That's a real hot phone man...

April 19, 2010 9:41 AM

Apple lost a prototype 4th Generation iPhone. Someone found it and sold it to Gizmodo, who then took it apart and posted pictures and video online. What laws if any are Gizmodo beaking?

If anyone would be aware that the 4th Gen iPhone must be stolen merchandise, it seems to me it would be a gadget blog. It also appears to me that a prototype of an unreleased iPhone would be extraodinarily valueable. What will Gizmodo argue if they are charged?

posted by 2bucksplus to law & government (21 answers total)

There's a simultaneous FPP about this (I only checked, because I was going to recommend you post whatever answer you get there!). Sure to be an interesting story.
posted by activitystory at 9:44 AM on April 19, 2010

I'm not sure why you think that Gizmodo bought the phone, which may affect the answer to your question.
posted by chinston at 10:02 AM on April 19, 2010

It wouldn't really change the answer. The charges would be something like larceny (for the actual taker) and receipt of stolen property (for the Gizmodo staff). Receipt of stolen property doesn't require that the property be purchased (though paying far less than the obvious value of the item can be circumstantial evidence that the receiver knew the item was stolen).
posted by jedicus at 10:05 AM on April 19, 2010

Oh, I see that John Gruber claimed that here. Er, carry on, then.
posted by chinston at 10:05 AM on April 19, 2010

chinston: I imagine it's because of this post from Jon Gruber: “It’s been an open secret to those of us in the racket that Gizmodo purchased this unit about a week ago, from those who claimed to find it.”
posted by jaffacakerhubarb at 10:05 AM on April 19, 2010

What will Gizmodo argue if they are charged?

"For a reasonable period of time, your Honor, we honestly didn't know what this device was. Moreover, it was given to us by a friend who told us it was lost, and therefore, we had no reasonable reason to assume that this device was stolen. Finally, as a gadget blog, we have been duped by public relations staff in the past into serving as an unknowing vehicle for calculated 'leaks' in order to build marketing traction."
posted by Cool Papa Bell at 10:12 AM on April 19, 2010 [3 favorites]

The short answer is, "They wouldn't be breaking any laws, but it could still go badly for them."

The long answer is, "The issue of lost, mislaid, and abandoned property is a rather nuanced area of law."

Suffice it to say that it's unlikely that they're guilty of violating any particular statute--assuming they didn't have reason to know that it was stolen, which does not appear to be the case here--but that Apple might be able to recover the item and possibly damages in a common law property action.

If Apple demands the property and Gizmodo refuses to turn it over, Apple could sue for replevin, a legal action under which an owner of property wrongfully withheld from him can seek to have the court order its return. Most US jurisdictions have followed the federal approach outlined in the Federal Rules of Civil Procedure--widely regarded to be one of the most successful and effective judicial reforms in world history--and folded the replevin action into the single, general-purpose "civil action," but that's essentially what would be going on.

If a court issued such an order and Gizmodo refused to comply, they could be held in contempt, but even then it isn't like they'd be violating a particular law. Courts have the authority to enforce their decisions independent of any statutory grant; it's an inherent power of the judiciary. Though legislatures may define and limit the scope of contempt orders, it's unlikely that any supreme court, state or federal, would permit a legislature to take it away entirely.
posted by valkyryn at 10:17 AM on April 19, 2010 [1 favorite]

Assuming of course that this wasn't an intentional "leak" to steal some of the thunder of the HTC Incredible launch, right? The timing seems highly suspect.
posted by JaredSeth at 10:24 AM on April 19, 2010

Moreover, it was given to us by a friend who told us it was lost, and therefore, we had no reasonable reason to assume that this device was stolen.

The fact that it was lost property doesn't mean the original taker didn't commit larceny when he or she picked it up. Presumably he or she knew the phone wasn't his or hers, and the true owner retains constructive possession of lost or misplaced property.

The best thing the taker could argue is that he or she gave it to Gizmodo hoping that they, with their contacts in the gadget world, would be able to locate the proper owner. Thus, the taker would argue that he or she lacked the intent to steal. Gizmodo would argue that they took the property intending to return it to the rightful owner once they could be located, which is a defense to receipt of stolen property.

Unfortunately, by selling the phone, the taker and Gizmodo kind of destroyed any notion that the taking and receiving were innocent. Gizmodo further hurt their defense by taking the phone apart and deriving additional economic benefit from it (i.e. writing articles about it) rather than promptly locating and returning it to the rightful owner.

assuming they didn't have reason to know that it was stolen, which does not appear to be the case here

Gizmodo pretty clearly knew that the item was stolen. The taker could not have had lawful possession because Gizmodo knows darn well the legal means Apple takes to protect its trade secrets (and the design of the next iPhone was, until now, a trade secret), and so Gizmodo knew that any lawful possessor would not be in a position to legally give or sell an iPhone prototype to a gadget blog. Furthermore, Gizmodo knew the phone had been remotely deactivated yet persisted in its course of conduct.

All that said, though, there's no way Apple will press charges or file suit unless Gizmodo flatly refuses to give the phone back. Any criminal or civil suit would paint Apple in a negative light, cost more than it would gain, and probably result in the disclosure of further details about the phone.
posted by jedicus at 10:27 AM on April 19, 2010

To me the important question isn't property theft -- the device components are worth $1000, max. The perpetrators would probably get off with return of the goods and a fine. The question for me is whether Gizmodo can be prosecuted under industrial espionage laws, or whether publication falls under free speech. I know publication of leaked classified government documents isn't illegal (only leaking them is), but I'm not sure if the law considers this an analogous situation.
posted by miyabo at 10:37 AM on April 19, 2010

The question for me is whether Gizmodo can be prosecuted under industrial espionage laws, or whether publication falls under free speech.

Criminal action under 18 USC 1832 would be defended against by arguing that Apple failed to take reasonable measures to keep the prototype a secret because it a) allowed the prototype out in public and b) entrusted it to an employee who left it in a bar c) did not put any notice on the phone that demanded its immediate return if found d) apparently didn't even lock the phone (the taker was able to play with iPhone OS 4 for a while) e) didn't use SMS or a similar service to send messages requesting its return and f) didn't use Find My iPhone or similar services to go to its location and request its return.

A civil action for disclosure of trade secrets would probably fail because neither Gizmodo nor (presumably) the taker were party to a non-disclosure agreement with Apple and again Apple arguably didn't take reasonable measures to keep the prototype a secret.

To me the important question isn't property theft -- the device components are worth $1000, max.

The question is not merely the defendant's gain but also the true owner's loss. In this case, there's the loss of the use of the prototype, which is probably significant since there likely aren't very many of them, and there's also the loss of secrecy, though I'm not sure to what extent a court would factor that in.
posted by jedicus at 10:47 AM on April 19, 2010 [1 favorite]

...b) entrusted it to an employee who left it in a bar...

Am I the only one who thinks that "found it in a bar" turns into "snuck it out of Infinite Loop" under penalty of perjury? What does that do to an 18 USD 1832 defense (even considering the other bits)?
posted by Vetinari at 10:53 AM on April 19, 2010

...um, oops, USC. I'm not sure I'd want to go up against Apple's lawyers with a defense that cost me eighteen bucks...
posted by Vetinari at 10:54 AM on April 19, 2010

f) didn't use Find My iPhone or similar services to go to its location and request its return.

They did remotely wipe the phone once it was discovered missing.
posted by device55 at 10:54 AM on April 19, 2010

They did remotely wipe the phone once it was discovered missing.

That is true, but nonetheless you can learn a ton from the physical prototype, as Gizmodo has shown. Indeed if they took it to the level of x-raying or unpackaging the chips they could learn even more. It's also not clear that Apple has reported the device stolen or sent a legal notice to Gizmodo. On balance I don't think Apple has taken reasonable measures to protect the secrecy of the device or its contents.
posted by jedicus at 11:12 AM on April 19, 2010

also, there's the matter of jurisdiction to think about...apple's in CA, gizmodo in NYC...by the time apple would be able to bring charges, if any, the 5G phone will be out. my guess: no legal action, but gizmodo might get fewer invites to apple events in the future. or red carpet/VIP treatment.
posted by sexyrobot at 11:38 AM on April 19, 2010

"Am I the only one who thinks that "found it in a bar" turns into "snuck it out of Infinite Loop" under penalty of perjury? "

the phone was in a custom case that mimics the size and shape of current iphone models meaning it was likely being tested out in real world situations. though i do suspect that the "leak" may have been planned by apple to steal some of HTC/google's thunder today.
posted by swbarrett at 12:44 PM on April 19, 2010

As I understand it
According to Gizmodo, the gentleman who found it was with a group of buddies drinkin and legitimately thought it belonged to a friend. Upon rising in the morning he found that the device had been remotely bricked and that it had no contact information and, in fact, wouldn't even boot. It was then that he discovered that it wasn't a standard 3GS but had a 3GS camouflage casing. He supposedly contacted Apple several times via publicly published means and claims to have created a ticket in their call logging system and asked to speak to the people in charge. It was only after 4 weeks of Apple not contacting that him he passed it on to Gizmodo. (reported by others to be in exchange for a 5 figure sum)
posted by Megafly at 1:12 AM on April 20, 2010

Not answered is the question of why, if Apple could remotely deactivate the phone, they couldn't use the gps to track the location of their device. If the finder took steps to disable the gps or prevent them from tracking it, his case doesn't look very good.
posted by Megafly at 1:14 AM on April 20, 2010

Not answered is the question of why, if Apple could remotely deactivate the phone, they couldn't use the gps to track the location of their device.

It's a prototype. The camera on it doesn't work (according to Giz), so I wouldn't be surprised if the GPS wasn't working either.
posted by achompas at 6:48 AM on April 20, 2010

Nobody's mentioned 'possession is nine-tenths of the law'?

Sure, Apple has some legal possibilities in its toolbelt - but so does Gizmodo. By the time that case got sorted out we'd be looking for the iPhone 6 or something. Apple's best reaction is 'yeah, congrats, we screwed up, we'll take that back now'...
posted by chrisinseoul at 9:51 AM on April 20, 2010