, the person saving or finding the property shall, if the property is of the value of one hundred dollars ($100) or more, within a reasonable time turn the property over to the police department of the city or city and county, if found therein, or to the sheriff’s department of the county if found outside of city limits, and shall make an affidavit, stating when and where he or she found or saved the property, particularly describing it. If the property was saved, the affidavit shall state: (1) From what and how it was saved. (2) Whether the owner of the property is known to the affiant. (3) That the affiant has not secreted, withheld, or disposed of any part of the property. (b) The police department or the sheriff’s department shall notify the owner, if his or her identity is reasonably ascertainable, that it possesses the property and where it may be claimed. The police department or sheriff’s department may require payment by the owner of a reasonable charge to defray costs of storage and care of the property.
Another lawyer

@Athol, what’s your statutory basis for arguing that Gizmodo broke the law by dismantling the phone? You shouldn’t make assertions you can’t back up. Gizmodo arguably — though not clearly — may have violated the civil law by dismantling the phone. But, even assuming Gizmodo violated the law, there’s no apparent state penalty for doing so. Apple could sue for damages, but Apple would have a hard time proving anything other than nominal damages. Moreover, if, as Gizmodo suggests, Apple initially refused to confirm ownership of the phone, Apple may be estopped to argue that it was harmed by Gizmodo’s actions occurring prior to Apple’s formal claim of ownership.
Another lawyer

@Athol, you don’t seem to know much about the realities of litigation. If Apple sued, which is unlikely, here’s how things would probably play out: Apple would sue, Gizmodo would immediately make an offer of judgment for a nominal amount, and Apple would accept that offer. Apple would accept because Apple wouldn’t want to take the substantial risk that Apple would recover less than the judgment-offer amount at trial and then consequently be on the hook for all of Gizmodo’s attorneys fees.
Preston

If you found a Razr on the ground, would you call Motorola customer service to return it? No, in those few hours that you had access, you’d call some of the numbers or emails to contact/find the owner. Playing with the device, popping the cover, etc., does not look good, and it’s disingenuous to say Apple’s the owner when the employee that lost it could probably be deemed the “owner.”

Also, I think your trade secret analysis may be lacking, too. Seems like shrouding the device in a protective cover and having lock capabilities is some good effort to maintain trade secrets. Without doing the research, I believe there’s gotta be some case law on this. It’s like the difference between publicly available customer list data and customer list data made public by a disgruntled employee that publishes on the internet. It’s kind of like corporate espionage, but worse. Giz took it on themselves to knowingly publish clearly trade secret material.

Plus, you’re looking at California. There’s got to be some broad tortious interference with economic relations claims or something in there. Maybe there’s some corporate expectation of privacy or something.

Also, think about the criminal stuff. Apple’s not going to be bringing this case. They may bring a civil one, but they’ll call the authorities to investigate and look at charging the thief and receiver of stolen goods. When Giz goes to the owner to purchase the phone, though, they know they’re not buying a regular phone on the market. They’re buying something that’s secret and protected by Apple.

Not to mention the fact that Apple is a public company and there could be some interesting issues raised by publishing clearly nonpublic information about the company. Query whether anyone at Gawker/Giz owns stock in Apple.
I_prefer_Yeti

Now that Gizmodo has posted detailed photos and description of the phone dissected, does the legal situation change?
Another lawyer

@Preston, it doesn’t matter that the engineer “appeared” to be the owner. The law states that the finder’s duties are to the owner. Since the engineer isn’t the owner, the finder had no duty to contact the engineer.
Another lawyer

@Preston, you’re also assuming that the finder made no efforts to contact the engineer or that, after discovering the phone had been shut down remotely, the finder remembered the engineer’s name. (I’m assuming that Gizmodo’s statement of facts are true, but that’s the assumption the law will apply until a case gets to the jury — unless Apple has grounds for asserting the facts are otherwise. “Grounds” means evidence, and “evidence” means something other than Apple’s speculation at what the finder did. At this time, we have no statement of facts from Apple, thus we’re left with Gizmodo’s allegations only.)
Athol

Another Lawyer, it depends on whether the key outcome is simply to get compensation.

If it were me, and I had a couple of billion in the bank, punishing the offender and setting an example would be a tad more important than paying lawyers fee’s. I’d ensure that Gizmodo were hit hard enough that it set an example to the journalistic community rather than to simply get a couple of hundred grand which makes no difference to my bottom line anyway.

If Apple backed down and looked at a small settlement, the option would remain open for people to weight up the pros and cons of a settlement vs website publicity. If on the other hand the stakes were higher, like potentially shutting down the website, someone in the journalistic community may think twice before doing the same thing.
Another lawyer

The point is that Apple wouldn’t be able to punish Gizmodo. Most states (and I assume, although I don’t know, that California is the same) have an offer-of-judgment rule. Under that rule, (1) if a defendant (i.e., Gizmodo) offers to settle; (2) the plaintiff (i.e., Apple) rejects that offer; (3) and then the plaintiff loses at trial or wins an amount that is less than or not much more than the offer to settle, (4) the plaintiff is liable for all of the defendant’s attorney’s fees incurred after the offer of judgment. In other words, since Apple has no real damages, Apple can’t hurt Gizmodo by suing Gizmodo. If Apple sued, Gizmodo would immediately offer to settle for a nominal amount — say $1,000 — and, if Apple refused and then lost or won only around $1,000 or less (which is what would happen), Apple would have to pay Gizmodo’s fees. Thus, knowing that Apple would only recover around the offer-of-judgment amount, Gizmodo wouldn’t care how long the litigation lasted or how expensive it got because, at the end of the day, Apple would have to pay all of Gizmodo’s fees and costs — which is why Apple will never sue in the first place.
Another lawyer

@Athol, plus Gizmodo surely has insurance to cover suits such as the one we’re discussing. So being sued, wouldn’t pose any serious risk of shutting Gizmodo’s site down. The insurance would cover Gizmodo’s attorney’s fees until the case ended. (Gizmodo’s liability insurance would be similar to your auto liability insurance — if you get sued, the insurance company pays for lawyers to defend you.)
Ryan

@ Athol I totally agree. Gizmodo can back-pedal and spin their stories of self-righteousness all they want because at the end of the day they KNEW that they were undertaking a shady operation. They dissected a confidential piece of proprietary technology still in production and distributed globally, the details for all competitors to see.

All of the Apple employees who go to work everyday busting their asses off to see a product to market just lost a bit of that confidence they had in their return. Gizmodo should be ashamed of themselves. I am deleting their blog link because of their lack of respect. I wonder if they were paid out by some other company? Hmmm…
http://jballer.tumblr.com Jonathan Ballerano

My last post was more troll-ish before I edited it down!

I just made my first contribution to this saga at: http://jballer.tumblr.com/post/536967462/how-nick-denton-found-the-next-iphone

Why don’t you think the UTSA would apply? It looks like a winner to me, and it seems like California is more liberal with trade secret remedies – allowing for a charge of indirect trade secret misappropriation. Apple only needs to show that:

1) Apple owns a valid trade secret 2) Gizmodo got the secret from someone other than Apple 3) Gizmodo had reason to know it was a trade secret without Apple’s authorization 4) Apple suffered harm, and/or Gizmodo benefited, from the disclosure [I got this from Trade Secrets Law (TRDSECRT on Westlaw) § 22:2, which directed me to the case I cited in my first post.]

While there might be an issue as to whether Apple forfeited the trade secret by losing it, I think that Gizmodo would be estopped from using that as a defense. They were only interested in it for the value of “unlocking” these secrets, and voluntarily chose to keep it under wraps until they could maximize the damage (by “documenting” everything before Apple even knew they had it). In essence, they implicitly assumed the burden of protecting the trade secrets, with a malicious intent to profit from its destruction.
Steko

“In other words, since Apple has no real damages…”

You didn’t actually show that, you just said it. Apple can make a pretty strong case that this hurt them by helping their competitors. Tens of thousands of phones in lost sales over 2 months adds up fast.
Gunnar

AnotherLawyer – it’s not about the $100 worth of phone. Gizmodo knew they had Apple trade secrets in their possession and they trumpeted that belief as they published those secrets. The fact that the intellectual property took a physical form, that it was an actual device, makes it even more damning. It’s one thing to pass on a rumor, it’s another to buy a stolen prototype and then reveal its design to a company’s competitors.
Terrin

Another lawyer, as a former prosecutor, I think your analysis is flawed. I sincerely hope you are not a defense attorney. I personally would have little trouble of successfully trying the finder of the phone especially under the Civil Code, but probably under the Criminal as well.

First, the person finding the phone chose to take possession of it, thereby becoming, “a depositary for hire.” That means he had the responsibility to take reasonable measures to safeguard the device while trying to find the owner. Selling it to an unknown source who wanted to dismantle the device hardly qualifies as exercising his responsibility. Further, he had the responsibility of making a reasonable effort to locate the owner. The guy was internet savvy enough to list the device for sale and contact sites like Gizmondo to try to sell the device, but couldn’t take the ten seconds it took me to find Apple’s legal department phone number online? Further, I found Steve Jobs email address in less then a minute. From experience, I know he reads his email and within a day of leaving an important email either his staff or himself will contact you. Finally, if he took the device into an Apple store, he could have gotten a manager there to look at the phone and get corporate on the phone. The manager would have done just that.

Further, the finder clearly knew the phone was an iPhone of some sort and found out the guy who lost it was an Apple engineer. He discovered the phone had unreleased features and was encased in a fake 3GS case. He then thought it important enough to call Apple to supposedly try and return it. There isn’t a jury on earth that would hold the finder didn’t think the device was more then $100. Further, the actual value is probably not important [although prototypes are very expensive because they are hand tooled]. It is what the finder thought the device to be worth. He originally asked $10, 000 for it. The statute required him to turn it over to the police.
jef

Doesn’t the protective case the thing had on it built by Apple in order to disguise it as a 3GS constitute it as a trade secret blah blah blah?
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Ned

Spot on Terrin.

AnotherLawyer is either smoking some serious weed or more likely works for Gizmodo.
Rachel S.

@Amanda — Apple’s formal request for the return of the iPhone was written on Apple stationery by its general counsel. How is that “quiet”?

I would bet that the contract between Gizmondo and the iPhone finder states quite explicitly that the $5,000 was consideration only for the transfer of the finder’s rights and obligations as depositary.
UBaltLaw

Gizmodo didn’t wrongfully appropriate the property. They came into possession lawfully, and made an objectively reasonable attempt to return the property to its owner. No remedy available.
Amanda

@Rachael S. I made the law frm reference because in other places people were comparing it to other Cease and Desist etc requests from Apple which came from their outside law firm and are more formal and scary-law-talkin’ than this. My reading of Gizmodo’s article is that Apple made the request in writing at Gizmodo’s insistence; previous contact had been over the phone and there would have been no formal written request at all if Giz had not asked for one, as a condition of getting it back. (can’t turn a phone call into as many pageviews, eh?)

So yes it looks oddly low key to me, considering what they could have done and the assumed magnitude of the event/s. They (have) let it run for longer than they needed to and their uncharacteristic lack of the big hammer is one reason some people are still clinging to the idea this is a plant/hoax.

Your interpretation of those elements might differ of course. I can see upsides and downsides in Apple pursuing this formally; I don’t know which set of consderations hold what weight inside the Infinite Loop. I have no special knowledge but yeah, my first thought was “calm before the storm.”
Rachel S.

@Amanda — There may be “calm before the storm,” but I do not think the letter from Apple is proof of that. They struck exactly the right tone knowing that the letter would be published online.

I agree with your point about Gizmodo’s not being able to “turn a phone call into as many pageviews,” but despite that part of their motive, even a first year lawyer would have requested a claim of ownership in writing under these circumstances.
Amanda

OK the pageviews thing was snide of me. I guess, Apple knows everything they release half publicly will be published online and it hasn’t stopped them acting in ways which have (unfairly much of the time imho) earned them the reputation they have. A more intimidating response yesterday might have stopped the tear-down pictures being published today. The restraint seems curious. A possible explanation is they are very sensitive to the Foxconn suicide smears and are going completely in the opposite direction to deflect that.

I think the tone of the letter was spot on too in terms of not adding to the story any more than they had to but … kinda un-Apple like is all. But, just idle speculation as I say.
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http://live.sax.net Mike Sax

Don’t forget that Gizmodo took the thing apart and my have willfully damaged it.
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bdh

UBaltLaw: asserting that they came into possession lawfully doesn’t make it so. That is a finding of fact. As Gizmodo’s clear intention was to buy something that they knew, stone-cold-knew, was not the seller’s to sell, it wouldn’t be a tough case to present.
bdh

Slight correction: whether they came into possession lawfully is not a finding of fact; establishing the manner in which they came into possession is, which is what I was getting at.
YouBet

@ UBaltLaw

Oh, as long as you claim it is so, I’m relieved. Such an expert must know what he’s talking about and, quite frankly, your evidence clearly speaks for itself.
Brian

Well written. I think your conclusions are correct. The one area of concern has to do with Gizmodo tearing open the phone and inspecting its innards. That was deliberate, and I wonder if this would constitute a missapprpriation of trade secrets. That is an interesting question.

Apple will suffer because consumers may delay purchases for a couple of quarters. Competitors will gain because they have an advance look in close detail on key features of the product, giving them valuable time to react. So long as Denton et al do not share other unpublished secrets for financial gain with Apple competitors, they may enjoy sunshine for quite some time.
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Rob

Those responsible at Gizmodo should be prosecuted. Good luck in prison, schnooks.
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Kirt

This is the best article and commentary I’ve read about this issue to date. Well done Ian and those who have written comments.

The thing that I find ironic about this situation is that the rest of the tech blog community has reacted to Gizmodo’s behavior with shocked outrage. To be clear, I think that Gizmodo’s actions were unethical and, likely, illegal according to the case law and statutes discussed above. That said, Gizmodo’s behavior is the natural outgrowth of a blog/tweet/podcast culture that makes a fetish out of secret R&D development. Did Giz cross the line–yes. But crossing that line was inevitable when even the most respected podcast hosts and tech journalists report every rumor and blurry picture ad nauseum. Tech internet media make enormous amounts of money out of rumor, innuendo, and the “surprise reveal.” Gizmodo is guilty, but sometimes even a guilty party becomes the scapegoat for the less than admirable behavior of everyone else. Justified moral outrage can slip, very easily, into self-righteousness.
Ian Betteridge

Kirt – yes, I agree. Giz might have been the one to cross the line, but the culture of “process journalism” (publish first, check facts later) has contributed to where we’re all at.

I really must write that post about the ethics, I think
http://twitter.com/KirtWilson Kirt

Ryan Block has just weighed in on this conversation. (See http://bit.ly/cbgg9L). Breaking criminal and contractual codes are very different from one another, but I appreciate Ryan’s move to consider this controversy within the larger culture of “tech journalism.” This incident is going to be a great case study in journalism schools across the country.