In response to arguments made by CNET and other media organizations, a San Mateo judge unsealed documents that provide a glimpse into an April 20 meeting between law enforcement and Apple lawyers and executives. They also highlight a madcap dash for evidence that evening that led a police detective to a gas station, a church, and a bush in Redwood City where a thumb drive and a 1GB Lexar Media compact flash card were allegedly hidden.
Brian Hogan, is clearly identified as the individual who found, and later sold, the prototype iPhone to Gizmodo.
Jason Chen and the Web site Gizmodo are not characterised as suspects. Investigators believed they could find evidence in Chen’s computers confirming Hogan’s involvement in the case. In fact Chen was not even identified as a journalist – but as an individual.
It was confirmed that Steve Jobs himself contacted the folks at Gizmodo to ask that the phone be returned.
The scrambling from various pundits over these revelations (if you are one of them – you know I am talking about you) has been quite amusing. That’s all I’ll say for now while I let them pay out some more rope for themselves.
Sure Apple Legal have complained to the police, and the police have investigated. But don’t expect Apple to make a big thing of this any more. They have just been satisfying procedure so they are covered.
Some other points of interest from CNET’s account :
Apple CEO Steve Jobs personally contacted Gizmodo editor Brian Lam to request the 4G phone’s return on April 19, the day the story was published, but Lam refused to do so, unless the company provided “confirmation that it is real, from Apple, officially,” according to an e-mail message that was also made public.
“Right now, we have nothing to lose,” Lam wrote. “The thing is, Apple PR has been cold to us lately. It affected my ability to do my job right at iPad launch. So we had to go outside and find our stories like this one, very aggressively.” (Gawker Media has offered to pay up to $100,000 for Apple prototypes.)
Kind of makes me want to play the Jerry Springer Show’s baby crying sound.
Brian Hogan, a 21-year-old Redwood City, Calif., resident, found the phone in a bar. But the affidavit prepared by detective Matthew Broad in the San Mateo County Sheriff’s Office reveals that an important tip came when Hogan’s roommate, Katherine Martinson, called Apple on April 21 to let them know that [s]he had examined it and sent photographs to back up her claim.
It all kind of goes pear shaped for Brain after this…
Broad, the San Mateo County detective, began to prepare a request to search the apartment on Farm Hill Boulevard the following day when, he said, he received an urgent phone call just before midnight from Martinson, saying Hogan and their roommate Thomas Warner were removing any evidence about the iPhone from the apartment and leaving in two separate cars. Broad said he tracked Hogan down at his father’s house, also in Redwood City, and learned that Hogan’s computer had been discarded at a nearby church.
Warner showed up the house at 1 a.m. and was arrested on two outstanding misdemeanor warrants. Warner claimed that a prototype sticker from the iPhone fell out of his wallet at a Chevron station, and later said a 512MB thumb drive and 1GB Lexar compact flash card were under a bush on Harding Avenue, the affidavit says. Police say they recovered all the discarded hardware, including the HP computer left at the Sequoia Christian Church.
Hogan, and his roommate’s panic at this point is rather damning. Stupidly they have now made all their actions look suspect, as the officer involved comments to them.
It is also interesting to note that in Martinson’s account of all this she was trying to talk Brian out of selling pictures of the prototype to magazines and websites as she believed it would destroy Powell’s career. Powell is the Apple engineer who lost the iPhone.
Also that Powell, although saying that it is possible the iPhone was taken from his bag, says he doesn’t think that is what happened. And that perhaps it fell out when the bag was knocked over at one point during the evening.
Those two come out as the most genuine people in the whole affair, in my opinion.
[News outlets] are asking a California judge to unseal the search warrant affidavit that led to a police raid on the home of Gizmodo editor Jason Chen, who paid $5,000 for a prototype 4G iPhone.
Under California law, the public has a right to see the documents that led San Mateo County Superior Court Judge Clifford V. Cretan to approve the police search, we argue. We’ve asked for a hearing on the issue at 2 p.m. PT, Thursday.
Under California law, search warrant records are normally made public after the search is complete, and no later than 10 days after the warrant is issued, unless a motion and memo are filed with the court indicating a specific need for sealing. But “despite this clear right of access “all records relating to the warrant have been sealed” in a manner that may violate the procedural requirements for sealing judicial records, our motion argues.
If Judge Cretan (what wonderful possibilities that name has) didn’t mess up, or isn’t still unsure of the legality of the search, then what other possible reason could he have for dragging his feet on this?
The motion to unseal was prepared Wednesday by attorneys representing Wired.com, the Associated Press, CNET, Bloomberg News, the Los Angeles Times, the California Newspaper Publishers Association and the First Amendment Coalition.
People identifying themselves as representing Apple last week visited and sought permission to search the Silicon Valley address of the college-age man who came into possession of a next-generation iPhone prototype, according to a person involved with the find.
The finder attempted to notify Apple and find the owner of the device but failed, even going so far as to search alphabetically through Facebook, the source said. Thoughts then turned to contacting the press about the device to confirm its authenticity and help locate the owner, but early attempts to drum up interest went unanswered. After a few days with no response, the finder expanded the search.
News accounts depicting the $5,000 payment as a “sale” are incorrect, this person said. Rather, the agreement with Gizmodo was for exclusivity only. “It was made very explicit that Gizmodo was to help the finder return the phone to its rightful owner or give it back,” this person said. “Gizmodo said they could help restore the phone.”
Giving me a headache.
Wired.com received an e-mail March 28 offering access to the device, but did not follow up on the exchange after the tipster made a thinly veiled request for money.
Apple didn’t return a phone call Tuesday.
The world is now rotating on its axis correctly again.
By far the best overview of the situation as it stands right now :
To understand this debate, know three things:
Under a California law dating back to 1872, any person who finds lost property and knows who the owner is likely to be–but “appropriates such property to his own use”–is guilty of theft. There are no exceptions for journalists. In addition, a second state law says that any person who knowingly receives property that has been obtained illegally can be imprisoned for up to one year.
A federal Privacy Protection Act broadly immunizes news organizations from searches, effectively requiring police to use subpoenas in most cases instead. It applies not just to traditional media but anyone “reasonably believed to have a purpose to disseminate to the public a newspaper, book, broadcast, or other similar form of public communication.”
“I don’t think a lot of law enforcement are aware of” the Privacy Protection Act, says James Chadwick, a partner in the Silicon Valley offices of Sheppard Mullin who specializes in media law and litigation. “This is a federal law. It’s been on the books a long time but doesn’t get enforced a lot.”
For their part, San Mateo County prosecutors say they are reviewing Gizmodo’s legal claims.
One way of looking at this is as follows :
The police can argue that they are going after Gizmodo / Chen, and their crime of knowingly obtaining goods illegally. In effect going after a crime, not a source or a journalist or a news organisation.
But in order to have a solid case that Gizmodo obtained the goods illegally they will have to involve Gizmodo’s source.
The identity of that source (which has not been released by Gizmodo) could now potentially come from an illegal search and seizure, rather than a legal subpoena and interview of Chen – which is how the police should correctly get that particular piece of information.
It’s kind of a chicken and egg situation.
And the police may have put the egg before the chicken.
Last Friday night, California’s Rapid Enforcement Allied Computer Team [REACT] entered editor Jason Chen’s home without him present, seizing four computers and two servers. They did so using a warrant by Judge of Superior Court of San Mateo. According to Gaby Darbyshire, COO of Gawker Media LLC, the search warrant to remove these computers was invalid under section 1524(g) of the California Penal Code.
There are a range of documents on the page I link to, including Chen’s account of the experience, the search warrant paperwork, and Gizmodo’s position…
What is most interesting about all this is how the opposing sides arguments will play out. The best analysis I have read so far comes from Avram Piltch :
The EFF has even chimed in with some interesting interpretations of Privacy and Information laws (relating to journalists and know as ‘Shield Laws’) :
Granick said that, even if Jason Chen is under investigation for receipt of stolen property, the government has no right to issue a search warrant, because California law includes exceptions for journalists who are in receipt of information from sources.
Granick said that a gadget like an iPhone fits the definition of “information or materials” and falls under the law’s protection.
The Privacy Protection Act states that ”a government officer or employee may not search for or seize such materials under the provisions of this paragraph if the offense to which the materials relate consists of the receipt, possession, communication, or withholding of such materials or the information contained therein.”
Other sources argue that the EFF is barking up the wrong tree.
Ultimately, as is often the case in these kinds of things in the US, it may all come down to a silly technicality. The search was apparently conducted in the late evening, and on the search warrant a tick box which precludes a **night search is checked. Gizmodo have mentioned this in their letter to the police.
Upon a showing of good cause, the magistrate may, in his or
her discretion, insert a direction in a search warrant that it may be
served at any time of the day or night. In the absence of such a
direction, the warrant shall be served only between the hours of 7
a.m. and 10 p.m.
Jonathan is quoting California law.
(Links to the relevant parts of the law are in the original blog piece by Jonathan.)
California, however, only requires measures that are reasonable under the circumstances.
Regarding field testing and Trade Secrets.
Apple needed to field-test these phones, and arguably met this burden by placing the testers under NDA’s comparable to Top Secret clearance.
Presumably Apple also assessed these ‘testers’ as being in possession of a certain amount of common sense too.
If the owner accidentally or mistakenly reveals a trade secret to X, and X knows that it’s a trade secret, X is liable for disclosing it publicly.
X is Gizmodo. The “owner” is Gray in this case. Or Apple via Gray, as a proxy.
Therefore, Apple would only have to show that Gizmodo knew or [had] reason to know, before publication, that the prototype was a trade secret.
Which they didn’t know until they opened the device. Quite some time after purchasing it.
Prior to that they thought it might be, but they also thought it might be a clone. $5000 is the kind of sum Gizmodo might be willing to risk for an interesting story that turns out to be a bust. I am giving them the benefit of the doubt there. Because they may have been culpable in all this; beyond what they are outlining as their version of events. But a court will look at the facts, and the $5000 figure being relatively low (when compared to the revenue it could potentially generate Gizmodo) is possibly a small facet of a good defence.
However, Gizmodo’s entire purpose was to discover and disclose as much as they could (read: maximize the damage) before posting a single word.
That is what they do.
They went out of their way to document everything before saying anything so that, upon the expected demand for its return, they could “immediately” and publicly like they were doing Apple a favor. Given that these are the facts according to Gizmodo, I expect that a court would find their actions willful and malicious and award up to 2x the original damages.
Apple didn’t officially contact Gizmodo until after the information was published. Sure Gizmodo knew it was more than likely an Apple prototype. But they can argue they weren’t certain of it. And there was one hell of a lead up on both Engadget and Gizmodo before all the gory details were published.
At any time prior to that Apple could have hit either website with a C&D.
I’m just saying.
What I really want to touch on though, is this : Does taking a “Top-secret” piece of hardware, which contains critical Trade Secrets, to a bar, on your birthday, getting drunk (or at least slightly intoxicated – by your own admission on a Social Networking site), and then leaving said “Top-Secret” piece of hardware on a bar stool, before toddling off into the night, constitute responsible behaviour on the part of a trusted employee under NDA, handling a “Top-Secret” piece of kit?
Even when taking into account that California law only requires measures that are “reasonable under the circumstances”, I don’t think so.
Again, I am not on Gizmodo’s side here. Far from it. But I’d love to be in court when the counter argument to Jonathan’s case is put forward by Gizmodo’s lawyers.
Re: The “individual” who found the iPhone Prototype :
What he never did, however, was notify anyone who worked at the bar, according to its owner, Volcker Staudt. That would have been the simplest way to get the phone back to the Apple employee who lost it, who “called constantly trying to retrieve it” in the days afterward, recalls Volcker.
“The guy was pretty hectic about it.”
The “individual” should have contacted the bar. But again all this does is cloud the issue for the individual involved, not Gizmodo. It could be argued that handing it over to a bar employee is as bad / risky as handing it over to an Apple Store employee who “might sell it on eBay”. It’s worth noting that at this point no-one knew for sure it was Apple’s super secret prototype anyway. It may have been a copy.
Nor did the finder report it to the Redwood City Police Department, says Sgt. Dan Mulholland. To be fair, no one from Apple told the police the phone was lost, either.
Apple can’t hold someone to a standard that, for whatever reason, they did not hold themselves to. They are also going to have to come down hard on an individual in order to make a case stick against Gizmodo. A criminal case.
And I think Apple’s lawyers could make an even tighter civil case that, in so doing, Gawker misappropriated trade secrets, inflicting damages that could run to millions of dollars.
Apple have no redress through Trade Secret Law if they did indeed let Gray walk around in public with this iPhone. If they didn’t let him have this freedom, then they have to sue another individual. An employee. For breach of contract.
Sure, technically, Apple could have a case on many levels.
But they won’t pursue it this way.
It’s not good PR.
NOTE : I am not on Gizmodo’s side here. Just pointing out the alternate arguments. I have to wonder if some of the persistent venom coming out of the journalistic community is tainted with a little jealousy sometimes. Oh, and picking up collateral page views of course.
As I outlined in very broad terms yesterday in an update in this piece I don’t expect Apple to sue Gizmodo.
There are many reasons for this, not withstanding legal reasons. If Apple wants to get anywhere in a lawsuit related to the lost / stolen iPhone prototype they will at some point have to go after an individual, indirectly involve the police and criminal law. Something which won’t play well for them. No matter how wronged they may appear to be in this situation.
Ian Betteridge has an article on this that is worth reading. He sees Gizmodo and the “finder” falling foul of theft laws, and not trade secret laws. But in any case he doesn’t see it being a case that Apple will pursue either.
Here is his conclusion :
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.
Trade secrets law
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.
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.