Silicon Valley Police Investigating Gizmodo’s Purchase of 4G iPhone

Leander Kahney ()

Silicon Valley Police Investigating Gizmodo’s Purchase of 4G iPhone

Gizmodo's Jason Chen with a prototype of Apple's iPhone 4G, which the site bought for $5,000 after it was left in a bar. The cops are now investigating.

There’s another juicy wrinkle in iPhonegate. The Silicon Valley cops are investigating, reports CNet:

Silicon Valley police are investigating what appears to be a lost Apple iPhone prototype purchased by a gadget blog, a transaction that may have violated criminal laws, a law enforcement official told CNET on Friday.

Apple has spoken to local police about the incident and the investigation is believed to be headed by a computer crime task force led by the Santa Clara County district attorney’s office, the source said. Apple’s Cupertino headquarters is in Santa Clara County, about 40 miles south of San Francisco.

CNet: Lost iPhone prototype spurs police probe

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About the author

Leander Kahney

is the editor and publisher of Cult of Mac, and author of three books about technology culture: Inside Steve’s Brain, the New York Times bestseller about Steve Jobs; Cult of Mac; and Cult of iPod. Leander has written for Wired, MacWeek, Scientific American, and The Guardian in London. Follow Leander on Twitter @lkahney and Facebook.

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Posted in Apple, iPhone, News |

  • applessguy

    …and the amount of payment from Apple to the police department is..?

  • Morris

    Nice to see this is being followed up in a criminal direction instead of civil.

  • Jeff_R

    No payment is required; that’s the joy of the cops. When a law gets broken, they come, and according to California law, there is reason to suspect a law got broken. Looking forward to seeing how this turns out.

  • cficare

    @applessguy- why do you impugn the integrity of the police?

  • Fred M.

    @cficare,

    You asked “@applessguy- why do you impugn the integrity of the police?”

    If a sale of your lost iPhone gets investigated “by a computer crime task force led by the Santa Clara County district attorney’s office,” you let me know.

  • alex

    I recently had rather unpleasant encounter with Jason Chen. And all I could think after seeing of is Karma is a B**** . Well that and his little stunt probably violated at least two California criminal codes besides being ethically dubious …

  • http://www.heyhire.me Flowsion Shekar

    @Fred M,

    Good thing this isn’t the loss of an iPhone but the loss of an unreleased and unannounced prototype hardware that was kept under wraps by a company.

  • Gazoobee

    Anyone who’s ever had any dealings with the actual guys at Gizmodo (Jason & Brian esp.), is rubbing their hands with glee today. :) It couldn’t happen to a more deserving couple of a-holes than them IMO.

  • Jon

    Schadenfreude.

  • Shawn Pero

    Huh, I haven’t seen any mention of this on Gizmodo today, as part of their iPhone 4 Exclusive Coverage.

  • charli

    The issue of a civil suit is a no brainer. there’s no damages that Apple can claim.

    Gray Powell on the other hand has cause to claim that there was no reason to give out his name and it has caused a serious disruption on his life and emotional damages and he could probably sue over it.

    The criminal charges will do much to tarnish any positive side to this game, making other sites hesitant to try the same. Plus some advertisers may pull their ads off Gawker sites as a show of distain, which would be a major ding.

    And you can bet that Gawker just lost all press passes, review copies/units etc for life

  • Fred M.

    @ Flowsion Shekar You wrote: “Good thing this isn’t the loss of an iPhone but the loss of an unreleased and unannounced prototype hardware that was kept under wraps by a company.”

    It’s an iPhone. Read the title of this article. It was an iPhone that was special to Apple just as my iPhone (when I get one) would be special to me. The difference is that there would be no “computer crime” division of the police starting a major investigation into the sale of my lost iPhone

  • Jeff_R

    @Fred M., there is a difference between a prototype containing industry secrets and your personal phone. You can tell the difference; try to sell yours to Gizmodo and see if they give you $5K for it. Get your hate on for Apple all you want, but there is clearly a difference between an industrial prototype device and someone’s personal property.

    And please consider things more carefully before you accuse law enforcement of corruption. It’s a serious charge, and you have absolutely zero evidence of it.

  • BoxMac

    I hope — nay, PRAY — that this shitbag does time because of this.

  • Optical

    I’d think the main reason for the involvement of the law wouldn’t be the ‘trade secret’ status of the object but maybe the ‘paying for technically-stolen goods’ angle, since Gizmodo profited from this transaction, as well as the unknown ‘finder’.

    Guess all the ‘this was an Apple-initiated leak’ theories can be put to rest. Unless they wanted to entrap the GMondo guys? Come on guys, let’s get imaginative here, ok?

  • Phil

    @Shawn Pero writes “Huh, I haven’t seen any mention of this on Gizmodo today, as part of their iPhone 4 Exclusive Coverage.”

    Ah but you forget, it takes Gizmodo 2-3 weeks to write an article.

    Glad to see this coming about, and I hope Grey gets some closure from it too. There’s no f’ing way Gizmodo had any right to drag him through the mud for their ratings like that. They guy’s not a frakking gadget.

  • Ryan Thompson

    @Fred M

    I’m really curious, is this what you think, or are you just being facetious? I know a lot of people like to ‘troll’, but I’ve always wondered why. Most people I encounter in the real world may be odd at times, but few fail to grasp the reality of the situation quite so clearly as you’ve done here. I assume you’re just being contrary in hopes of eliciting a reaction. And though, I am always supporting the ‘devil’s advocate’ position for good debate, your position fails to consider the the scope of the crime.

  • Fred M.

    @Jeff_R:

    “Get your hate on for Apple all you want,”

    Don’t be an idiotic troll. I’m replying to you using my Mac Pro. I’ve got a MacBook, and an iPod Touch. I’m getting an iPad with 3G. And I own over $81K worth of Apple stock (300 shares for those viewing this non-contemporaneously) — the value of which has only gone up since this ‘devastating’ leak.

    “but there is clearly a difference between an industrial prototype device and someone’s personal property.”

    But that difference doesn’t make it a “computer crime.” I’d be amazed if there were one tenth this much interest by the police if the item in question were a prototype for the next generation of Coby personal DVD player or Acer netbook.

    “And please consider things more carefully before you accuse law enforcement of corruption. It’s a serious charge, and you have absolutely zero evidence of it.”

    And you have absolutely zero evidence that I accused them of corruption. All I did was answer as to why someone might suspect that (due to the police pursuing this with so much vigor). I actually believe that the police are not receiving any kind of illegal bribe, but I do think that Apple is enjoying a level of service from the police not afforded to smaller firms or those located outside of that jurisdiction.

    @Ryan Thompson

    You wrote: “Most people I encounter in the real world may be odd at times, but few fail to grasp the reality of the situation quite so clearly as you’ve done here.”

    I assure you that I have a much firmer grasp of the situation than you do — and probably a lot more grounding in this field in general, having entered it professionally as an engineer before IBM even introduced the PC. This isn’t a “computer crime.” It’s a simple purchase of an item which appeared to the purchaser to be a newsworthy prototype. Whether it’s the final design or just one of several under consideration remains to be seen.

    Nor was this a case of “industrial espionage” — as it would have been if the purchaser had been Samsung, RIM, Motorola, or even Microsoft. Gizmodo is clearly not a competitor to Apple. They do not appear to have been working for some competitor or to have offered to sell the trade secrets to a competitor. I see no evidence that they attempted to infiltrate Apple or that they even posted an offer to purchase illegally obtained goods.

    What’s next? Shall we start jailing magazine editors who purchase “spy shots” of cars which are under development? Isn’t it amazing how detailed spy shots of non-camouflaged cars often make it to press until just a couple of months prior to the official release of the cars, revving up interest and generating free publicity?

  • MikeRogers

    Gizmodo: kinda like National Enquirer. But with less class. Is that even possible?

  • Jeff_R

    @Fred M.; your post to cficare certainly made it seem you agreed with applessguy’s post about the police being paid. However, it’s true you never said they received a bribe; it just seemed like you agreed from your post.

    However, I likewise did not say you accused the police of getting a bribe. What I did say was to not accuse them of corruption without evidence, and when you say they are treating one group differently than another, then that is, to my mind, police corruption and a serious charge.

    And kindly try to avoid using terms like “idiotic”; I matched your tone to cficare, but I think name-calling is uncalled for. :-)

    I’m still looking forward to seeing how this plays out… In my mind, Gizmodo stepped over the line, and apparently the police agree. Given Giz’s apparent arrogance about all this, it could be very intriguing indeed.

  • Fred M.

    @Jeff_R

    You seem a reasonable guy and I want this to end on a good note — but fairly.

    You wrote: “…when you say they are treating one group differently than another, then that is, to my mind, police corruption and a serious charge.”

    The computer crime task force allegedly investigating this is called REACT (Rapid Enforcement Allied Computer Team) It was established in 1997 with a goal of working closely with Bay Area technology companies. So that’s the group (Bay Area technology companies) that’s getting a level of police service and protection not afforded to those in other sectors or even to technology companies not located in that region. Agreed?

    Since we’re being extremely particular about semantics, I didn’t call you a name. I urged you to not be an “idiotic troll.” That did not seem so out of line when you basically called me an Apple hater, rather than sticking to the cogent points.

    You wrote: “In my mind, Gizmodo stepped over the line, and apparently the police agree.”

    You are misrepresenting, perhaps unintentionally, what the police have said. CNET wrote that they have been unable to determine whether the investigation is targeting Gizmodo.com, its source who reportedly found the iPhone, or both.

    I think that a decision to prosecute Gizmodo could have a chilling effect on many tech news sites — if the case and ruling are not very tightly limited to the act of knowingly receiving stolen goods.

    If it’s a broader ruling based on the item being a prototype, harm coming to Apple Computer, etc., I will be very concerned. I could do Apple harm by publishing something that I learned in conversation with one of their engineers. Would I be liable for investigation by REACT and prosecution? What if I published a photo I was given of an unreleased Apple product? What if I bought the photo — would that make a difference? What if I advertised, in advance, promising to pay for said photos?

    If this was a clear-cut case of Gizmodo breaking into the home or car of an Apple employee and stealing a phone, I’d want to see them prosecuted to the fullest extent of the law. If I learned that the “finder” was actually a Gizmodo-paid pick-pocket, prosecute. But purchasing a prototype after Apple refused attempts by the person with the device to return it?

    While researching for this reply, I found this interesting ethical analysis/monologue on TechnoBuffalo:

    http://www.technobuffalo.com/blog/apple/iphone-4g-leaks-checkbook-journalism

  • Jeff_R

    Fred M.,

    I appreciate your desire to end this on a good note, and I agree.

    Regarding REACT, thanks for the information; you’re quite correct, as that would be something that others who don’t fit the profile don’t have access to. However, I don’t think this is unfair at all, as it is a group that presumably was formed to fill a need. It would, to my mind, be akin to a Gang Task Force in an area with high gang activity. So while it may be something others don’t have access to, I believe there is nothing unfair or inappropriate about this.

    In my view, I do hope that the ruling is tightly limited to knowingly receiving stolen goods, and based on what has been said about the law in California, there are definite grounds for this to be investigated. I don’t want tech sites to think anytime they have a scoop for any reason, they risk prosecution. I don’t believe Apple has a civil case, unless California law provides for damages in a stolen goods case of this type. I do think Gray Powell might have grounds for a civil case, but we’ll have to see.

    And I think we may have to disagree on how sincerely the finder attempted to return the iPhone. When I find something that I believe belongs to someone else, I try to get it back to them, and if I can’t, I drop it off at the local lost and found or, failing that, the police department. My efforts to return it increase relative to the apparent worth of the item. That, to my reading, doesn’t seem to be what happened here. I’ve read that Powell contacted the bar several times to see if the phone had been turned in; the finder could have left their number, or done more than simply contacting what I heard described as a mid-level tech support person.

    And considering the fact that we see almost daily lately Mr. Jobs replying to emails, I suspect a “I think I have your prototype” email might have gotten a quick reply, something along “Give it back. Sent from my iPad”. :-)

    We’re all figuring this out of the sidelines, and I’m very curious to see what happens. I do think Gizmodo has been incredibly pompous and obnoxious about this, but that alone (perhaps unfortunately :-) ) is not a crime. Whether anything else they did is remains to be seen.

  • Fred M.

    @Jeff_R: “So while it may be something others don’t have access to, I believe there is nothing unfair or inappropriate about this.”

    What if you’re the engineer from Acer who loses the prototype netbook in that same bar, will you feel it’s fair and appropriate that REACT won’t provide the same investigative efforts that they provided to Apple? I know that I would not, were I that Acer engineer.

    Part of what bothers me about this is the authorities calling this a “computer crime.” Selling a lost/stolen iPhone is not a “computer crime” any more than robbing a house that contains a computer is a computer crime.

    “And I think we may have to disagree on how sincerely the finder attempted to return the iPhone.”

    I think he made a cursory effort to return it and may have discharged his legal responsibility by contacting the owner (Apple), allegedly multiple times. I’m not suggesting, for a moment, that he exhausted all options and I’m sure he saw an opportunity to make a buck — maybe partly out of spite and frustration with Apple.

    “I do think Gizmodo has been incredibly pompous and obnoxious about this, but that alone (perhaps unfortunately :-) ) is not a crime.”

    Fortunately for me it’s not a crime! ;-)

  • Jeff_R

    Fred M., I guess the question is moot unless Acer loses a prototype. But I wouldn’t be surprised if an iPhone loss gets more attention, simply because it’s higher profile. Every police detachment in the U.S. and Canada deals with the “public pressure” angle. If I get murdered by a random robber, I get one level of police attention, and if I’m victim 20 out of 25 for a serial killer, I get another. I don’t think it’s sinister, nor do I think that the legal process gets twisted (e.g. more likely to return a conviction, or an unwarranted charge being pressed). It’s just the reality of how police work.

    And I’m going to go out on a limb and guess that Giz won’t pay $5k for an Acer prototype. :-)

    As for pomposity and obnoxious attitude not being a crime… that’s fortunate for a lot of us! :-) (Me included at times…)

  • imajoebob

    Despite all the photons killed to create these posts, things are pretty simple here:
    Somebody (ananymous source) found property that wasn’t there’s (iPhone “4″), identified the correct owner (Apple), and then offered to sell it to a third party (Gizmodo). Gizmoodo obviously confirmed the identity of the prototype, or they would not have offered $5K for it. The only twist might be that Gizmodo offered to buy it without being solicited; a minor quibble.

    The police are involved because a) someone knowingly purchased goods from someone they knew was not the actual owner. This may not be sale os stolen goods – Gizmodo may have convinced the finder that they were offering a higher reward than Apple and they could get positive publicity for it. However, it’s pretty obvious Gizmodo trafficked in stolen goods, since they decided to dissect the device before notifying Apple they had it. And it appears they never formally notified Apple at all. There’s no “I gave it back when they asked defense” because they identified it as Apple’s on their own website.

    It’s also a criminal matter because dissecting the device IS an act of intellectual property theft. Any number of people have gone to jail for doing the same thing in other industries. Add to that the publishing of what they found and you have additional theft, and the possibility of industrial espionage (if that’s got a different classification under CA statutes).

    It’s a computer crime because they knowingly disassembled someone else’s computer. It’s not just a phone, it’s a computer. That also makes anything Gizmodo did subject to the DMCA and related laws. If you traffic in stolen prototype cars and take them apart just to take photographs, it’s still investigated by the auto theft division.

    Which brings us to civil action. Apple HAS been harmed by Gizmodo. They disclosed what was inside an Apple prototype. Again, they even went to the extreme of saying they didn’t remove certain items on the advice of counsel. So they have lawyers who believe it’s okay to reveal certain parts of the phone but not others? On what basis? Just the placement of certain components can constitute a distinct competitive advantage, and the disclosure could end up harming Apple.

    The part of all this flaming I actually enjoy is everybody dumping on Gizmodo. They do come across as d*cks most of the time, and even worse, they’re boring. I got rid of that book mark a few years ago. Mainstream advertisers may not want to be on their site for a while. Maybe never if they do this again.

  • Alexis

    well I guess I can kiss goodbye the Gizmodo Live blogging during Keynotes…lol

    oh well they were getting buggy anyway…two tickets now available for a different Blog…how about Cult of Mac or theAppleBlog…sounds good to me

  • Fred M.

    @imajoebob,

    You wrote: “Which brings us to civil action. Apple HAS been harmed by Gizmodo. They [Gizmodo] disclosed what was inside an Apple prototype.”

    Being harmed by the actions of another party does not automatically mean that you have grounds for civil action. For example, if I posted a scathing review of the iPad, Apple would not have grounds to sue me solely because it harmed them. If I revealed that that a medical exam showed that Steve Ballmer was in in perfect health and would likely be able to remain the CEO of Microsoft for decades, the resultant slide in Microsoft stock prices would not mean I was liable for damages.