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Apr. 26 2010 - 9:02 pm | 1,641 views | 3 recommendations | 16 comments

Gizmodo’s iPhone 4 preview turns criminal

The default Home screen of the iPhone shows mo...

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The case of the lost iPhone 4 prototype, purchased by Gawker.com for $5,000 and revealed to the world on Gizmodo, has taken a turn that could lead to a landmark court case having absolutely nothing to do with smartphone technology.

On Friday evening, police officers from the California Rapid Enforcement Allied Computer Team, broke into the home of Gizmodo Editor Jason Chen and removed four computers and two servers from the location. The police were acting pursuant to a search warrant issued by a Judge of the Superior Court of San Mateo.

According to the warrant , the officers were authorized to take items that may have been used in the commission of a felony and/or could tend to show that a felony has been committed or that a particular person has committed a felony.

Clearly, the San Mateo district attorney is looking to make a criminal case against either the fellow who allegedly found the lost iPhone 4 prototype on a bar stool and then sold it to Gawker; a case against Gawker for purchasing stolen property; or both.

Was a crime committed? After all, barstool guy didn’t really steal the iPhone from the Apple engineer who accidentally left the device in the bar after an evening of celebrating his birthday over a couple of beers. Rather, barstool guy found the device after the engineer had already left it behind.

But that doesn’t mean that a crime was not committed.

California Penal Code Sec. 485 states:

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.

Clearly, the fellow who found the device in the bar qualifies as someone who found lost property. But did he find the iPhone ‘under circumstances which give him knowledge of or means of inquiry as to the true owner’?

This is a fact question that will ultimately be answered by the Trier of fact (judge or jury), should the authorities pursue a case against the finder.

Still, at some point the man realized that he had something belonging to Apple. Otherwise, why would he have received $5,000 for the device from Gawker? Thus, he would appear to have had ample knowledge as to the identification of the true owner. As for whether or not he made a reasonable effort to find and restore the property to the rightful owner, that is another question to be determined by a jury should the prosecutor decide to move forward with a criminal case.

According to Gawker, the man did attempt to contact Apple (evidence that he knew that Apple was the owner of the property) to arrange for the return of the device but was given a number and told he would be contacted at some point in the future when his number came up. On the other hand, barstool guy allegedly made no effort to return the device to the bar where he found it in the expectation that the engineer who lost the iPhone would return looking for it nor did he take the lost device to the police.

The next part of the statute is where is gets interesting. Apparently knowing all to well what he had stumbled upon, the fellow who found the device sold it to Gawker – thus meeting the requirement of the law that prohibits his appropriating the property to his own use or to the use of another person not entitled thereto.

Once he sold it, not only did barstool guy potentially get into the soup, Gawker may well have joined in and committed a criminal act.

California law states that anyone who knowingly receives property that has been illegally obtained has also broken the law and can be imprisoned for up to one year.

Did Gawker know that the seller had illegally obtained the phone – if, indeed, the phone was illegal obtained? Again, this is a question of fact for a jury, but, given Apple’s well known penchant for uber-secrecy when it comes to new technology devices, it is certainly not unreasonable to expect that Gawker knew that Apple had not turned over the device to the seller hoping he would give it – or sell it – to Gawker to become the subject of a Gizmodo review.

A slam-dunk that somebody at Gawker is going to fry?

Not necessarily.

In Bartnicki et al. v. Vopper, 532 U.S. 514 (2001), the Supreme Court ruled that a radio station broadcasting a taped conversation that had been illegally obtained by one of the parties providing the tape to the radio station, did nothing wrong when broadcasting the tape because the radio station did nothing illegal to obtain the tape. The case has since stood for the rule that media defendants are not liable even if a third party has broken the law.

Does the Bartnicki case get Gawker off the hook?

Maybe…maybe not. The question would seem to turn on whether or not Gawker broke the law in obtaining the iPhone prototype. If they did, they may well fail to meet the test in Bartnicki requiring them to be innocent of having broken the law.

There is a  good chance that had Gawker simply taken a good look at the iPhone 4, reported on their findings and gave the phone back to barstool guy, they would be in the clear. But that is not what happened. They bought the device for $5,000 making them potentially guilty of purchasing illegally obtained property.

As noted, the San Mateo DA is looking to make a case against someone. But did the District Attorney make a fatal mistake in seeking a search warrant to enter Mr. Chen’s house so that they could cart away his computers?

According to Gaby Darbyshire, COO of Gawker Media LLC, that is exactly what the district attorney has done.

Darbyshire is arguing that the search warrant permitting the raid on Chen’s home was illegal pursuant to California Penal Code Section 1524(g) which prohibits a warrant being issued for any item or items described in Section 1070 of the California Evidence Code which, in turn, reads:

a) A publisher, editor, reporter, or other person connected with or employed upon a newspaper, magazine, or other periodical publication, or by a press association or wire service, or any person
who has been so connected or employed, cannot be adjudged in contempt by a judicial, legislative, administrative body, or any other body having the power to issue subpoenas, for refusing to disclose, in any proceeding as defined in Section 901, the source of
any information procured while so connected or employed for publication in a newspaper, magazine or other periodical publication, or for refusing to disclose any unpublished information obtained or prepared in gathering, receiving or processing of information for
communication to the public.

Darbyshire is arguing is that the material on Chen’s computers is shielded by the laws that protect a journalist’s sources. If she is right, and the computers were illegally seized, anything the police find on those computers would be inadmissible in a court of law, thus badly damaging the District Attorney’s opportunity to make a case.

In case you’re wondering, according to a recent California case, an on-line operation like Gawker, and its subsidiary Gizmodo, are protected under these laws.

But does Section 1070 of the California Evidence Code apply?

It seems clear that the law is intended to protect journalists from being found in contempt for refusing to disclose a source or source material. When we connect that to California Penal Code Section 1524(g), it would indicate that a search warrant cannot be issued to confiscate any material in the possession of a journalist that would be protected as such source material.

Was the DA looking for information that would lead them to the identify of barstool guy so that they can charge him with illegally possessing the iPhone or is the DA looking for information to be used in making a case against Gawker for purchasing stolen property? Or both?

The answer to that question may prove pivotal in how this all ends up.

Ms. Derbyshire has posted a twitter in the past hour indicating that she is currently speaking with the San Mateo Country authorities who are looking into the propriety of the search warrant. If I were she, I wouldn’t be holding my breath until the computer equipment is returned. The time for the DA to do his or her homework on the propriety of the search warrant was before they obtained it – not now. A decision to return the equipment and give up on the warrant would be far too embarrassing and very possibly deal a death blow to whatever case may exist.

The legal issues triggered by the search warrant and the question of whether or not Gawker is protected by the Bartniki case promise to resonate long after the release of the iPhone 4 and many versions beyond.

Let’s hope that Gawker has a big enough bank account to fight what is likely to turn into a protracted battle for journalistic freedom- even if it might involve purchasing stolen property to bring the story to the people. While it would have, admittedly, been far more sexy if it involved some presidential scandal or massive criminal enterprise, this matter nevertheless promises to make some very interesting law in how far a journalist can go to deliver a story, even if it’s just a story about a telephone.


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  1. collapse expand

    Legalities aside, this, in my honest opinion, is just another free advertising gimmick perpetrated by Apple. Apple is widely known to leak information to select outlets to get a buzz going before a product launch. Why else would a young, apparently novice Apple employee have such a piece of hardware outside the security of the Apple campus to begin with? Unless he himself stole it. Apple employees have been fired for lesser offenses. (See the Wozniak/iPad story) My wife has even put off getting an Android phone in hopes of purchasing said iPhone, which plays right into this scheme.

    Just my 2 cents.

    • collapse expand

      Unlikely, now that it has become a matter for the San Mateo DA. Were it a hoax, Apple would themselves be in serious legal trouble- think balloon boy.
      Once a judge issues search warrants and cops go into someone’s home and take their computer equipment, it moves well beyond a promotional scam. Apple is not this stupid – and if they are, someone there is in very, very big trouble.
      Not likely to be the case.

      In response to another comment. See in context »
    • collapse expand

      Also, from what I understand, the employee had it off campus because they were in beta testing and employees working on the project-as the fellow who lost his was – were testing the device in the field.

      In response to another comment. See in context »
      • collapse expand

        Fair enough, but on another note, why would an employee get fired for showing another employee, a founder even, an iPad. While a separate drunken employee loses his super secret iPhone in a public place and still has his job, for now. I still don’t think it’s as simple and innocent as it appears on the surface. Other seemingly harmless advertising campaigns have gone criminal before.

        Now anytime a known Apple employee is out using what appears to be just another Apple product will be a target and the next thief and journalist wont be so dumb as to sell and advertise it in the US.

        4 cents now.

        In response to another comment. See in context »
        • collapse expand

          1. “Other seemingly harmless advertising campaigns have gone criminal before.”

          While that may or may not be true, it is irrelevant. Were the whole thing initially a publicity ploy, as you suggest, once it reached the attention of the District Attorney, that would be the moment for Apple to step up and tell the DA that no crime was committed – nobody stole anything. They didn’t do so or the DA would never have gone for a search warrant. That would make Apple complicit in a crime of its own. Do you really think that they would do that? Where would the upside be in that? While anything is possible, logic dictates that this is not what happened.

          2. We really don’t yet know what the fate of the engineer will be. However, it is not hard to see a difference in the case of the iPad and what happened here. In the case of the iPad, the employee purposefully broke company policy by intentionally showing the device to Wozniak. In this case, the employee lost his phone -something that could happen to anyone, including Steve Jobs himself.

          “Now anytime a known Apple employee is out using what appears to be just another Apple product will be a target..”

          Come now…that’s a bit of a stretch. For one thing, I really don’t know how one identifies an Apple employee in a bar or anywhere else.

          In response to another comment. See in context »
          • collapse expand

            Remember the blinking light ads under bridges and in subways that sparked terrorist fear?

            Criminals don’t just find them in a bar, at least not accomplished ones. They follow them into the bar or their homes after staking out the Apple campus and identifying them coming and going. $5k is $5k.

            I understand your legal interest in this story, being a lawyer yourself, but is this really a story worthy of even more attention then it has already gotten?

            Gizmodo most likely loves all this free advertising either way since their readership has surely gone up exponentially since the story broke. Heck even I check them out more now than ever before. Before this they were considered a hack of the Apple journalistic world, not taken seriously at all.

            On a less serious note. Did you see the story about the Oktoberfest people in Germany offering the sad drunken Apple employee a full ride to come get drunk with them? Hilarious!

            In response to another comment. See in context »
  2. collapse expand

    Very helpful analysis, Rick. Gizmodo had a choice in their approach. Rather than paying $5K and taking possession of the phone they could have simply paid barstool guy for his time and an interview, or access to the phone. I presume the decision to pay barstool guy $5k to buy the iPhone 4G went up the Gizmodo chain of command, as it would in most news orgs. Think they got bad legal advice?

    • collapse expand

      Very possibly. While it’s hard to tell how this comes out, I would have advised them differently. On the other hand, it is certainly possible that barstool guy made it clear he would take it somewhere else if they didn’t pay what he wanted and they made a business decision. It got them a ton of hits, but, in the long run, they may come to feel that it wasn’t anywhere near worth it.

      In response to another comment. See in context »
  3. collapse expand


    “Remember the blinking light ads under bridges and in subways that sparked terrorist fear:

    Not only do I remember the events in Boston, I actually know the guys involved.

    Nobody was ever charged with a crime. It was stupid – but there was no criminal intent – which is necessary in almost every crime. It was just a promotion that had unintended consequences.

    Were Apple involved, as you have suggested, that would not be a crime. The crime would occur once they realized the authorities suspected and were investigating the events as a possible crime and failed to come forward with the facts. That would be an intentional effort to mislead the authorities when Apple knew the facts.

    I really think we’ve covered this in ample detail. Who knows, maybe Apple is that stupid and you will turn out to be right- all logic to the contrary. In any event, you are certainly entitled to your opinion.

  4. collapse expand

    To me, this case is an extension of the Open Source and Creative Commons theory gone bad. I think folks who believe in a free Internet are starting to confuse that freedom with entitlement; meaning, your property is the collective property, your ideas are my ideas. So in their twisted heads, Gizmodo probably thought they were doing the people’s work, when in fact they were stealing a trade secret. I’m not condoning it, I’m just offering an explanation for the stupidity.

    They will argue that the law hasn’t kept up with the pace of Internet communication, just as digital content pirates believe it’s okay to redistribute e-books and music without the creator’s or publisher’s permission. In fact, I think this is going to be a hard lesson for those out there who feel entitled to the hard work of others with no skin in the game themselves.

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    About Me

    I am an attorney in Southern California, and a frequent writer, speaker and consultant on health care policy and politics. To that end, I am active member of the Association of Health Care Journalists. Based in beautiful Santa Monica, California, I'm very pleased to have the opportunity to be a contributing editor to True/Slant. I've recently finished a book designed to make the health care debate understandable to the average reader, and expect it to be out in the next five months or earlier. In my 'spare time', I continue to write for television and, occasionally, for comic books.

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