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Jason Chen's sloppy iPhone breakdown damaged the prototype and may have added vandalism to the list of pending charges against him and other Gizmodo staffers.  (Source: Gawker Assets)
Vandalism and sale of trade secrets are two of the top charges that may be leveled against Gizmodo's staff

Gizmodo/Gawker employees Brian Lam and Jason Chen are embroiled in a mess over the fourth generation iPhone that they purchased and then tore apart.  Lam and Chen contend that the iPhone was merely lost and that they are innocent.  Apple, however reported the phone stolen.

Documents concerning the case and the search of Chen's house have been released in the form of an affidavit pertaining to the search of Chen's home.  The damning summary of the case comes on page 12, which reads:

Suspect Brian Hogan found or stole a prototype iPhone 4G that was accidentally left at a restaurant by Apple employee Robert "Gray" Powell. Hogan identified the owner of the phone as Apple Engineer Gray Powell through the contents of the phone and through Internet searches. Rather than return the prototype phone to Powell and/or Apple, Hogan subsequently sold the iPhone Jason Chen in Fremont for $5000. Upon receiving the stolen property, Chen disassembled the iPhone, thereby causing it to be damaged. Chen created copies of the iPhone prototype in the form of digital images and video, which were subsequently published on the Internet based magazine Gizmodo.com.

It's will be mighty hard for Gizmodo to dispute that, except perhaps for the phone's status being stolen.  However, Apple had reported the lost phone prototype stolen before Gizmodo found it.

Gizmodo's writers appear to have not been truthful about at least one significant detail of the incident.  In their coverage they claimed they bought the prototype for $5,000.  According to multiple accounts the real total was close to $10,000.  Detective Matthew Broad describes in the affidavit an interview with Katherine Martinson, roommate of Brian Hogan, the man who found and sold the phone:

Martinson said Hogan later showed her a camera box that contained $5000.00 in $100 US Treasury Notes. Hogan told her that the money was a result of selling the phone to Jason Chen. Martinson said Hogan told her he has received a total of $8500.00 the sale of the phone, but she is not sure of the source of the additional $2500.00. Martinson said Hogan also told her that he will receive a cash bonus from Gizmodo.com in July if and when Apple makes an official product announcement regarding the new iPhone.

(Note: There seem to be some discrepancies in Detective Broad's numbers, he probably meant $5,000 and $7,500; not $5,000 and $8,500.  The take home message, though, appears to be that Gizmodo paid more than the $5,000 they claimed.)

The affidavit also reveals:

Martinson said she and other friends attempted to talk Hogan out of selling the iPhone prototype on the basis that the sale would ruin the career of Robert "Gray" Powell (Apple engineer who lost the phone). Hogan's response to her was that it, "Sucks for him. He lost his phone. Shouldn't have lost his phone."

It also reveals that Hogan had an accomplice -- his roommate Thomas Warner.  Warner, who has a misdemeanor history, helped Hogan try to destroy evidence of the phone.  States the report:

Based upon the fact that Warner directly assisted Hogan with the removal and concealment of evidence directly related to this case, I believe it is highly likely that Warner was involved and or conspired with Hogan in the negotiation and subsequent sale of the prototype iPhone and that his efforts to conceal and or destroy the evidence as an indication of his consciousness of guilt. I also know that cellular devices like BlackBerries and iPhones function as small computing devices and that they maintain large quantities of data which include, but are not limited to call logs, email communications, system logs, GPS logs, text messages, applications, and Internet browsing history. Additionally, based upon my training and experience, I know that continued use of the devices can result in the deletion of data and or potential evidence on the phone.  Therefore, I seized the items as evidence.

Unfortunately, Warner and Hogan's attempts to hide or destroy the evidence were largely for naught, as the pair apparently had a change of heart and directed police to the evidence they had ditched.  The ditched items include stickers that identify the phone as an Apple prototype, a camera memory card, a USB memory stick, and a computer.

The affidavit also contains part of the email exchange between Brian Lam and Steve Jobs, in which Lam demands a letter of authenticity for the phone's safe return.  Jobs complied with the demand, according to the affidavit.

The affidavit indicates that Chen and/or others at 
Gizmodo will likely be charged with receiving stolen property, vandalizing private property, and sale of trade secrets.  Even if they can escape the claim that they bought stolen property, they will be particularly hard pressed to fight the vandalism charge, as it is obvious they damaged the expensive prototype.

The seller Hogan may be charged with felony theft and or sale of trade secrets as well.  And his friend Warner may be charged as an accomplice to these actions  They may find it hard to prove their innocence, given the fact that they tried to destroy evidence of their actions.



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RE: <no subject>
By intelpatriot on 5/15/2010 2:34:18 PM , Rating: 2
Reread what I said.

"The term only has legal meaning if there is a contract (and this is a provision of said contract) OR if it's a trade secret, and something doesn't become a trade secret just because you call it that, you have to take every reasonable step to keep it secret."


RE: <no subject>
By intelpatriot on 5/15/2010 2:41:45 PM , Rating: 2
And you are overstating your point with "such as" and "also".

Trade secrets did not have legal protection (and still don't in many other countries) until the law you mention (which was passed mid in the mid 90s).

They do now, but this protection is not gained because a corporation decrees something a trade secret or because they can make a case that are disadvantaged if it becomes public knowledge, they have to demonstrate they have taken every reasonable step to keep the information secret.


RE: <no subject>
By porkpie on 5/15/2010 3:50:25 PM , Rating: 2
"Trade secrets did not have legal protection (and still don't in many other countries) until the law you mention (which was passed mid in the mid 90s)."

Lol, what? Son, trade secrets have been protected for centuries. The law I referred to just updated and codified the standard. The Uniform Trade Secrets Act has been steadily adopted since the 1960s, and long before that, there was extensive case law and a varying pattern of differing state laws. Take a look at a case like Peabody v. Norfolk, which dates back to 1868:

http://www.jordasecrets.com/2007/10/jorda_on_trade...

The British protected trade secrets all the way back to Medieval times, and even the Roman Empire had laws protecting trade secrets.


RE: <no subject>
By intelpatriot on 5/15/2010 5:16:58 PM , Rating: 2
No, they haven't. Not in the sense you seem to believe; that they are protected because a corporation calls them trade secrets or would be disadvantaged if they became public knowledge.

Trade secrets are not a property right and do not have that kind of protection in Britain. So why you brought up the UK as an example, I don't know.

The united states is different (and pretty much unique among common law countries) in that it does recognise trade secrets as a property right. But this is still not an absolute right, corporations don't just de facto 'own' 'their' 'information'.


RE: <no subject>
By intelpatriot on 5/15/2010 5:33:03 PM , Rating: 2
Although,

looking on wikipedia (I'm not a lawyer obviously).

http://en.wikipedia.org/wiki/Uniform_Trade_Secrets...

This 2007 law, which has been adopted in California, does exactly what you want.

It makes something a trade secret if it "derives independent economic value, actual or potential, from not being generally known" and defines misappriation to include obtaining the trade secret "from someone else who had an obligation not to disclose it; or by accident or mistake".

This has no basis in history though. Historically obtaining the information by illegal means did not protect a trade secret.


RE: <no subject>
By porkpie on 5/15/2010 6:27:04 PM , Rating: 3
You're as wrong about this as everything else you've posted:

quote:
The United Kingdom provides broad and effective protection for trade secrets. Search-and seizure orders may be issued to protect trade secrets and preserve evidence. There exists the full panoply of remedies for a "breach of confidence" including injunctive relief, damages and third-party liability.

Many aspects of the doctrinal development of the law of trade secrets in the United States came from England.
http://tradesecretshomepage.com/intern.html

Trade secrets are not protected as "property" in the UK ... but they are still very much protected. I'm not an IP attorney...but as a substantial amount of my income derives from IP, I have dealt with several dozen of them over my career, in both North America and Europe.


RE: <no subject>
By tmouse on 5/18/2010 7:46:54 AM , Rating: 2
If you read any of my posts in other articles it should be clear this is not a trade secret so the amount of legal protections trade secrets have is irrelevant here. A trade secret CANNOT be by legal definition be something the holder plans to reveal to the public at any time, so the specs of the phone cannot be considered a trade secret. In addition a trade secret CANNOT be something that can be readily discovered by cursory examination of the end product (this includes removing the outer covers to look inside). If someone was looking at this guy using the phone they would have seen several of these "trade secrets". Finally a company must PROVE that all reasonable measures are taken to protect a trade secret. Giving the guy a prototype to take outside of the building where he admits just placing in into his man purse at his feet in a public place and admitting to leaving it unattended really does not meet this burden of proof. Was it proprietary confidential information, absolutely, can the specs of a device be a trade secret, absolutely not.


"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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