Why Is Apple's iPhone Prototype Entitled To More Justice?
litigationandtrial.com
litigationandtrial.com
The complaint (her TRO should have been enforced) is valid, but has nothing to do with the handling of trade secrets investigation elsewhere in the country.
If REACT wants to make it a high priority to issue subpoenas to recover information from third parties that might relate to someone else's wrongful possession of a phone for a brief amount of time, then so be it. Last I read they were focused on major counterfeit software operations.
At the moment, though, it appears REACT suddenly developed a zeal for prosecuting a trivial offense merely because the offense is high profile and involved an influential victim. That's a problem, and it's the same problem in the Gonzales case: the improper exercise of discretion. The public is entitled to know how and why REACT is utilizing its limited resources.
Having said that, what happened to that woman is inexcusable. I understand police doesn't want to be used to intimidate a parent on behalf of other parent, but this inaction is absolutely shocking.
I can respect that. But that also raises a number of questions. Does REACT believe that this incident will create a wave of prototype thefts by journalists? Do they believe that public reaction and civil lawsuits arising from such incidents will be insufficient to deter future individuals contemplating such a crime?
The bigger problem is that we're all doing a post hoc analysis that REACT likely didn't do at all. Maybe it saw a hot story in the news and so dashed off the broadest subpoena it possibly could. Maybe Apple made a few calls. The situation is concerning enough to warrant, at a minimum, an explanation from REACT as to what they thought they were doing. Depending on that explanation, an investigation or sanctions could be warranted.
Frankly, that might happen sooner than we think. I wouldn't be surprised if the EFF or ACLU filed suit on behalf of Chen for the unlawful seizure of his property. Of all places, California is the last state in which you want to start seizing a journalist's computers on a mere hunch that a crime was committed by someone else.
http://www.eff.org/deeplinks/2010/04/gizmodo-search-warrant-...
They are simply showing how bad/corrupt/failed the current law system is.
If every case "should be handled the exact same", explain to the LAPD they don't need seven (7) divisions and could save tax dollars:
http://www.lapdonline.org/detective_bureau
- Vice Division
- Juvenile Division
- Commercial Crimes Division
- Detective Support & Vice Division
- Robbery Homicide Division
- Force Investigation Division
- Gang and Narcotics DivisionSeizing personal computers, cameras, cell phones, servers, and paperwork, for a case where the property has already been returned, might be legal but is also a completely inappropriate response. There's already a very clear case here, and lives are not in danger. It doesn't matter if he's a journalist or not, this is just not the level of action that should have been taken. We should be able to expect fairly consistent responses to legal situations, based on the severity of the crime and the impact, rather than based on the identity of the victim or the media attention focused on the case.
If some random phone gets lost obviously you aren't going to spend too much resources on this because there aren't enough available. I'm pretty sure not all such individual cases are ignored, so it's not like only the corporations "receive justice".
But, having such a public case about a presumably lost prototype, etc. be ignored is a sign that the state considers this to be ok or of low importance. You do not want that idea to spread into the mainstream. Justice isn't just about busting dors, it's also a marketing (or propaganda) issue.
And it may be just me, but the whole thing seems to be a pretty easy case: The California law regarding lost items is pretty clear. If you think it's stolen, you have to report it.
The website shows a story admitting to buying the prototype for $5000 and showing lots of pictures holding it, disassembling, etc. They know who owned it, and you're not going to pay $5000 for something that you're not completely sure of.
"I walk into a coffee shop and see an unattended laptop sitting on one of the tables, so I decide to close it up and take it home with me."
Nobody I've talked to seems to think that this scenario is okay or consider the laptop "lost". So I don't know why people are so quick to consider this iphone lost.
Or did Apple (or the police) assert that IP and/or trade secrets were stolen, in addition to (or exclusion of) the phone itself?
It's still just a single phone, a phone that's been returned to its owner. Maybe Apple was damaged by the loss in a way the law recognizes. If so, then they can file a civil lawsuit just like everyone else with a grievance against someone else.
The part that's troubling here is how, if anyone else reading this post reported to the police that an employee had lost a ready-for-market prototype and that a blog had published pictures of it and then returned it, the police would politely file the report at the bottom of the pile and then get back to pursuing real crimes. Apple, however, gets an unannounced seizure of a journalist's home and work computers.
Such preferential treatment demands an explanation.
The most Gawker revealed was (1) features readily observable on the outside and (2) information printed on the components when the device was opened. Obviously, none that would be considered a "trade secret" once the iPhone was up for sale on the market.
Can a feature list be considered a trade secretly few months before the items released? That's a tough one, particularly because Apple itself released this iPhone into the wild, where it was found by a third party. It's not like Gawker snuck into Apple's campus and found some research for products contemplated way in the future, product so far off that Apple had not yet filed a patent on the technology. (By way of background, the whole purpose of trade secret law is to protect things that a person doesn't want to disclose publicly by patenting. Almost by definition, a trade secret has to be something that was patentable, and so far nothing on the prototype iPhone looks like it was patentable.)
All of which brings us back to the central point: it's debatable if Apple even suffered a legally-cognizable injury by virtue of someone bringing publicity to a device Apple, through its employee, left out in the wild. In light of that, and in light of the serious concerns about journalistic shield, REACT should have shown caution. Instead, they took the most aggressive approach they could have.
For example, if Apple is negotiating pricing for current models and other party was willing to pay more pre-leak because the did not think the next gen would be as large of an upgrade.
So, buying stolen merchandise or trafficking in trade secrets is fine as long as you write a story about it?
-- http://twitter.com/TheMacalope/status/12917912411
Quoting Gruber:
Journalist shield laws are about journalists being able to protect sources who may have committed crimes. They’re not a license for journalists to commit crimes themselves. Gawker is making an argument that is beside the point. They’re arguing, “Hey, bloggers are journalists.” The state of California is arguing “Hey, you committed a felony.”
http://www.businessinsider.com/henry-blodget-gizmodo-search-...
Btw, quoting Gawker:
"We may inadvertently commit journalism. That is not the institutional intention."
Gray admits he left the phone at the bar, and then came back later (presumably sober, the next day) and was upset when it wasn't there. He may as well have given it away. The phone was not stolen. It was carelessly lost.
While you might not like it, Apple's marketing plans probably do have a larger impact on our society than does OP's hypothetical lost phone. It's unfortunate, but the realities of life force us to draw lines somewhere.
Why? Your explanation might be perfectly valid, but it's not the explanation REACT has given. They haven't explained anything at all.
I was working on an idea of "size of the crime multiplied by the number of people impacted" might define where the threshold lies. So murdering one person is significant in that it affects one person ultimately, and a good chunk of other people in the second order. Losing one's own phone affects a single person only, and not very significantly at that. Apple's losing their prototype is analogous in the actual act, but the effect on Apple's marketing multiplies it out big-time.
Other test cases for the thought experiment: bank robbery; simple assault; rape; creating a public nuisance. I think the idea can be applied successfully across all of these.
I don't know anything specific about the stolen iPhone case. I find the whole "zOMG I saw a picture of the new iPhone!!!1!!" thing to be ridiculous. So I can't address anyone's behavior in this instance.
No one seriously believes that Gawker Media poses a continuing threat to anyone, including Apple. There's also no question about the disposition of the property; it's in Apple's hands. Further, the damage done is questionable. (I don't mean "frivolous." By "questionable," I mean that there's a legitimate dispute as to whether or not anyone suffered legally-recognized damages from the leak, as compared to, say, someone running a counterfeit-iPhone operation.)
In such a situation, most cops and DAs would put the investigation at the bottom of their pile, tell the victim to file a civil lawsuit, and then focus their resources at on-going criminal activity or crimes with substantial damages to the public.
Here, however, REACT raced into action with a particularly aggressive maneuver: a subpoena and unannounced seizure of a journalist's property. That's among the most aggressive actions they could have taken, and the decision-making behind it deserves an explanation.
Now, if I may paraphrase, you're saying 'all this for a single phone that is going to be sold to millions anyway? pfff.' But you know it's a prototype, if you've followed the story closely, you know that Gawker did publish "more than information the appearance of the phone": http://gizmodo.com/5520876/the-next-iphone-dissected - such things are not readily ascertainable by proper means, so I don't think IDX v Epic systems is a good comparison.
You say there are 'thousands of businesses [that have been wronged] and yet Apple [...] gets preferential treatment.' I can't agree. A quick search of justice.gov for the terms ''economic espionage' arrested' - a different jurisdiction, to be sure, but a similar kind of enforcement - yields over 100 cases of the police power being used on behalf of companies' intellectual property - and as we both know, a comprehensive search through legal databases would turn up many more. We both know that IP theft or misappropriation isn't about the physical devices, DVDs or sheets of paper which may go missing, but about the large sums of money and time that go into their development: which money and time represent the assets and jobs of a good many people, and may have a large bearing on their economic security.
I don't know about Philadelphia, but here on the west coast US customs regularly find shipments of counterfeit devices; here's a recent (pre-Gizmodo) story about a batch of 2000 such units: http://abclocal.go.com/kgo/story?section=news/local/peninsul... The numbers seized here are trivial in comparison to those sold abroad. Although black markets are notoriously hard to estimate, extrapolating from recent assessments by Nokia suggest that annual production of counterfeit iPhones might amount to ~2.5 million units (http://communities-dominate.blogs.com/brands/2010/03/revised...). Obviously not every purchaser of a fake would or could buy a real device, but even if we assume the number of actual lost sales is only 20% of fake sales, based on the typical price differential of fake and real units, we're still looking at something in the region of a quarter-billion dollars a year in lost revenue.
Now, while this is not Gizmodo's fault - and like other gadget blogs, they frequently 'out' fake devices as fake - showcasing the interior construction of the new iPhone several months ahead of release is surely a significant, if incidental, assist to black market manufacturers. What engineer wouldn't be delighted to get a head start on their design cycle? I'd wager that a fake iPhone v4 appears for sale in China before the release of the genuine device by Apple, anticipated in June.
I mean, suppose this happened to you - a few months out from important litigation, a draft of your brief is accidentally exposed - perhaps a paralegal briefly mis-configures the wi-fi settings on a laptop, allowing a 'guest' to access it and open a file. I've seen it happen. Some freewheeling industry blog buys the document, disseminates it widely, and gleefully mocks your staffer's preference for triple-cream lattes and weak understanding of wireless networking for added yuks. Your case is strong enough on its merit to litigate successfully, but the incident would still be a nightmare for your firm, would it not?
Now, to address your headline question of whether the police should be equally or more assiduous where missing children are concerned - undoubtedly. But the contrast you draw is a poor match in time, scope, and geography, and borders on saying that one enforcement action is unjustified because an unrelated police department once failed to serve the public effectively, with a horrible outcome.
I'm glad to have found your blog, which has many interesting and thought-provoking articles. But I really feel your approach to this episode has been somewhat one-sided. True, there are issues of press freedom at stake whenever police find cause to investigate members of the media. But there are also issues of wilful misappropriation of private IP, publication resulting in private harm but no obvious public benefit, and a management team carelessly exposing junior employees to civil and criminal liability.
Disclaimers: I'm not an attorney, have never owned any Apple hardware, software, or stock, have no connection with anyone even remotely close to this case. I admit having a bee in my bonnet about this; in a past life I was a tech journalist at PC Magazine (UK) and feel personally offended by Gawker Media's cavalier ethical outlook.
The analogy you give about my firm is close, but let's make it exactly on point. Let's presume I have some major class action against Apple and, weeks before a major brief is due, I leave a copy of it on the train and some intrepid blogger posts the whole thing, thereby giving Apple a window into my strategy.
Would this be embarrassing? Of course. Would it prejudice my clients? It could.
Would the police care? Of course not.
The police would tell me that, if I had a problem with it, I should sue the guy. End of story. And, indeed, as I wrote before, if Apple wants to sort out its legal remedies, there is a civil justice system ready and waiting for it.
What's so disturbing here is the aggressive response by criminal law enforcement authorities. If you or me or thousands of other technology companies had complained to the police about an identical incident, we would've been told to seek remedies elsewhere. Apple, however, got the full lawful power of the state and then some in the form of an overly broad and potentially illegal seizure of a journalists' computers.
That's a problem, and its one that deserves some degree of explanation from REACT.
Woah, there - let's trace that chain of events a little more closely. The 'intrepid blogger' has publicly offered a reward for any inside information about your suit - and your clients have already demanded that he cease and desist from doing so, because such a reward suborns a breach of confidentiality. Your loss is careless, but the blogger pays someone for your briefcase, unlocks it, and makes public about half the contents, while publicly bragging about the manner in which he obtained it and incidentally mocking you for using public transport. Finally, he demands that your inaugural client in the suit publicly beg for its retrieval, even though he knows where to find you, and also the identity and location of your client.
If you or me or thousands of other technology companies had complained to the police about an identical incident, we would've been told to seek remedies elsewhere.
How can you say that? There are abundant examples of law enforcement assisting in the recovery or investigation of misappropriated IP resulting in custodial sentences.
I mean, take a look at http://www.justice.gov/criminal/cybercrime/ipnews.html - There are over 100 trade secret related cases here, from companies both large and small, and many of them concern opportunistic rather than premeditated misappropriation. If I had a Westlaw or L/N account at home I'm sure I could quickly pinpoint many at the state level too.
First, you presume there's a trade secret. There's no indication that is correct; all I see is a new soon-to-be-sold product that Apple intentionally let off of its campus and into the wild.
Second, you presume Gawker criminally misappropriated or otherwise misused the trade secret. Gawker bought a lost phone. Did they have a duty under California law to seek out its owner? Possibly -- but that's an entirely different question from if they criminally violated trade secrets laws. There's no indication that Gawker had any duty at all to protect Apple's secrets; it's not like Gawker is an employee at Apple. You can't just say that, because a person committed a lesser crime, they necessarily committed all greater conceivable crimes. Same goes for the person who found and sold the phone.
Third, you presume the government had probable cause to believe that each of the items seized from Chen had information relating to a crime. Two problems with that: (a) as noted above, it's unclear a crime even was committed and (b) the warrant was patently overbroad, and its doubtful the government had more in mind than a fishing expedition. That's a plain violation of the Fourth Amendment.
Fourth, where's the fire? There's no on-going crime here. There's no criminal enterprise. There's an isolated, public incident. So why the high priority? Why the extremely aggressive measures of seizing all of a journalists' computers?
Compare and contrast that situation to one of the cases listed on the DOJ website you linked to:
"In support of his plea, Mitchell acknowledged that on September 5, 2007, he emailed much of the contents of a DuPont proprietary spreadsheet document entitled “Denier Economics” to an official with Kolon. “Denier” is a term used to describe the weight per unit length (linear density) of a continuous filament or yarn. The Denier Economics spreadsheet contained highly sensitive business trade secret information related to DuPont’s production capacity for Kevlar® yarn in a variety of denier types. Included in the information for each denier type were specific figures relating to annual production, unit capacity, spin speeds, and several factors relating to line efficiency (such as percentage yield and percentage up time). The Denier Economics spreadsheet was closely held and distributed to a small number of DuPont personnel on a need-to-know basis only."
Now that's a trade secret, and it's a clear misappropriation of it by someone with a duty to keep it secret.
And what did the DOJ do there? Did they start seizing the property of third parties covered by shield laws?
No. They slowly started building a case.
The exact opposite of what REACT did here.
Shoot first, ask later, for high profile crimes is not just the wrong approach, it's unconstitutional and inappropriate. And it demands an explanation.
1. I agree the trade secret is questionable. But an employee having it off-campus isn't a release into the wild. Gizmodo even wrote an article about how well it was disguised, calling it '[a] very ingenious solution to protect future designs from lookeyloos'. It's hard to argue Apple intentionally abandoned their IP; and although the exterior shell was removable, the finder did not disassemble the device within. So when Gizmodo got it, the only information 'in the wild' - which was published by Engadget, who were also offered the device - was its external appearance.
2. Gawker paid $5000, by their own admission. Clearly they considered the likely provenance of the phone to have commercial value, and I think that part is legitimate - the loss of a prototype by a famously secretive firm is newsworthy for both consumers and stockholders, who have an interest in the integrity of the firm's IP. Gawker certainly has no obligation to help Apple keep their reputation for security intact.
Arguably it was stolen under CA law, arguably that put Gawker in a position of receiving, knowing that it could not be legally saleable under the circumstances. And arguably they took the phone with the intent of returning it to Apple, and what they paid for was the story of how it was lost and found, making it newsworthy as above.
Where I part ways with Gawker is in what occurred next. Believing it was likely a prototype they could easily infer that it belonged to Apple; and being experienced tech journalists, they certainly knew how to get of hold of someone senior there, describe the device and its attached ID labels, and confirm its authenticity. A quick look at California's Uniform Trade Secrets Act would have apprised them that a prototype device is itself a trade secret, and that they did have a duty of care, under subparagraph (b)(2)(C) of the UTSA: ['Misappropriation' means .. disclosure or use .. by someone who] Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
So - loss of protoype phone, not a secret. External appearance of same - also not a secret, Engadget has republished the finder's own photos. Acquisition of device - defensible, even with money involved. So far, so good. Take all the pictures you want, call Apple, confirm and return, publish and be damned. Prior restraint is a barrier to any injunctions from Apple, as shown by Ford Motor Co. v Lane.
But this is not what happened. Instead, Gawker, acting as Chen's employers, 'dissected' (their word) the device, up to the point of Chen losing confidence in his ability to reassemble it, and published the results.
Now this seems to me like a clear violation of not only the UTSA (creating civil liability) but the Economic Espionage Act of 1996, specifically title 18, § 1832. I suggest that Gawker converted possession of a prototype device, destined for an existing global market, into advertising revenue based on readership, knowing that publication of the device's internal construction would injure Apple by benefiting competitors and counterfeiters.
I think they have violated this law in multiple ways, and possibly violated laws against receiving and fraud (for misrepresentation of fact to the finder/seller and employees about their liability under civil and criminal law).
3. Yes, I think Gawker's published version of events is prima facie evidence of a crime and that the federal statute cited provides for a very broad search. To my mind the only question is how far up Gawker's chain of command the responsibility goes.
4. How do we know? Gawker parlays its audience into sometimes exclusive access to products, services and information in the various industries it covers. They have actively solicited confidential commercial information for cash, relying on their journalistic privilege to protect them. Is it not possible that they, or one of their staff, would share a trade secret for some quid pro quo, given their professed lack of ethical inhibitions?
Yes, it is indeed an aggressive approach by the police. But skilled technologists have been known to destroy digital evidence, and Gawker blogs have published a articles on topics like concealment or permanent deletion of digital information...as recently as last month. And no, I'm not sure I would trust a promise to voluntarily abstain from doing so.
Because Apple has lots of money and political influence.
Justice is politics and politics is money. Its ugly when it shows up so explicitly, but it should be no surprise.
This is actually completely relevant because anything involving this story could involve a small business that finds itself in a similar situation. Gizmodo could have been a small startup idea that only had a few viewers, for example. It could happen to any of us that are starting a new business. However, not everything must be relevant. Sometimes stories are simply entertaining and break the monotony.
Sorry, I don't believe that anything involving the story is relevant to HN, nor do I believe that anything entertaining is HN. The acid test is "Anything that would gratify our intellectual curiosity." Some issues connected to this story do, some do not.
Remember that almost everyone here reads multiple sources of information: We read reddit, we read stackoverflow, we are on twitter. Therefore, there is no need for HN to contain every story that might be entertaining or even interesting.
For example, anecdotes about using dating sites are of great prurient interest to hackers, but not Hacker News. Stories about what makes some profiles on dating sites attract more responses than others: Hacker News.
So besides entertainment value, what specifically about this post should gratify my intellectual curiosity? What can I learn from this post to write software? What does it teach me about running a start-up?
What does it teach me about running a start-up?
I'd say quite a lot; core IP can be very hard to keep secure, you should be suspicious of people offering to sell you IP without clear proof of ownership, you can unwittingly incur legal responsibilities at the same time as material benefits, and economic considerations often trump ethical ones.