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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:

  • The Stored Communications Act does not permit Apple to subpoena the information.
  • The sites are protected by the California Reporters Shield.
  • Even without the protection of the SCA and Shield Law, the First Amendment prevents Apple's subpoena until they exhaust their other options.

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.

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