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Apple vs. the Bloggers: How It Unfolded and Where It Stands Now

by Richard Koman
06/13/2006

When AppleInsider and PowerPage -- blog-driven websites that report relentlessly on Apple -- published apparently purloined confidential documents from Cupertino, Apple sued their ISPs to find out who inside the company was leaking. A California trial court said that was appropriate; the documents, after all, were nothing less than trade secrets. With the Electronic Frontier Foundation (EFF) as counsel, the sites appealed.

Late in May, the California Court of Appeals issued its decision. Under three different laws, the court said, the answer is, "No way."

"It's a complete and total win," said Lauren Gelman, associate director of Stanford Law School's Center for Internet and Society, which filed an amicus brief on behalf of bloggers. (Full disclosure: The author submitted material for that brief on behalf of SiliconValleyWatcher.) "It's a wonderful ruling for protecting journalists and sources, whether traditional or published on the Internet."

"It's the first case to say we've expanded our notions of who is a journalist. This case opens doors for broadening our definition of journalism. There's nothing in this case that closes any doors," she said.

The case is a victory for all journalists, not just those working online, said Kurt Opsahl of the EFF. "It's important to recognize that in addition to online journalists, this is a victory for journalists of all stripes. The trial court reached its decision regardless of online or offline, finding that trade secrets trumped source secrecy. So this is really a victory for all journalists."

And, says the EFF, the decision protects more than journalists, it protects every ISP user. "[Today's] decision is a profound electronic privacy victory for everyone who uses email," said EFF staff attorney Kevin Bankston in a statement. "The court correctly found that under federal law, civil litigants can't subpoena your stored email from your service provider."

Impact on Apple and the Tech Industry

So what's the impact of all this on Apple and other high-tech companies? For Silicon Valley in general, not much, industry analyst Rob Enderle wrote in an email. "Apple is really the only firm that doesn't use nondisclosure agreements and, as a result, they stood alone in this. So, other than a few execs likely feeling superior because they guessed the outcome of this correctly (did anyone really think it was going to end differently?) this should have little impact on the Valley."

As for Apple, Enderle says that the whole business has pretty much blown up in Steve Jobs' face. "From Apple's perspective they have been at war with the media for years now and, with this decision, are faced with a much larger and rapidly growing group to be at war with. ... The end result of the approach they took is that it is now likely open season on Apple secrets and that wouldn't have happened had they simply chosen not to take the bloggers to task. "

Inside the Decision

The decision covers four areas of central importance to anyone publishing on the Internet, so it will be worth taking an in-depth look at what exactly the Court of Appeals said.

The whole brouhaha started when AppleInsider and PowerPage published confidential documents, apparently stolen from Apple, about the "Asteroid" product. On Nov. 19, 2004, PowerPage posted a technical drawing of a "FireWire-based audio input device" to be used with GarageBand. On Nov. 22, the site published more information about the product and a "concept drawing" of a small mixing board. On Nov. 23, they published more information, and the same day AppleInsider published an "artist rendition"of the device "based on Apple prototype design."

Apparently Apple interviewed employees to try to figure out who had leaked the docs. When no one came forward, Apple issued a subpoena against Nfox, one of the ISPs. Although Nfox was willing, the sites, with EFF as counsel, filed suit to block the subpoena under the Stored Communications Act (SCA), the California Reporters Shield, and the First Amendment.

The trial court refused that motion, casting doubt on the sites' status as journalists and declaring that even journalists have no right to break the law. "Reporters and their sources do not have a license to violate criminal laws. ... Even if they are journalists, this is not the equivalent of a free pass. ...Whether he fits the definition of a journalist, reporter, blogger, or anything else need not be decided at this juncture for this fundamental reason: there is no license conferred on anyone to violate valid criminal laws."

The judge famously said that "an interested public is not the same as the public interest." The judge saw great harm to Apple from the release of its confidential documents and no particular harm to so-called journalists for having to turn over their sources. "Unlike a whistleblower... the movants are doing nothing more than feeding the public's insatiable desire for information."

The Court of Appeals saw things quite differently. The main points:

Stored Communications Act

The Stored Communications Act, part of the Electronic Communications Privacy Act passed in 1986 forbids those "providing an electronic communications service to the public" from "knowingly divulg[ing] ... the contents of a communication while in electronic storage by that service." (18 U.S.C. ßß 2701-2712).

The law provides various exceptions for law enforcement. But Apple was suggesting a radical new exception to the SCA, that ISPs can be required to disclose documents for a civil discovery subpoena because disclosure "may be necessarily incident... to the protection of the rights or property of the provider." Under Apple's circular reasoning, failure to comply with a subpoena could expose the ISP to sanctions, thus compliance should be required because compliance would protect the ISP's interests.

This, the court said, is sheer nonsense. "A subpoena is not enforceable if compliance would violate the SCA," the court said. Thus, the ISP would face no sanctions (except the legal cost of mounting the defense) for refusing an illegal subpoena.

"The SCA means what it says," said EFF counsel Kurt Opsahl in a phone conversation. "The prohibition is pretty stark. You can't go around the account holder and subpoena directly to the ISP. If not for this act, you wouldn't have opportunity to prevent disclosure." There are a number of privileges that bar disclosure besides the reporter's privilege: marital privilege, attorney-client privilege, doctor-patient privilege. "The ISP would have no idea of what your privileges are," said Opsahl. "By requiring [the subpoena] to go to the account holder, you have the chance to present those privileges."

"This is especially important," said Gelman. "Journalists use the Internet to talk to sources. Unlike in the past, now there's a third party that has information. The court is saying you can't go around the journalist to get the information. You have to subpoena him directly."

This puts an end to Apple's subpoena of the ISPs. The court might have stopped here and awaited the next move at the trial court. But the court went further, speaking explicitly on the sites' protections under the California Reporter's Shield and the First Amendment. Since the sites would naturally assert the journalist privilege under the Shield and the Constitution, the Court of Appeals addressed those issues here rather than waiting for the issue to work its way back up from the trial court.

The Reporter's Shield

Under the California Reporter's Shield law, journalists cannot be held in contempt of court for failing to disclose information about their sources. The issue is who is a journalist and what news organizations are covered under the law. The Shield law says:

"A publisher, editor, reporter, or other person connected with or employed upon a newspaper, magazine, or other periodical publication... shall not be adjudged in contempt... for refusing to disclose the source of any information procured... or for refusing to disclose any unpublished information obtained... in gathering... information for communication to the public."

Apple argued that the sites are not protected by the law and that the writers were not engaged in legitimate journalism. These guys are not journalists, Apple said. They merely trade in "trade secret misappropriation" and copyright violation. Apple denigrated the site's operators as mere "posters" to websites. "...If Petitioners' arguments were accepted, anyone with a computer and Internet access could claim protection under the California Shield and conceal his own misconduct."

In deciding whether the Shield extends to PowerPage and AppleInsider, the court looked at whether the sites activities were substantially journalistic in nature, regardless of the medium. Among the issues:

Posting of the documents. The trial court emphasized Apple's point that the sites merely posted the purloined documents without providing editorial analysis. "The undisputed facts are that Mr. O'Grady took the information and turned around and put it on the PowerPage site with essentially no added value."

That argument made little sense to the Appeals Court. "A reporter who uncovers newsworthy documents cannot rationally be denied the protection of the law because the publication for which he works chooses to publish facsimiles of the documents rather than editorial summaries," the court said. "The primacy Apple would grant to editorial function cannot be justified by any rationale known to us."

Displaying a clear understanding of the Internet, the court added:

Digital communication and storage, especially when coupled with hypertext linking, make it possible to present readers with an unlimited amount of information in connection with a given subject, story, or report. The only real constraint now is time -- the publisher's and the reader's. From the reader's perspective, the ideal presentation probably consists of a top-level summary with the ability to "drill down" to source materials through hypertext links. The decision whether to take this approach, or to present original information at the top level of an article, is itself an occasion for editorial judgment. Courts ought not to cling too fiercely to traditional preconceptions, especially when they may operate to discourage the seemingly salutary practice of providing readers with source materials rather than subjecting them to the editor's own "spin" on a story.

To Gelman, this language supports a broad definition of journalism for legal purposes. "The case says it's legitimate for websites to publish entire documents, not just reports about documents. News is not just going to be reporters' analysis but also users' ability to view source documents. Wired News recently published entire documents from the AT&T case. Hopefully, we'll see a burgeoning of this journalism of pointing readers to source documents."

Who is covered? In its brief, Apple repeatedly dismisses the writers as people who "post information on a website," suggesting that allowing them to be covered under the shield would effectively extend the journalists' protection to any and everyone who ever writes a blog, submits a comment or posts to a bulletin board. The shield would be so broad as to be meaningless, the company says.

Here, the court took Apple to task for playing fast and loose with such language. Apple conflates "the open and deliberate publication on a news-oriented website of news gathered for that purpose by the site's operators" with the casual depositing of "information, opinion, or fabrication by a casual visitor to an open forum." The former kind of "posting," the Court said, is generally known as reporting. "[W]e see no theoretical basis for treating it differently."

What is a publication? The most vexing issue from the court's perspective was in interpreting what is a "publication." The language actually says "newspaper, magazine, or other periodical publication." Web sites are obviously not newspapers, but are they magazines? Is Slate not an online magazine? Salon? It would be hard to argue that those sites are substantially different than Newsweek or The New Yorker.

In any case, "other periodical publications" are also covered. While "publication" traditionally means print, there's no reason to think the Legislature meant to exclude non-printed editorial products. Looking to the goal of the law, to protect newsgathering, the court concludes the Legislature intended the phrase to include "all ongoing, recurring news publications." That includes PowerPage and AppleInsider, the court concluded.

So does this mean that all bloggers are journalists now? That any blog or website should feel confident about publishing any Apple secret they get their hands on? No, says Gelman. "It doesn't say all bloggers are journalists; it says, people who are doing journalism are journalists no matter where they publish," she said. "Not any person who posts anything online has the journalists' protection."

Still, the case offers a precedent to test just where the line will be drawn. "A lawyer might take this case and use it in the case of a common blogger who sometimes posts news," she said. "It opens the door to bloggers to be treated as journalists -- if they organize their activities as journalists do, as opposed to posters."

The Constitutional Privilege

The court also addressed journalists' Constitutional right to withhold sources unless a clear need is shown to require disclosure. The federal First Amendment protection is substantially weaker than the California Shield Law. The key question is whether Apple exhausted its options before demanding the sites turn over their sources.

The court found Apple far from exhausted their options. The court found that Apple identified 29 employees who had knowledge of the file and interviewed them. Apple said it did "everything possible" to trace the leak because employees were obligated to tell truth at risk of losing their jobs. But, the court asks, wouldn't an employee who admitted revealing confidential docs also be fired?

In any case, Apple didn't swear the employees to oath, which would expose them to criminal prosecution. Other than an examination of their email servers, Apple apparently did little forensic research. "Apple failed to establish what other modes of transfer were or were not traceable and what efforts were made to investigate the traceable ones."

The court asks if computer logs would reveal that an employee copied a file to CD, transferred to flash memory, printed the document, uploaded to an FTP server, emailed it via an web-based service, and so on. The court concludes that Apple utterly failed to exhaust many reasonable avenues of investigation; thus even in the absence of the Stored Communications Act and the California Shield, Apple would not persevere even under the relatively weak Constitutional protection.

Final Thoughts

So what will Apple do now? No reasonable company would continue to push the issue after such a resounding defeat, but Steve Jobs is not generally considered the most reasonable guy in the Valley. (John Markoff on Jobs in an interview from 2005: "He's a little tyrant. I wouldn't call him a sociopath but, you know, Jobs has got some very rough edges.") Apple could take the case to the California Supreme Court or simply drop it. Perhaps more likely, they can comply with the court's order and fully exhaust their internal investigations. Based on the Appeals Court ruling, there will be little point in that, since the sites are now well-protected by the California Shield Law.

Resources

Richard Koman is a freelancer writer and editor based in Sonoma County, California. He works on SiliconValleyWatcher, ZDNet blogs, and is a regular contributor to the O'Reilly Network.


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