Apple Said to Have Upped Ante with Crime Probe of Gizmodo

"There’s a tension here, and at some point the intellectual-property protection” of trade secrets “and the First Amendment are going to collide,” said Roger Myers. He represented news organizations that got unsealed the affidavit supporting a search warrant under which Gizmodo editor Jason Chen’s home was raided and his computers taken. But the case comes up in a terrible posture because Gizmodo botched its handling of the story from start to finish, a longtime Silicon Valley futurist said. Apple, Gizmodo and Gawker didn’t reply right away to requests for comment Tuesday.

Judge Clifford Cretan of San Mateo County Superior Court is awaiting a report from a special master with a forensic expert analyzing what information from the computers to give prosecutors as relevant to their stolen-property investigation, Steve Wagstaffe, the county’s chief deputy district attorney, said in an interview. No charges have been filed. Wagstaffe, unopposed on the ballot Tuesday to become the district attorney, said the case is being handled routinely. “I'm viewing this as theft of a little phone.” He said it could be charged as a felony or misdemeanor against anyone who took the device wrongfully and anyone who received it knowing that it must have been stolen, or not be charged. Business and social considerations “will be on the scale” in the decision, Wagstaffe said.

"Back in the day,” Apple would have filed in civil court for a temporary restraining order against Gizmodo’s publication of Chen’s article about the prototype, said Myers, of Holme Roberts & Owen. The company’s having pressed successfully for a criminal investigation shows that Apple thought the old route “would be utterly ineffective,” he said. “It would just bring more publicity to the situation … so they decided to criminalize newsgathering."

There’s “a history of cases” in which “large corporate interests have gotten injunctions against websites to stop publication” of information that they considered sensitive, Myers said. But orders against publication were “ultimately reversed,” as “utterly ineffective” in preventing circulation of the news, by the judges in New York and San Francisco who had issued them, he said. That’s because the information got pumped “all over the Web, all over the world,” through “cached copies and mirror sites,” Myers said. And a late-April ruling in Salinger v. Colting by the 2nd U.S. Circuit Court of Appeals in New York may make it considerably harder, for copyright owners at least, to win injunctions against publication, he said. Jennifer Granick, the Electronic Frontier Foundation’s civil liberties director, generally agreed with Myers’ assessment.

Apple is “trying to send a message” to reporters who lawfully get information that the company doesn’t want reported, Myers said. A violation of some law often can be found somewhere along the line of getting a good story, Granick said. As long as a reporter doesn’t solicit a violation to get information, “we get to learn about this stuff,” she said. Wagstaffe called concerns under the First Amendment about a chilling effect “fair” and “reasonable.” He said, “A court may ultimately make a ruling on that."

Companies “will find new and innovative ways to protect their intellectual property rights,” said William Coats, an intellectual-property litigator at Kaye Scholer. The market provides a check against Apple’s overreaching, he said: The company “has a very tech-savvy base of customers, and it has to be careful to keep them happy.”

Coats, who represented the DVD Copy Control Association against companies with disk-copying technologies, acknowledged that if the iPhone prototype had been reported by the Los Angeles Times, and it hadn’t paid for the information as Gizmodo acknowledges having done, “the court would have had a lot greater problem issuing the search warrant” and the First Amendment might have “trumped” the state stolen-property law. “Wrong,” Wagstaffe told us. “I wouldn’t care if it was The New York Times, the London Times or anyone. A journalist cannot use that shield to protect criminal conduct."

"The challenge is protecting the pure monetary value” of a new product such as the iPhone, to the tune of billions of dollars, against competitors’ getting an early jump on knocking it off, Coats said. But futurist Paul Saffo of Discern Investment Analytics said no company can succeed by chasing Apple: They'll have to get ahead. Coats replied that many companies “make huge amounts of money by being second.” Saffo shot back: “Like Microsoft."

Apple’s contention that news of a coming iPhone before it was announced undercut sales of the product’s current version doesn’t “make any sense,” Myers said. People won’t stop buying iPhones because of a Gizmodo article, he said. Myers said he’s “perturbed that law enforcement didn’t ask a few harder questions” before pursuing the case. Police aren’t “marketing experts and they're not tech experts,” Coats replied.

"Bad precedent is created by the exercise of poor judgment,” and Gizmodo showed plenty of that, along with the person who found the prototype and provided it to the site, Saffo said. Gizmodo blundered by paying for the phone and failing to cover its tracks, he said. Besides, everyone in Silicon Valley knows how foolhardy it is to tick off Apple CEO Steve Jobs, Saffo said. “This is a case where there were a lot of dumb bunnies. … It may be new media, but have common sense.” The “exchange of money does give it a different odor” and “change the public perception,” he said.

Myers said Apple has shown that it’s entirely capable of getting ticked off even when reporting it dislikes is “totally aboveboard.” If Gizmodo “had practiced good journalism” instead of checkbook journalism “they might not be in the boat they're in,” he said, but “not necessarily.” Granick agreed. Saffo stressed that his criticism of Gizmodo wasn’t meant to contradict the importance of protecting media rights.

"What a boring world it would be if everyone followed your advice” about how reporters should behave, Granick told Saffo. She said the dominant “odor” in the case came from the involvement of a “police force” funded and trained by Apple and other high-tech companies. The Rapid Enforcement Allied Computer Team (REACT), a multi-agency Silicon Valley body, gets “specialized training, liaison personnel and internal support” for investigations from “high tech companies and industry councils,” its website says. The prosecutor who sought the search warrant and the judge who issued it aren’t in the company’s pocket, Saffo said. “It ends up being this conspiracy of dunces,” rather than anything more sinister, he said. Wagstaffe tried to justify only his office’s role in the case. “Whether REACT ought to be involved is somebody else’s call,” he said.

The law-enforcement task force consults with companies like Apple to keep up on technology and the crimes and criminals involved with it, said an official with it, Lt. Mike Stermer of the Santa Clara County District Attorney’s Office. Apple has an open invitation to take part in REACT’s steering committee, he said. The company hasn’t provided the state-funded group money or equipment, Stermer said, adding that he wasn’t sure about training. The relationship between REACT and companies doesn’t mean they get favoritism, he said. Stermer said he couldn’t discuss the Gizmodo-iPhone case, including whether pursuing it implied that the harm to Apple’s business outweighed any free-expression considerations.