Apple alleges student Web publisher misappropriated trade secrets on site

CALIFORNIA — Harvard University student Nick Ciarelli created in 1998 as a way to showcase his enthusiasm for Apple products. Seven years later, he is fighting to keep the site online.

The site includes information and previews of Apple products, such as the iPod Mini that was released in January or an operating system, Gold Master, that is slated for release in late April. What has ignited a lawsuit from Apple Computers Inc. and forced Ciarelli to publicly declare himself a journalist is the fact that Ciarelli, who goes by Nick dePlume on his site, gathers his information from anonymous sources that allegedly work for Apple. The battle has forced Ciarelli to publicly declare that he deserves the same protections afforded to similar publishers of newsworthy information.

Apple filed a lawsuit against Think Secret in January, claiming that Ciarelli illegally posted information on Apple’s intellectual property by knowingly obtaining trade secrets from Apple employees who are bound by confidentiality agreements. Apple claims Ciarelli’s site induced its employees to divulge trade secrets and wants Ciarelli to remove his site and reveal his sources.

Citing the California Trade Secrets Act, Apple has accused Ciarelli of misappropriation, or “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means,” such as a breach of a duty to maintain secrecy.

Ciarelli called the lawsuit “frivolous” and “unprecedented.” In a press release dated March 4, Ciarelli defends himself by stating that, as a journalist, his First Amendment rights are being violated by the lawsuit.

“Apple’s lawsuit is an affront to the First Amendment, and an attempt to use Apple’s economic power to intimidate small journalists,” he said, citing Think Secret’s court filings. “If a publication such as the New York Times had published such information, it would be called good journalism; Apple never would have considered a lawsuit.”

Ciarelli is being represented by Terry Gross, an attorney who has worked with the Electronic Frontier Foundation, an organization that defends Internet civil liberties. Gross said Think Secret did not solicit information through improper means and called the lawsuit “meritless.”

In March, Gross filed a motion to dismiss the lawsuit, which stated in part, “A journalist cannot be held liable for trade secret misappropriation or for inducing breach of contract for publishing newsworthy information lawfully obtained.”

Apple would not comment, citing the pending lawsuit.

The lawsuit has ignited media attention and raised questions that as of yet have no clear answers: Under the law, are Web site publishers considered journalists and therefore able to protect confidential sources? And is the publisher or journalist protected if the sole purpose of speaking with confidential sources is to obtain trade secret information?

Ron Collins, a scholar for the First Amendment Center, former law clerk to the Oregon Supreme Court and former professor of constitutional and commercial law, said he believes Web site publishers should be considered journalists and therefore be protected from revealing sources. However, Collins said, courts are seldom sympathetic toward any journalists seeking to protect confidential sources today.

Matthew Cooper, a Time magazine reporter, and Judith Miller, a New York Times reporter, both may face jail time for refusing to disclose their sources. A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit recently ruled that no privilege protects journalists from being compelled to disclose their sources before a grand jury. (See story on page .)

“If a traditional, mainstream journalist can’t [protect their sources], how is any [other journalist] supposed to?” Collins said.

However, Collins added that the exchange of trade secrets is a “clear exception” to the First Amendment.

“When there’s a confidential source and a [journalist] is basically protecting the source who has wrongfully taken property, then it becomes particularly tough,” Collins said. “If you can give [trade secrets] to the press and the press can just call you a confidential source, then there wouldn’t be any trade secrets.”

David Hudson, a research attorney for the First Amendment Center and professor of legal research as well as a former law clerk, also questioned Ciarelli’s First Amendment claim, citing the 2001 Supreme Court case Bartnicki v. Vopper.

In that case out of Pennsylvania, an unidentified person illegally intercepted and taped a cell phone conversation between a teachers’ union chief negotiator, Gloria Bartnicki, and the union president over contract negotiations between a local high school and school board. Following the end of the negotiations, the intercepted tape was released to Frederick Vopper, a local radio commentator who played it on his public affairs talk show. Bartnicki sued Vopper and another radio station for “repeated publishing” of the conversation, which she claimed had been illegally intercepted by an anonymous source. Vopper argued that he was protected under the First Amendment.

The court ruled in favor of Vopper, saying that “the media cannot be held liable for publishing information of public concern that is obtained unlawfully by a source” and “free speech interests outweighed individual privacy concerns,” according to an article on the Reporters Committee for Freedom of the Press Web site. Two key factors in the ruling were the court’s finding that media members did not participate in committing the illegal activity, and that the information recorded was a public matter. In the Think Secret case, the question remains if the court will find that Ciarelli’s Web site is providing a forum that encourages Apple employees to divulge trade secrets—which Apple argues would make Ciarelli a participant in illegal activity—and if trade secrets are of public or private interest.

In addition to its suit against Think Secret, Apple also filed a lawsuit against 25 unnamed persons who divulged trade secrets to other Apple enthusiast sites, including AppleInsider and PowerPage. In a March 11 ruling, a judge said that there are no legal protections for sites that publish a company’s trade secrets because, he said, that information is “stolen property.” Although the ruling was preliminary, it suggests that one court believes Web sites such as Think Secret may have no legal protection for confidential sources of this kind.

“What underlies this decision is the publishing of information that at this early stage of the litigation fits squarely within the definition of trade secret,” Judge James Kleinberg wrote. “The right to keep and maintain proprietary information as such is a right which the California legislature and courts have long affirmed and which is essential to the future of technology and innovation generally. The Court sees no reason to abandon that right even if it were to assume movants are ‘journalists’ as they claim they are.”

Lee Levine, an attorney who was involved in the Bartnicki v. Vopper case and a scholar for the First Amendment Center, called Kleinberg’s ruling wrong.

“The mere fact that Apple is alleging a violation of the law of trade secrets, a claim that is itself of dubious validity, should not, standing alone, deprive a journalist—student or professional, mainstream media or blogger—of the ability to invoke the law’s protections against the compelled disclosure of confidential sources,” Levine said.

Both cases are pending in the state trial courts. Ciarelli said Think Secret has remained focused on its mission and will continue serving its readers with news about Apple products.

CASES: Apple Computer, Inc. v. Doe 1, 74 U.S.P.Q.2d (BNA) 1191, 33 Media L. Rep. (BNA) 1449, 2005 WL 578641 (Cal. Santa Clara County Super. Ct. Mar. 11, 2005), petition for appeal filed sub nom. O'Grady, et al.v. Apple Computer, Inc., No. H028579 (Sixth App. Dist. filed March 22, 2005). Apple Computer, Inc. v. DePlume, et al., Case No. 1-05-CV-033341 (Cal. Santa Clara County Super. Ct. filed Jan. 4., 2005).

reports, Spring 2005