Gizmodo paid $10,000 for "lost" iPhone 4G | Hacker News Reader

Gizmodo paid $10,000 for "lost" iPhone 4G

edibleapple.com

81 pointsanderzole72 comments

California Penal Code, Section 485.

One who finds lost property under circumstances which give him knowledge of or means of inquiry as to the true owner, and who 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.

http://law.onecle.com/california/penal/485.html

Hmm. So you can't buy or sell lost property, but there's nothing to say you can't carefully examine and photograph something you found before you return it to its rightful owner.

So if the finder had taken it to Gizmodo and offered to let them take a look at it for $10,000 then he'd be in the clear, but if he actually sold it to Gizmodo then he's in serious trouble.

Gizmodo is in pretty serious trouble, too. They knew what they were paying for (they have expertise in these things - they can't just claim they bought the thing off of Craigslist), and I wouldn't be surprised if someone at Gizmodo ends up in jail over this.

Apple has the same right to their property that you have to your own private property because Apple is just a voluntary association of employees and shareholders. Their individual rights give rise to Apple's rights. If someone stole something you made, like your private journal and plastered it all over the Internet, you'd be livid, and the perpetrator should go to jail (how long is for the courts to decide). For that same reason, whoever was involved with this at Gizmodo belongs in jail (again, how long is a judicial matter).

Before anyone goes to jail, Apple needs to publicly admit that this is their device. Current analysis seems to suggest strongly that it is, but it'll be interesting to see if they admit it.

Or they can just wait until it's released, and then press criminal charges.

No one will go to jail. This is the highest profile leak of the kind, but prototypes get shown online all the time against company wishes. It's usually a lot more shady than finding it a bar too--Apple would be a lot more concerned if their supply chain was compromised.

I am not so sure about that. A number of things make this case quite different, such that it may violate federal criminal statutes in multiple ways. The effects might spread beyond Gizmodo, at that.

Gizmodo offers (some) more details... http://gizmodo.com/5520438/how-apple-lost-the-next-iphone

...while Gawker Media head honcho Nick Denton seems to confirm they bought the thing... http://twitter.com/nicknotned/status/12474394397

Either their lawyers are no good or they didn't bother to check with them in advance, or they would have been told about their (federal) criminal liability under the economic espionage act of 1996, which can result in prison for up to 10 years, or fines of up to $5m for the organization.

Seriously - there is not much room for interpretation here:

http://www.law.cornell.edu/uscode/18/usc_sec_18_00001832----...

Edit: Gizmodo is in SF, not NY. D'oh.

I am not a lawyer.

Edit: Apple already sent a cease-and-desist letter in January to Gawker Media, warning them they were inviting a violation of California Trade Secrets law. http://gawker.com/5448177/update-apple-wins-the-first-prize-...

I'll let the lawyers sort that out, but I don't think Apple wants to take the PR hit of sending a blogger to jail for taking pics of a gadget that was left in a public place. It didn't even have a material effect on stock price, Apple will have a hard time proving anything but an ego was hurt.

I could be way off base, so if Denton get hauled odd to jail feel free to reply and get in your kicks.

Apple has filed lawsuits based on much less[1] and was willing to take the PR hit for it. I'm aware the circumstances are different, but Apple's obsession with secrecy has led it to take PR hits before.

[1] - http://www.eff.org/cases/apple-v-does

A lawsuit is much different than criminal charges and yet they also lost the cases you linked. This time they would be up against a much more formidable defense too--Gawker has money and connections.

It would be a really tough sell to send a blogger to jail for taking pictures of something that was in a public place.

Indeed so. But as Gizmodo paid for, took possession of, and then publicized the device, it seems pretty clear that they've crossed a line into criminality. The US customs service spends money on finding and seizing knockoffs, including the iPhone, and I wouldn't be that surprised if they moved on it; even though they might only seeks a token penalty like 1 day in jail.

Gawker has money and connections

And Apple doesn't? :) Really, the only reason I can think of not to come down on Giz like a ton of bricks right now is the perception that they've been throwing their weight around with developers lately.

Is the owner of the phone Apple, Inc. or the individual who presumably lost it?

Almost certainly Apple Inc. I get to use my company laptop at home, but it's still the company's laptop. Surely this is doubly true for products in development

Man, they're gonna be pissed when Apple drops the price 30% in two months...

Forget the buyer and seller. The person that lost their iPhone prototype in a bar is the one who's going to get crushed by Apple.

There was an IAMA at reddit a while ago from someone who dropped a prototype (of a macbook) in public. You can read it here: http://www.reddit.com/r/IAmA/comments/a8an1/i_was_part_of_th...

That exchange sounds as if it was made up by a teenager who has seen Pirates of Silicon Valley one too many times.

Someone track down 'grellas; I really want to know what he thinks about this debacle.

This is pretty reprehensible of the buyer and seller. What if you found a big bag of money? Would you keep it? If so, fuck you.

Edit: This isn't a matter of what's legal or not, or that it's Apple or not – it's a general issue with peoples' opportunistically predatory nature.

There's a big difference. It's not actually worth $11k to Apple. They don't actually want all the details out there yet (probably. I could see some of their leaks being intentional ways to get people to hold out for summer and not buy Android phones now), but they didn't directly lose $11k by losing the iPhone.

Technically, prototypes are usually worth much more than $11k (hand built consumer electronics as complicated as mobile phones are expensive), but it wasn't the money that was important to Apple. It's the secrecy, Apple is obsessed with it. This is the company that announced everything about the iPad months ahead of time but wouldn't even let Apple Store staff use it once until the day of launch. It's useful to a point, but they have taken it way over the edge.

But it wasn't a bag of money, it was information (that we mostly already knew). In the scheme of things this is a meaningless leak, it's just huge news because Apple/Jobs is obsessively secretive. I actually enjoy seeing them beat at their own game.

Speculation is one thing, but knowing exactly what your competitor will be selling two months before it hits the market is worth a lot more than $10k to the right people.

I don't think that's true. The mobile industry is a pretty incestuous place, everybody kind of knows what everybody else is doing. All the companies buy parts from the same suppliers, trade employees, and see the same market trends. Two months isn't enough time for anybody to do anything significant, except perhaps for the chinese knockoffs to make it to market faster.

Two months isn't enough time for anybody to do anything significant, except perhaps for the chinese knockoffs to make it to market faster.

Two months is more than enough time, though, to plot a "leak" that buries your competitor's marketing in the noise floor. I wonder if any other major phone manufacturers were planning to announce anything this week?

While I don't disagree with you in general, I'd be hard pressed to imagine an announcement that drowns out Apple's product launch PR short of "hey, we found aliens, and we're selling their communicators".

It was not information. It was a physical object that belonged to somebody else. Beyond that it was intellectual property that belonged to somebody else. Gizmodo is morally indefensible here, I think.

It's unquestionably dishonest but I suspect it will make for an interesting court case as Gizmodo tries to claim the person who sold it is a "source" and hence they should have a right to anonymity. I don't think it holds up but it's up for debate. There's no question that people like Mark Felt (aka Deep Throat) stole documents from the White House which is a much bigger crime than this.

Regardless of whether they protected that person, they would appear (IANAL) be liable for damages under the Uniform Trade Secrets Act - given their understanding of how significant the device was and where it was from - and if it's true they paid big $ for it, they'd be liable to have those damages doubled for improper methods of acquiring the thing.

http://thetradesecretsblog.wordpress.com/trade-secrets-law/c...

IIRC, journalists as a rule don't typically pay sources for information.

There is no actual right to anonymity for sources, is there? That's just a convention among journalists. They go to prison when they refuse to cough up sources.

Not true: http://en.wikipedia.org/wiki/Shield_laws_in_the_United_State...

Apparently more of the story is coming out soon. They're going to milk it all they can of course, but it should be interesting.

http://twitter.com/nicknotned/status/12472344531

I think this is going to end badly for all parties involved, named and unnamed: http://twitter.com/nicknotned/status/12479140215

There is nothing in this article that lends any credence to the claim that Gizmodo paid for the phone. Why should I believe this? Sources are important people. Not that a site as well known as edibleapple.com would post hearsay to get views...

Nick Denton is more or less confirming it: http://twitter.com/nicknotned/status/12467349291

There is of course the possibility that it's a fake. The Gizmodo article says how much work it would be to put together a fake, obviously they haven't been paying attention to all the fake iphones coming out of China, often with extra features such as USB and mini-sims.

Edit: In fact the flat plastic back makes it seem similar to the fake covered in:

http://www.youtube.com/watch?v=J_TZfpEvzrQ&feature=playe...

Gizmodo is in a bad place here. If Apple chooses they could nail Gizmodo to the wall. Firstly, Gizmodo knowingly bought stolen merchandise, that is a criminal offense and the owner (the Apple employee or Apple themselves, depending on the legalities) could press charges. Secondly, this could be considered corporate espionage and Apple could make a case in court that they have been financially damaged by it, to the tune of millions.

IANAL but there is probably a legal divide between stolen merchandise and lost merchandise.

Not much of one. You'd need to prove that the merchandise was abandoned, not just lost. And you'd have to prove the finder did due diligence in locating the proper owner before taking ownership. Good luck with that in this case.

If Apple had the inclination they could have Gizmodo's balls in a vice.

What if Gizmodo does its due diligence after the fact?

ie. First take all the photos they need, then contact Apple

I think paying the money is the trigger point for some problems.

Exchanging money doesn't mean exchanging ownership. If you pay an agency $10,000 to photograph a model, you don't own that model. Why would a telephone be any different?

Because It doesn't sound like they paid for the photographs, it sounds like they paid for iphone

Per Gizmodo themselves, they got the phone and held onto it until contacted by Apple's Bruce Sewell who requested its return. Nick Denton has been quoted in several other news stories as saying he paid $5000 for it.

I imagine Apple's lawyers can shred that ruse. As an expert site, they knew exactly how likely it was that this was lost (near zero), and they knew they could profit from its clandestine possession. Whether they give it back afterward is immaterial to Gizmodo's profits and to the secrecy Apple wanted to protect.

Not that I doubt what you said, but the 'due diligence' comment reminds me of this: http://www.reddit.com/r/WTF/comments/89kto/student_finds_cel...

No. Taking possession of lost property creates a "bailment", a legal relationship between the possessor and the owner, governed by local bailment laws. The offense by Gizmodo, if any, would be failure to report found property. It would not be espionage, since Gizmodo had no contractual obligation to maintain secrecy, and since Apple failed to take due care not to abandon the secret in a public place.

Assuming the story is truthful. If Gizmodo paid for misappropriation of trade secrets by an Apple employee, they are toast.

Stolen? He probably decided he didn't want the phone and threw it away.

To me i don't believe everything I see and hear. This could be Apple doing this to create buzz, as well it could be Gizmodo and Engadget making this up for buzz/traffic.

I'm skeptical in part because my first reaction would be to email Steve and ask him if they lost anything the size and shape of an iPhone lately. If he did and he can tell you what it looks like they can have it back. If they didn't I hock it to the highest bidder and discard the email from Steve.

Apple once went nuclear with lawsuits and cancelled a product when info on it leaked to AppleInsider and ThinkSecret. This isn't their style at all.

So what processor is in this thing? Does it have the A4 like the iPad?

I keep waiting for this headline: "Gizmodo Digs Deeper: Reveals iPhone Prototype to Actually be a Nexus Two Prototype"

It seems vastly more likely to me that someone "arranged" to "lose" a phone ahead of time, to get it to Gizmodo with some kind of plausible deniability.

Presumably also there are uniquely identifying IDs in the phone (IMEI, but for a dev phone maybe that is in flash), or just a limited number of these phones, so Apple can do inventory and find out who lost the device. At that point, extensive interviewing to make sure the loss was actually a loss.

Gizmodo Lost and Found: who owns the phone in the pictures?

Just saw this on Sachin's blog - http://sachinlet.posterous.com/the-leaked-next-generation-ip... .

I wonder how much Apple paid to the guy that "misplaced" the phone.

And the author of this article doesn't take in to account the possibility that Apple gave Gizmodo the phone to build up the hype for the new iPhone?

It's the oldest trick in the book. Costs just one prototype and the whole internet is talking about it. I don't believe anything of the "stolen", "lost" or perhaps even "mugged" stories. The "mugged" I came up with myself. Makes as much sense as stolen etc.

This post says it better than I could:

http://www.reddit.com/r/reddit.com/comments/bt3cp/this_is_ap...

I dunno. With all the fake photos out there I feel like maybe Apple had to step up their slow-leak campaign to include actual hardware this time around. There's some pretty strong competition out and iPhone 3G owners on a 2 year contract are now looking at a small early termination fee if they wanted to jump ship. Now is a pretty good time to build hype post-iPad -- let consumers know Apple hasn't forgotten about the iPhone. Between this, the iPad launch, iPhone OS 4 and new MacBooks Apple has pretty much dominated the tech media for the last 4 weeks.

head(s) are certainly rolling in Cupertino; can't wait to get my hands on one though

Gizmodo should have given it back to Apple. Apple probably had to go ahead and buy themselves a new iPhone so they could make and receive calls. They're out of pocket here!

I have to laugh at how Apple was able to remotely disable that one specific phone at their will. If that's not alarming to anyone who owns an apple product, they simply deserve to lose control of whatever they buy.

... This is an advertised feature of the phone (and many others). Not alarming.

Umm.. I should point out two things-

1) It's a prototype. Building protections into your prototypes is common-sense, and doesn't mean that there is an evil overlord out to attack you.

2) Both Blackberry and iPhones have had this capability for years. It's part of MobileMe, and built into every BES. It's a must for enterprise use, practically anywhere. This is a publicized feature, and a very useful one.

...how Apple was able to remotely disable that one specific phone at their will.

This does not prove that Apple has the ability to remote-wipe any user's phone.

First, if Apple remote-wiped the iPhone, this would be explained by the fact that the company administrator of mobile devices can disable employee and contractor phones, and Apple does give out iPhones to its employees. It's logical that the owner of this prototype phone is an iPhone employee.

Secondly, it's likely that the rightful owner decided to remote-wipe the phone themselves to protect their own personal data (as he or she would do to any other lost or stolen phone) while continuing the search.

Not only is there no evidence that Apple can remote-wipe any user's phone, but it's very possible they specifically passed on having this ability in order to minimize liability.

Isn't that the entire point of mobile phones having an IMEI number? Hardly new to the iPhone. In fact, it looks as if all they've actually done is the remote-wipe feature of mobile me ... and no one outside apple can get it working again, as you need the right "image" to restore on to it. Which obviously isn't available yet.

edit: I presume IMEI isn't something that's unique to the UK?

It's not unique to the UK. But most US mobile customers never have had to deal with swapping SIMs between devices and, thusly, never needed to know what their IMEI is.

> I presume IMEI isn't something that's unique to the UK?

Definitely not, though depending on the underlying system the acronym will change a bit, the function is the same, to identify a phone independent of the identity card in it.

This is why people that prank call 911 with their identity card removed from the phone are caught.

Not always... there are lots of mobile phones where you can change the imei with simple tricks - temporarily or permanently. I know it was trivial to reprogram this on many siemens sets ~6 years ago.

There are remote wipe applications available for every smartphone platform I've ever seen. I believe it's built into the BlackBerrys when connected to a BlackBerry Enterprise Server. Just because Apple had a remote wipe program installed on this prototype, doesn't mean it's installed by default on any production retail phone.

Reply on news.ycombinator.com