Apple v. Gizmodo in the Leak of the Supersecret iPhone

If you’re one of the six million people who have read this post about Apple’s next iPhone, you may already be familiar with the outline of this story. According to Gizmodo, an Apple engineer allegedly left his prototype iPhone on a bar stool in Redwood City. A random stranger picked it up, realized it was a next-generation iPhone, and then got in touch with Gawker, which has made it clear in the past that it’s willing to pay big money for advance peeks at Apple products.

So this random person — who Gizmodo is being careful not to name — then sold the iPhone to Gizmodo for $5,000. Ever since getting a MacBook Pro, we understand the worship at the shrine of Apple a little better, but still, the excitement about the new iPhone is beyond us. It appears that the major advancement is that there will be a camera on the front, so that you can video-chat with someone on your phone Star Trek-style.

The super-sercretive company wasn’t happy about the phone going rogue. Charles Arthur at the Guardian asked whether the site’s editors had violated California state law by buying stolen property. But Gizmodo isn’t worried about that:

(Our legal team told us that in California the law states, “If it is lost, the owner has three years to reclaim or title passes to the owner of the premises where the property was found. The person who found it had the duty to report it.” Which, actually, the guys who found it tried to do, but were pretty much ignored by Apple. )

Apple’s general counsel Bruce Sewell sent Gizmodo a letter requesting the return of the secret iPhone, and Gizmodo plans to comply.

Well, that confirms that the secret iPhone is a real iPhone. What are the legal implications for the trade secrets made public?

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We reached out to tech lawyer and Santa Clara law professor Eric Goldman for comment. He told us:

If the prototype truly was left on the barroom floor as an accident, then the law gets murkier. The person who found the prototype is in a legally ambiguous situation. For example, courts are split on whether trade secrets accidentally left in public are still protectable. Many courts basically chastise the putative trade secret owner for being so sloppy with their allegedly valuable assets; but some courts will have sympathy for an honest mistake, especially when the finder knows (or really ought to know) that the found items are probably someone’s valuable trade secrets.

However, Gizmodo is probably not in any real danger itself. It can claim that it was a bona fide purchaser of the chattel (although I wonder if this is really plausible), and its status as a publisher should help insulate it from any trade secret claims. More importantly, at this point, what’s done is done; the information is out, and Apple can’t put the information back behind a secrecy veil.

There’s precedent for publications raiding Apple’s secrets. We cite the ever helpful Wikipedia:

Apple v. Does

In November 2004, three popular weblog sites that feature Apple rumors publicly revealed information about two unreleased Apple products, the Mac mini and an as yet unreleased product code-named Asteroid, also known as Project Q97. Two sites, Apple Insider and Power Page were subpoenaed for information to identify their confidential sources (a third site, Think Secret, was also subpoenaed but did no original reporting on the case, and thus had no sources to reveal). The suit raised the problem of bloggers, and whether they hold the same protection that journalists do. In February 2005, it was decided by a trial court in California that the website operators do not have the same shield law protection as do other journalists. The journalists appealed, and in May 2006, the California Court of Appeal reversed the trial court’s decision, ruling that activities in question are covered by the shield law.

Apple may say it’s not happy about the leak, but it’s not been too bad for them today. In after-hours trading, Apple’s stock price is the highest it has ever been.

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Gizmodo iPhone coverage [Gizmodo]
For Apple, Lost iPhone Is a Big Deal [New York Times]
Apple v. Does [Wikipedia]
Apple GC Asks Website to Return Its Secret Prototype iPhone [ABA Journal]

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