With Steve Jobs back in the saddle as CEO, Apple Computer has made a stunning comeback with the popularity of iPod music players and the iTunes online music store. The company’s stock is riding high, and Jobs recently introduced the new $499 Mac Mini computer and $99 iPod Shuffle to the adoring faithful at Macworld, who cheered him as a conquering hero.
But there is little cheering being done by technology journalists, as Apple recently sued the proprietor of the ThinkSecret.com insider news site for publishing general information on the Mini and Shuffle — what Apple considers trade secrets — before their official announcement at Macworld. Plus, Apple is preparing subpoenas for two other sites, Apple Insider and PowerPage.org, to force them to divulge their inside sources on a product code-named “Asteroid.”
The cloak-and-dagger game of journalists ferreting sources inside companies has gone on for ages, but the advent of non-disclosure agreements for employees (especially in Silicon Valley) has brought the possibility of harsh punishment for those employees. While many lawyers believe the First Amendment will protect journalists who publish this type of privy information, others say that California’s Uniform Trade Secrets Act could make journalists liable for misappropriation of trade secrets as well.
In any case, the publicity from these cases has not been a boon for Apple, a company obsessed with its image. “Apple Bites the Fans That Feed It,” was the incredulous Forbes.com headline, while the Wall Street Journal noted that “Apple Sues Web Site Run by 19-Year-Old.” If anything, Apple looks like it has taken a page from the Recording Industry Association of America, which has sued hundreds of music lovers for downloading copyrighted music via file-sharing services online.
Even if Apple has legal grounds to sue Think Secret, why do it? Apple spokeswoman Teresa Weaver gave me a canned statement, much of which has been parroted in every media report: “Apple has filed a civil complaint against the owner of ThinkSecret.com and unnamed individuals who we believe stole Apple’s trade secrets. We believe that ThinkSecret solicited information about unreleased Apple products from these individuals, who violated their confidentiality agreements with Apple by providing details that were later posted on the Internet. Apple’s DNA is innovation, and the protection of our trade secrets is crucial to our success.”
About the most creative response Apple has had was a comment by Apple marketing executive Phil Schiller to the AP: “Innovation is what Apple is all about, and we want to continue to innovate and surprise and delight people with great products, so we have a right to protect our innovation and secrecy.”
Call it the Right to Surprise and Delight. Just don’t expect a rally to coalesce amongst Apple supporters, marching on Washington to demand the company get that right enshrined into the Constitution.
Perhaps the most surprising element of the legal threats was that they were against some of Apple’s most ardent supporters and buzz-builders. All three news sites have been around long before the iPod, and have helped whip Apple fanatics into a frenzy, speculating on just what Apple will surprise and delight them with next.
“The shine has definitely come off the Apple,” said Jason O’Grady, editor at PowerPage.org. “If Apple has a problem with their house, if they have a leak in their house, they need to fix it. It’s a bad move to sue [journalists] in this way, because it’s a bad PR move, and it’s tipping their hand that the product exists.”
Good journalism or breaking the law?
In all these cases, Apple is intent on getting the site proprietors to turn over information on their inside sources. However, shield laws generally protect journalists from giving up that information in the interest of public service in investigative journalism. So the first question is whether these sites are considered journalistic endeavors.
“I use the same, legal news gathering techniques that any other reporter uses,” said Nick Ciarelli, the 19-year-old Harvard student who runs ThinkSecret and is an editor at the Harvard Crimson. “It’s worth noting that large publications and major newspapers frequently publish news scoops about Apple, but Apple has never sued any of them, and is instead attempting to silence a small online publication.”
The Electronic Frontier Foundation has offered to defend both PowerPage and Apple Insider, while Terry Gross of Gross & Belsky is defending Ciarelli and ThinkSecret. EFF staff attorney Kurt Opsahl said there are two sources for the reporter shield laws, the California Constitution and the Federal Constitution.
“The California shield has been applied to freelance reporters, and we see no reason why these Web sites should have any less protection,” Opsahl told me via e-mail. “For federal privilege under the First Amendment, the Ninth Circuit has set forth a straightforward test: ‘What makes journalism journalism is not its format but its content… The test … is whether the person seeking to invoke the privilege had the intent to use material – sought, gathered or received – to disseminate information to the public and [whether] such intent existed at the inception of the news gathering process.’”
Gross says the company is just out to shut down a little guy. “The typical trade secret misappropriation on Web sites happens with small readership where maybe there’s passwords to get in,” Gross told me. “And they’re giving out source code, or specifications, stuff that has real economic value, not something like this, announcing a few days before product release that someone’s going to release a product. That’s called good journalism.”
Still, Apple might have the Trade Secrets Act on its side. David Schnider is a partner at Sedgwick, Detert, Moran and Arnold, and specializes in intellectual property and trade secrets. Plus, he’s the president of PlanetMUG, a Macintosh user group spawned from the venerable Berkeley Macintosh User Group (BMUG), founded in 1986. Schnider couldn’t see how Apple could win damages against sites that actually build buzz for the company, but he did think the company might have the law on its side.
“‘Trade secret’ is pretty broadly defined as product information that has value because it isn’t generally known,” Schnider said. “So a release date could be [a trade secret], and product specifications are. If an employee breaches this by giving out information, and they tell someone who knows they are breaching it, then that person is also liable for misappropriating trade secrets. But if the site gets the information from someone who just says they heard it through the grapevine, then [the publisher] doesn’t know where that came from, and it’s not misappropriation.”
If Apple does take its lawsuit against ThinkSecret to court, the company might point to the way the site — and others of its ilk — solicit tips and inside information. On ThinkSecret’s contact page, Ciarelli goes to pains to protect sources with an anonymous e-mail form and even PGP encryption, while asking for “inside information.” That might not be a direct solicitation of trade secrets, but it’s pretty close. Add that to the name of the site, ThinkSecret, and the association with trade secrets is unmistakable.
Gross counters that ThinkSecret did not participate in the theft of trade secrets, and says that there is no evidence that ThinkSecret knew it was publishing trade secrets.
“Since ThinkSecret did not participate in the theft of a trade secret, and since the information about possible products that Apple will release is newsworthy, then the First Amendment prohibits holding ThinkSecret liable for publishing this information, even if ThinkSecret knew it was a trade secret,” Gross said. “Under the First Amendment, anonymity is important for many reasons, and a journalist offering a source anonymity does not mean the source is providing stolen information.”
Making enemies out of its friends
While Apple is seeking damages in its suit against ThinkSecret, the company has already done damage of its own, by alienating three of its biggest fans and propenents: Ciarelli (ThinkSecret), O’Grady (PowerPage) and Kasper Jade, the pseudonymous editor of Apple Insider.
“Apple’s overly aggressive behavior is already forming an overflow effect that may turn some of its most enthusiastic customers against it,” Jade told me via e-mail. “The company has a serious attitude problem.”
O’Grady agreed, saying he was disappointed in Apple after being a lifelong Mac user since the very first Macintosh came out. When O’Grady was first threatened by Apple’s lawyers, he took down the offending stories on “Asteroid,” but still could be served a subpoena to turn over sources. His recent experience with Apple has disillusioned him to some extent, though he still plans to push forward with PowerPage, even planning a site expansion.
“I’m sure I’ve helped sell an ungodly amount of [Apple] equipment,” O’Grady said. “But now Apple is really successful, their stock is flying high, and maybe they’re getting some bad legal advice.”
Longtime technology journalists such as Dan Gillmor, who recently left the San Jose Mercury News, and John Dvorak, a columnist at PC Magazine, railed against Apple’s legal shenanigans as arrogant. Dvorak has never been a big Apple proponent, and didn’t mince words in his distaste for the lawsuit and threats.
“This is probably the stupidest thing they could do,” Dvorak said. “What are the damages? That their stock went to the floor? It didn’t! There are no damages, and they’re still pursuing this? What’s their problem? It’s control freaks at work.”
Dvorak said that he often has to deal with anonymous tipsters, and does what he can to confirm them, or go with a hunch that the source is correct — and then couch the tip accordingly in his column. He said he trusts that these sites are all pretty adept at getting correct information, and there’s a good chance that they don’t even know the identity of the tipsters in these cases.
“A large majority of Apple Insider’s sources communicate with the site anonymously, and hence, we never know their true identity,” Jade told me. “The info is out there, you just have to know how to grab it.”
Schnider, the intellectual property lawyer who also helps lead PlanetMUG, says that user groups are mixed on whether to support Apple on stopping leaked info from propagating online. About a year ago, PlanetMUG had a long online discussion about someone leaking a photo of an Apple prototype product.
“Some of our members take the view that Apple puts a lot of work developing its designs, and that sites such as Apple Insider and Think Secret, by publishing those designs early, undermine Apple’s ability to compete and devalues the work that they’ve done,” Schnider said. “I personally disagree with that. My experience is that those sites are very good for developing excitement…It gets people talking about what might be the next big product from Apple.”