Silicon Valley Police Involved in iPhone 4G Investigation

By Ed Oswald | Friday, April 23, 2010 at 3:46 pm

Police in Silicon Valley have launched an investigation into the lost iPhone prototype that made its way in to the hands of Gizmodo, CNET reported late Friday. Law enforcement officials told the site that criminal laws may have been broken as a result of the transaction, but did not provide much more in the way of detail.

CNET’s source claimed that Apple had been contacted, and it was thought that a computer crime task force from Santa Clara County (where Apple is headquartered) was heading up the investigation. Everything is preliminary, and the investigation will only see if enough evidence exists to press charges.

It is not known if the investigation directly targets Gizmodo, the person who found the device, or both. Some legal analysts have said in the least that Apple may have a case against the prototype’s finder, and possibly Gizmodo as well depending on the facts.

Pressing charges against the site may not be as straightforward as some think: as I wrote Tuesday Apple does share some culpability in the matter, and due to First Amendment issues and past Supreme Court decisions, it’s much harder to criminally prosecute the press for leaks.

However, those cases did not deal with confidential information obtained in the manner that Gizmodo did, so it’s unclear how much those decisions would apply here.

12 Comments

Read more: Apple, Gizmodo, iPhone, law

10 Comments For This Post

Hamranhansenhansen Says:
April 23rd, 2010 at 6:23 pm

I like how so many people are calling them the “Silicon Valley Police” that is kind of cute. Like every cop is partnered with a robot. Of course they are police working for cities and counties that happen to be in the area that is nicknamed Silicon Valley.

> Pressing charges against the may not be as straightforward
> as some think: as I wrote Tuesday Apple does share some
> culpability in the matter and due to First Amendment
> issues and past Supreme Court decisions, it’s much harder
> to criminally prosecute the press for leaks.

There was no leak. Nobody leaked anything. None of the people involved even claims anybody leaked anything.

You’re talking like this case is only about trade secrets. It is not. It’s also about theft and receiving stolen property. Which happened before anything was published. There’s no 1st amendment issue involved in that at all, no freedom of the press involved at all.

If this were a plain iPhone 3GS instead of a prototype iPhone built into a 3GS case, the person who sold the phone would still be guilty of theft and the people who bought it would still be guilty of receiving stolen property. Engadget has said the seller offered the phone to them as well, he was having an auction of what is clearly stolen property. The fact that he did not take reasonable steps to return the phone to its owner (whose name and Facebook page he knew right from the start) turns it from found to stolen. The fact that he disassembled it (revealing the prototype parts) turns it from found to stolen. Just selling it turns it from found to stolen. Gizmodo has admitted that the seller told them the phone was not his before they bought it, that is clearly receiving stolen property. It’s open and shut.

Again, no freedom of the press. The public had a right to know an iPhone had been lost or stolen. Possibly to see photographs of the lost or stolen iPhone. Gizmodo might even have bought such photographs in the course of their reporting. But buying the stolen phone? No. Even if you’re writing a story about Steve Jobs, you can’t buy his stolen car from the thief to do it. You tell the police and you report “Steve Jobs’ car was stolen and somebody tried to sell it to me.”

The trade secrets issue is entirely separate. But even there, the D.A. has a good case because Gizmodo bought a stolen phone hoping that it would reveal trade secrets that they could publish, and they then did that. They did not just write a story about the found phone, or publish photos of the phone. They acquired the phone and got out a toolkit and went to work to discover trade secrets and publish them. The phone in question was not a 2010 iPhone, it was an iPhone 3GS with prototype hardware inside, rigged for field testing of the unit’s baseband by an Apple baseband engineer. It had to be disassembled with tools to even reveal it was not a retail iPhone 3GS. Even so, they were not able to get much out of the phone, which Apple had remotely wiped. Apple took many reasonable steps to protect their secrets during field testing. Gizmodo took many questionable and even criminal steps to expose those secrets, for no other purpose than exposing Apple trade secrets. It wasn’t a leak, or a whistleblower, or secrets that were revealed as a by-product of some other case. The only reason they got the secrets was because they bought a stolen phone. The only reason they bought the stolen phone was to get the secrets. The only reason they got the secrets was to publish them as “Apple secrets.”

Consider if Gizmodo had bought the phone and then taken it directly to Apple, without breaking it open, or publishing anything. Gizmodo could publish almost the exact same story, except with Gizmodo as a hero instead of a criminal. iPhone prototype found in a bar, offered for sale to Engadget and Gizmodo, Gizmodo pays $5000 out of pocket, not to get trade secrets and publish them, but in order to secure the device and return it immediately, that hour, directly to Apple, possibly to Steve Jobs himself. They could even turn down reimbursement of the $5000 and make the story $10,000 bigger. They get the same intrigue, but they don’t get to work on the iPhone with tools, which yielded almost nothing anyway. Other news outlets would be writing about Gizmodo-the-hero, the good samaritan who returned a stolen phone to its owner, even though they could have broken it open for personal gain, which people would have imagined would have yielded all kinds of information. But Gizmodo didn’t do that. Instead, they broke the law and they reported on themselves breaking the law. It says something about who they are that they made the choices that they did, and it says something about the people who are defending them.

davezatz Says:
April 23rd, 2010 at 6:41 pm

I’d be interesting to find out definitively if Apple reported this lost or stolen phone prior to it turning up.

Paul Judd Says:
April 23rd, 2010 at 7:40 pm

Dacwzaz – it matters not if Apple reported the phone as lost or stolen – California Penal codes do not require a police report for lost items that become stolen – the statutes define stolen property.

Apple’s formal demand to have the phone returned from Gizmodo is enough to establish that Apple feels that it is stolen.

Anonymous Says:
April 23rd, 2010 at 10:15 pm

I hope they don’t wind up taking the whole of Gawker down. :C <3 Jalopnik.

Ed Oswald Says:
April 24th, 2010 at 3:00 am

Paul: not exactly. Generally in stolen property cases, my understanding of case law shows judges typically want to see some type of action on the plaintiff to see that it made an effort to report the property as lost/stolen, etc. If Apple did not bother to report anything, that can be used against them in court and weakens the case. Essentially they didn’t care until it was in the hands of the media, in other words.

That letter did far from say anything one way or the other. In fact, it was probably the most toothless legal letter I’ve ever seen come out of Apple.

I have repeatedly said, including in arguments with fellow bloggers/journalists, that the real solid case is against the finder, not Gizmodo. The bar there is MUCH higher. Apple needs to prove that the site knew that it was real when it purchased it. If it cannot do that, it will have a hard time building a case for prosecution there.

The person that needs to really worry here is the finder.

Joshua Says:
April 24th, 2010 at 6:38 am

@Ed – Gizmodo paying $5000 for the phone might be a good indicator of what they ‘thought’ they were buying, no?

Paul Judd Says:
April 24th, 2010 at 7:49 am

Indeed – John Grueber has pointed out that there was a label on the phone that identified it as a protype – however their breakdown made it clear that it was real Apple hardware – they still waited a week and they knew the identity of the owner and the nature of the finding.

It became theft the minute that the finder intended to sell the phone. That happens independent of what Apple says or not.

E Says:
April 24th, 2010 at 10:44 am

Ed: I don’t think you are correct in this case. Gizmodo is essentially telling two stories here, trying to thread the needle as it were. One version states that the site didn’t know the phone belonged to Apple, and only disassembling it gave sufficient evidence to discern its true provenance. The other version has them buying a product that the finder feebly tried to return to its owner — Apple — only after said finder was rebuffed by top-level customer service. So either Gizmodo thought that the owner of the device was unclear (Apple or guy in bar?), in which case it had no right to purchase and is guilty of obtaining stolen property, or it thought that the owner was indeed Apple, whom it knew full well would not actually decline the return of a prototype phone were the proper people informed. If the latter assumption is true, then there was no need to disassemble the phone, publish pictures and videos of the disassembly, and withhold the unit from Apple until a letter-of-proof — that could also be published — was sent. I would imagine that this course of action violated California’s criminal statute for exposing trade secrets.

In this situation, it would appear, Gizmodo just can’t have it’s cake and eat it too.

robinmaster698 Says:
December 20th, 2011 at 3:59 am

Law enforcement officials told the site that criminal laws may have been broken as a result of the transaction, but did not provide much more in the way of detail.Top Directory

leohusy Says:
December 22nd, 2011 at 9:32 am

Yea, I guess so. But, since it would be hosted by Facebook, i suppose there's a good chance it might be decently secure even given its MSFT origin. Business Directory

Hamranhansenhansen Says:
April 23rd, 2010 at 6:23 pm
I like how so many people are calling them the “Silicon Valley Police” that is kind of cute. Like every cop is partnered with a robot. Of course they are police working for cities and counties that happen to be in the area that is nicknamed Silicon Valley.

> Pressing charges against the may not be as straightforward
> as some think: as I wrote Tuesday Apple does share some
> culpability in the matter and due to First Amendment
> issues and past Supreme Court decisions, it’s much harder
> to criminally prosecute the press for leaks.

There was no leak. Nobody leaked anything. None of the people involved even claims anybody leaked anything.

You’re talking like this case is only about trade secrets. It is not. It’s also about theft and receiving stolen property. Which happened before anything was published. There’s no 1st amendment issue involved in that at all, no freedom of the press involved at all.

If this were a plain iPhone 3GS instead of a prototype iPhone built into a 3GS case, the person who sold the phone would still be guilty of theft and the people who bought it would still be guilty of receiving stolen property. Engadget has said the seller offered the phone to them as well, he was having an auction of what is clearly stolen property. The fact that he did not take reasonable steps to return the phone to its owner (whose name and Facebook page he knew right from the start) turns it from found to stolen. The fact that he disassembled it (revealing the prototype parts) turns it from found to stolen. Just selling it turns it from found to stolen. Gizmodo has admitted that the seller told them the phone was not his before they bought it, that is clearly receiving stolen property. It’s open and shut.

Again, no freedom of the press. The public had a right to know an iPhone had been lost or stolen. Possibly to see photographs of the lost or stolen iPhone. Gizmodo might even have bought such photographs in the course of their reporting. But buying the stolen phone? No. Even if you’re writing a story about Steve Jobs, you can’t buy his stolen car from the thief to do it. You tell the police and you report “Steve Jobs’ car was stolen and somebody tried to sell it to me.”

The trade secrets issue is entirely separate. But even there, the D.A. has a good case because Gizmodo bought a stolen phone hoping that it would reveal trade secrets that they could publish, and they then did that. They did not just write a story about the found phone, or publish photos of the phone. They acquired the phone and got out a toolkit and went to work to discover trade secrets and publish them. The phone in question was not a 2010 iPhone, it was an iPhone 3GS with prototype hardware inside, rigged for field testing of the unit’s baseband by an Apple baseband engineer. It had to be disassembled with tools to even reveal it was not a retail iPhone 3GS. Even so, they were not able to get much out of the phone, which Apple had remotely wiped. Apple took many reasonable steps to protect their secrets during field testing. Gizmodo took many questionable and even criminal steps to expose those secrets, for no other purpose than exposing Apple trade secrets. It wasn’t a leak, or a whistleblower, or secrets that were revealed as a by-product of some other case. The only reason they got the secrets was because they bought a stolen phone. The only reason they bought the stolen phone was to get the secrets. The only reason they got the secrets was to publish them as “Apple secrets.”

Consider if Gizmodo had bought the phone and then taken it directly to Apple, without breaking it open, or publishing anything. Gizmodo could publish almost the exact same story, except with Gizmodo as a hero instead of a criminal. iPhone prototype found in a bar, offered for sale to Engadget and Gizmodo, Gizmodo pays $5000 out of pocket, not to get trade secrets and publish them, but in order to secure the device and return it immediately, that hour, directly to Apple, possibly to Steve Jobs himself. They could even turn down reimbursement of the $5000 and make the story $10,000 bigger. They get the same intrigue, but they don’t get to work on the iPhone with tools, which yielded almost nothing anyway. Other news outlets would be writing about Gizmodo-the-hero, the good samaritan who returned a stolen phone to its owner, even though they could have broken it open for personal gain, which people would have imagined would have yielded all kinds of information. But Gizmodo didn’t do that. Instead, they broke the law and they reported on themselves breaking the law. It says something about who they are that they made the choices that they did, and it says something about the people who are defending them.
davezatz Says:
April 23rd, 2010 at 6:41 pm
I’d be interesting to find out definitively if Apple reported this lost or stolen phone prior to it turning up.
Paul Judd Says:
April 23rd, 2010 at 7:40 pm
Dacwzaz – it matters not if Apple reported the phone as lost or stolen – California Penal codes do not require a police report for lost items that become stolen – the statutes define stolen property.

Apple’s formal demand to have the phone returned from Gizmodo is enough to establish that Apple feels that it is stolen.
Anonymous Says:
April 23rd, 2010 at 10:15 pm
I hope they don’t wind up taking the whole of Gawker down. :C <3 Jalopnik.
Ed Oswald Says:
April 24th, 2010 at 3:00 am
Paul: not exactly. Generally in stolen property cases, my understanding of case law shows judges typically want to see some type of action on the plaintiff to see that it made an effort to report the property as lost/stolen, etc. If Apple did not bother to report anything, that can be used against them in court and weakens the case. Essentially they didn’t care until it was in the hands of the media, in other words.

That letter did far from say anything one way or the other. In fact, it was probably the most toothless legal letter I’ve ever seen come out of Apple.

I have repeatedly said, including in arguments with fellow bloggers/journalists, that the real solid case is against the finder, not Gizmodo. The bar there is MUCH higher. Apple needs to prove that the site knew that it was real when it purchased it. If it cannot do that, it will have a hard time building a case for prosecution there.

The person that needs to really worry here is the finder.
Joshua Says:
April 24th, 2010 at 6:38 am
@Ed – Gizmodo paying $5000 for the phone might be a good indicator of what they ‘thought’ they were buying, no?
Paul Judd Says:
April 24th, 2010 at 7:49 am
Indeed – John Grueber has pointed out that there was a label on the phone that identified it as a protype – however their breakdown made it clear that it was real Apple hardware – they still waited a week and they knew the identity of the owner and the nature of the finding.

It became theft the minute that the finder intended to sell the phone. That happens independent of what Apple says or not.
E Says:
April 24th, 2010 at 10:44 am
Ed: I don’t think you are correct in this case. Gizmodo is essentially telling two stories here, trying to thread the needle as it were. One version states that the site didn’t know the phone belonged to Apple, and only disassembling it gave sufficient evidence to discern its true provenance. The other version has them buying a product that the finder feebly tried to return to its owner — Apple — only after said finder was rebuffed by top-level customer service. So either Gizmodo thought that the owner of the device was unclear (Apple or guy in bar?), in which case it had no right to purchase and is guilty of obtaining stolen property, or it thought that the owner was indeed Apple, whom it knew full well would not actually decline the return of a prototype phone were the proper people informed. If the latter assumption is true, then there was no need to disassemble the phone, publish pictures and videos of the disassembly, and withhold the unit from Apple until a letter-of-proof — that could also be published — was sent. I would imagine that this course of action violated California’s criminal statute for exposing trade secrets.

In this situation, it would appear, Gizmodo just can’t have it’s cake and eat it too.
robinmaster698 Says:
December 20th, 2011 at 3:59 am
Law enforcement officials told the site that criminal laws may have been broken as a result of the transaction, but did not provide much more in the way of detail.Top Directory
leohusy Says:
December 22nd, 2011 at 9:32 am
Yea, I guess so. But, since it would be hosted by Facebook, i suppose there's a good chance it might be decently secure even given its MSFT origin. Business Directory

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