Apple asks for iPhone prototype back, Gizmodo could face UTSA lawsuit
Gizmodo has received a letter from Apple's senior vice president and general counsel Bruce Sewell formally requesting the return of "a device that belongs to Apple."
Gizmodo's Jason Chen published the letter (shown below) with a response to Apple that insisted "we didn't know [the prototype iPhone] was stolen" at the time that Gizmodo chose to shell out a reported $5,000 to obtain it from the person who claimed to have found it.
It is beyond dubious that Gizmodo would have paid that much money for a device if it did not reasonably think that it was anything other than a real prototype that belonged to Apple. Further, the fact that it was remotely wiped provided compelling evidence that it was in fact stolen.
However, in addition to the legal issues involved with buying stolen merchandise (which are in effect regardless of whether the buyer knows the goods are stolen or not), Gizmodo also faces legal consequences under California's Uniform Trade Secrets Act.
Section 3425.1 defines "misappropriation of trade secrets" as a civil code violation, with wording that makes it pretty clear that buying a stolen prototype, determining it is authentic and includes valuable information in the form of trade secrets, and then publishing the information to earn money and notoriety for doing so is something that will expose you to legal liability.
The code section defines these phrases:
(a) ?Improper means? includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means.
(b) ?Misappropriation? means
1) Acquisition of a secret of another by a person who knows or has reason to know that the secret was acquired by improper means; or (2) Disclosure or use of a secret of another without express or implied consent by a person whoA) Used improper means to acquire knowledge of the secret; or (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) Before a material change of his or her position, knew or had reason to know that it was a secret and that knowledge of it had been acquired by accident or mistake.
(c) ?Person? means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.
(d) ?Trade secret? means information, including a formula, pattern, compilation, program, device, method, technique, or process, that1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
The remedies outlined for "misappropriation of trade secrets" which "used improper means [including theft] to acquire knowledge of the secret" are described as follows:
§ 3426.3 (a) A complainant may recover damages for the actual loss caused by misappropriation. A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.
(b) If neither damages nor unjust enrichment caused by misappropriation are provable, the court may order payment of a reasonable royalty for no longer than the period of time the use could have been prohibited.
(c) If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subdivision (a) or (b).
A following section indicates Apple has three years to file suit against Gizmodo and or Gawker Media.
§ 3426.6. An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.
Gizmodo's Jason Chen published the letter (shown below) with a response to Apple that insisted "we didn't know [the prototype iPhone] was stolen" at the time that Gizmodo chose to shell out a reported $5,000 to obtain it from the person who claimed to have found it.
It is beyond dubious that Gizmodo would have paid that much money for a device if it did not reasonably think that it was anything other than a real prototype that belonged to Apple. Further, the fact that it was remotely wiped provided compelling evidence that it was in fact stolen.
However, in addition to the legal issues involved with buying stolen merchandise (which are in effect regardless of whether the buyer knows the goods are stolen or not), Gizmodo also faces legal consequences under California's Uniform Trade Secrets Act.
Section 3425.1 defines "misappropriation of trade secrets" as a civil code violation, with wording that makes it pretty clear that buying a stolen prototype, determining it is authentic and includes valuable information in the form of trade secrets, and then publishing the information to earn money and notoriety for doing so is something that will expose you to legal liability.
The code section defines these phrases:
(a) ?Improper means? includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means.
(b) ?Misappropriation? means
1) Acquisition of a secret of another by a person who knows or has reason to know that the secret was acquired by improper means; or (2) Disclosure or use of a secret of another without express or implied consent by a person whoA) Used improper means to acquire knowledge of the secret; or (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) Before a material change of his or her position, knew or had reason to know that it was a secret and that knowledge of it had been acquired by accident or mistake.(c) ?Person? means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.
(d) ?Trade secret? means information, including a formula, pattern, compilation, program, device, method, technique, or process, that
1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.The remedies outlined for "misappropriation of trade secrets" which "used improper means [including theft] to acquire knowledge of the secret" are described as follows:
§ 3426.3 (a) A complainant may recover damages for the actual loss caused by misappropriation. A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.
(b) If neither damages nor unjust enrichment caused by misappropriation are provable, the court may order payment of a reasonable royalty for no longer than the period of time the use could have been prohibited.
(c) If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subdivision (a) or (b).
A following section indicates Apple has three years to file suit against Gizmodo and or Gawker Media.
§ 3426.6. An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.
Comments
Gizmodo's got some 'splainin' to do, that's all.
Also, (almost) any violation of the Penal Code can be used as the basis for a lawsuit in *civil* court in California under the "Unfair Competition Law" (B&P sec. 1700 et seq.)
Honestly, though, given all of the blowback against Apple going on lately, I wonder if they don't decide from a PR perspective to go soft here, still the precedent... oy....
The California Courts walked back a number of the stricter interpretations of the TSA in 2009, but those were all in context of more abstract trade secrets, like customer lists.
Gizmodo's got some 'splainin' to do, that's all.
Also, (almost) any violation of the Penal Code can be used as the basis for a lawsuit in *civil* court in California under the "Unfair Competition Law" (B&P sec. 1700 et seq.)
Honestly, though, given all of the blowback against Apple going on lately, I wonder if they don't decide from a PR perspective to go soft here, still the precedent... oy....
They could also be charged with receiving stolen goods.
Receiving stolen goods is generally buying or acquiring the possession of property knowing (or believing in some jurisdictions) that it had been obtained through theft, embezzlement, larceny, or extortion by someone else. The crime is separate from the crime of stealing the property. To be convicted, the receiver must know the goods were stolen at the time he receives them and had the intent to aid the thief. Paying for the goods or intending to collect the reward for returning them are not defenses. Depending on the value of the property received, receiving-stolen-property is either a misdemeanor or a felony.
There are numerous federal laws that make it a federal crime to receive stolen property (e.g., vehicles, securities) if the property received was or had been in interstate commerce.
it starts to feel like something is coming...iPad? Everyone was looking for that one. iPhone update? not a secret. With all that attention to Apple now they would be loosing a nice opportunity here if they don't present another new product soon. It would blow up.
P.S. so iPhone has been revealed...i bet after around 40 mins of WWDC Keynote SJ presents a new product rather than iPhone.
"I heard that if an alien from Mars attempts to sell stolen goods, then you have the right to submit for discovery with the nearest legal office on Phobos. S'true I saw it on Star Trek!"
Ffffffffuuuuuuuuuuuuuuuu
What may keep Apple from ruining them totally is maybe the PR thing. Not the PR and attention the phone got, but the reputation on cracking down to hard.
I don't feel sorry for Gizmodo. I guess they must have someone understanding the law around. However depending on the real facts I think the employee and apparent finder may have been caught up in something they do not fully understand and won't be able to gain anything but loose a shit load from.
I assume AI pays its sources of leaks and info. Does that fall under "bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy" . How is that different from what Gizmodo did? Maybe Kasper should be sent to jail then, or at least shut down the site.
Further, I think it's what any tech website should do. If you get ahold of the new iPhone before it's released, it's almost your job to bring it to your readers. This isn't journalism as as important as Watergate, but dammit if you're going to sit there and speculate for months on end when you can just get ahold of it early and tell us the facts, then by all means do it.
Is it going to come out that Giz did some shady stuff to get this phone? I don't care. I like knowing what's coming sometimes. They got me what no one else could. I'm tired of reading rumor after rumor, and then two weeks after its out they start with rumors about the next one, like the OLED iPad screen. BFD the damn thing just came out.
If Apple's whole marketing strategy is to leak rumor after rumor, then they should be paying you guys directly. I'm sick of being teased and reading all this speculation. Is the new phone done? Great, release it. Well I say I'm sick of it, but I'll be back to read more tomorrow. I'm just glad that at least once something unscripted happened, and the guys at Gizmodo deserve a big pat on the back for doing this, and they get a lot of cred in my book. I hope they don't get sued, they're doing their job, and someone else f'd up.
Now on to the KoolAid drinkers who scream bloody murder that the iPhone was outed with out their lord and savior's say so.
A following section indicates Apple has three years to file suit against Gizmodo and or Gawker Media.
§ 3426.6. An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.
So the 'Sword of Damocles' hangs over their head for the next 3 years.
It will crash down upon them at some point, a point when most people aren't looking.
Then Gizmodo is dirty: Noo, they're paying for stolen goods.
Now Gizmodo is in trouble: Crap, they broke the law and might face some serious trouble.
However, I think the letter from Apple was very carefully written and phrased in a humble way, giving Gizmodo the chance to just do the right thing without any further investigation. The damage is done, nothing to do about it. Maybe in a crude way Apple even liked the timing of this. After all, there was a strange "Where's the new hardware"-void following the introduction of iPhone OS 4.
Idiots like Gizmodo need to be made an example of by the courts. Otherwise, everyone else will think it's okay to essentially bribe people to break the law to line their own pockets since no one gets prosecuted.
Folks that imply that Apple would not want that kind of PR just don't get it. It's not an Apple thing. This is simply illegally taking and publishing trade secrets. Any company would get pi**ed-off if this happened to them.
Will be interesting to see how this develops.
Anybody that thinks Apple won't make an example out of them doesn't know Apple. Where's Think Secret? Where's Psystar?
So the 'Sword of Damocles' hangs over their head for the next 3 years.
It will crash down upon them at some point, a point when most people aren't looking.
No theft, no lawsuit. No Sword of Democles.
But Apple's competitors (such as Google) now have advance knowledge of what the next iPhone will be, possibly several months ahead of time. This could give them direction in their own designs.
Certainly the person who found the phone at the german pub should have handed it to the bartender, not walked off with it.
Which is a shame, because Gizmodo always had the very best live keynote coverage.
Far superior than all the rest.
So sad, Gizmodo, but you crossed over the line.
1. Gizmodo never told the whole truth about this from the beginning, and they're playing CYA hard and fast.
2. Currently, you don't know WHAT the real story is. It may have been lost, it may have been stolen, the person Gizmodo PAID to get the thing may have been a friend of an employee, or an employee of Apple or Giz, who knows, the story remains to be told.
3. Finding a device that you know for certain is at best "lost" and then selling it to somebody you know for certain is not the owner is a crime. Paying for a device you know for certain was either Lost or Stolen is a crime.
4. Brian Lam's moustache makes him look like an asian drag queen. You know its true.