WP: Teen Web Editor Drives Apple to Court Action

[kskiska]

Product Leaks Draw Suit

Friday, January 14, 2005; Page A01

CAMBRIDGE, Mass. -- Nicholas M. Ciarelli was not even old enough to shave when he started getting under Apple Computer Inc.'s skin.

As a 13-year-old middle-schooler, the New Woodstock, N.Y., native built a Web site in 1998 and began publishing insider news and rumors about Apple, using the alias Nick dePlume.

Three years later, ThinkSecret.com was first to report that the company would debut a G4 version of the PowerBook laptop series. The product launched soon thereafter, along with ThinkSecret's reputation among Apple's legendarily zealous fans, generating millions of page views per month.

But after a series of letters warning the Web site to stop publishing proprietary information, Apple decided enough was enough. When Ciarelli scored yet another scoop in late December, by predicting the arrival of a new software package and a sub-$500 computer rolled out at this week's MacWorld Conference and Expo in San Francisco, the computer maker filed a lawsuit accusing him of illegally misappropriating trade secrets.

more…
http://www.washingtonpost.com/wp-dyn/articles/A7937-2005Jan13.html

[LifeDuringWartime]

1. i dont want to say a whole lot

but ive known this kid since before he started the website. good kid.

i really dont think he'll have to pay millions of dollars or anything.

[renaissanceguy]

3. How did he get the proprietary info? n/t

[Mithras61]

6. He claims that he gets the info from

anonymous tips and rumors, and that he uses his contacts to confirm the info. I suspect that the comentary on the 3rd page of the story is right. Apple doesn't want HIM so much as they want the leaker, and their internal investigation has come up empty, so they're resorting to intimidation and lawsuits.

[Commie Pinko Dirtbag]

29. Makes sense

Only an employee or someone under contract is actionable under trade secret law, since s/he's breaking the company's trust. An outsider has no such obligation.

[LifeDuringWartime]

16. like any of the other sites with accurate info,

from anonymous people inside apple. although, i suppose it is possible for some of it to be coming from third parties doing contracting work for apple.

[burrowowl]

2. I'm an Apple user

Shame on Apple. They should hire the kid.

[TahitiNut]

4. Let me understand this a little better.

We've got a teen-aged internet journalist, not under any contract to Apple, exercising his rights under freedom of the press and publishing forthcoming product announcements before Apple makes the very same announcements. (Those are "trade secrets"? Hmmm.) So, Apple sues him.

On the other hand, we've got a septuagenarian who publishes a syndicated column who accepts U.S. intellgence information feloniously disclosing the identity of a covert agent and he continues to run around free?

Something is really fucked up in this country!

[nothingshocksmeanymore]

5. Hey one of those things caused harm via embarassment to a corp

the other was only treason. Get your priorities straight in the new plutocracy. :spank:

[AP]

7. Apparently CA law treats inducement to breach conf. agree as...

some kind of offence. The key to this is whether he encouraged people he knew were subject to conf. agreements to give him info in violation of those agreements.

Sounds like apple warned him a couple times, but the law still sounds like crap. My instinct is that this should be a contractual matter for Apple and they should only have recourse against people with whom they have contracts.

Maybe this case will go to the supreme court and it will be declared unconstitutional. Maybe not.

From the article:

But while lawsuits against online publications are rare, he said, the Uniform Trade Secrets Act, versions of which have been adopted by about 45 states, including California, prevents third parties from exposing information knowingly obtained from sources bound by confidentiality agreements.

"Just because you don't have a relationship with the company doesn't necessarily immunize you, if you publish what you reasonably should have known was a trade secret," Beckerman-Rodau said. "The First Amendment has been asserted more and more against intellectual property rights, but it's not faring well. Most courts haven't accepted it."

[AliciaKeyedUp]

13. CA doesn't trump the 1st Amendment

This kid is a journalist.

Fuck Apple and all of their products for this.

[AP]

18. Lots of things trump the 1st Amend.

And, as you know from Novak et al, recently, journalists don't get many special protections in the consitution.

Furthermore, I'm not clear about whether this is even a criminal statute. It may just be a statutory tort, in which case it's going to be hard to make a 1st A claim, since it would have to do with the rights of two private parties with no government involvement.

[TahitiNut]

14. IANAL ... but where's the consideration?

Talk about overreaching! Confidentiality Agreements are (cough) contracts - performance for consideration. Interestingly, other nations (e.g. Switzerland) even extend that 'consideration' requirement to non-compete agreements and require that the company continue to compensate the former employee for the term of the agreement.

When a piece of property (a corporation) can sue a human being for some theoretical failure to perform even without consideration and obliterate a human right (freedom of speech, freedom of the press) ... we're truly, deeply, painfully fucked!

Once upon a time, a company couldn't even assert any entitlement to a "trade secret" unless it demonstrated an ongoing investment and diligent effort in protecting the information. The scale of that expense was used as a comparative benchmark of the demonstrated value of that information to the company. No expense = no value.

Even then, the purported value of secrecy clearly evaporates over time. When the company itself divulges (incurring the expense of advertising!) that information, we must question whether the "value" is in keeping the information secret or making it public. Costs are freely incurred by the company in both directions. So there's a question whether they're actually 'harmed' or 'helped' -- since the value of such product announcements shifts over time.

[AP]

17. Not all jurisdictions require consideration for a valid contract.

I think it's generally common law jurisdictions that require consideration. A lot of civil law and mixed jurisdictions enforce unilateral contracts.

I don't have a problem with that.

I also don't have a problem with confidentiality agreements. Often a corparation's most valuable assest is simply know-how, show-how, and marketing strategy. If you're paying your employees and giving them access to that information and you want to make sure you can stay in business and pay them a lot of money, you're going to want to get them to agree not to give away your valuble secrets. And that's not unilateral. They're getting money. You're getting their labor. And there are conditions attached. It's not a big deal. I'd rather have a society of enforceable confidentiality agreements than a society where businesses are so worried about trust that they're only willing to hire family members, or people who went to the same schools or belonged to the same fraternities, or a world where they take naked pictures of you in a human pyramid and threaten to release them if you ever talk about what you know.

The problem with this case here is that the corporation is reaching beyond their contractual relationships to get at people who induce breach of their contractual relationships. Just about every legal jurisdiction (I suspect) makes inducement to breach a tort when certain conditions are met -- and that's a good thing, I think. Or, at least, I can't remember reading about many inducement to breach cases that make me angry -- I think it's usually a little guy who sues a big guy for stealing customers.

Now, if people are just going around talking about things in violation of their employment contracts, but not trying to get out of their employment contracts, then it seems like that's not really the same thing as tortious interference with the right to contract. It seems like it's a problem entirely between the contracting parties.

[TahitiNut]

20. Mere conversation or questioning cannot be viewed as "inducement".

To be regarded as "inducement," the behavior must (imho) surmount a reasonably high hurdle of a comparable level as bribery, coercion, fraudulent representation, etc.

Even then, who says a company must be protected from competition? It's not the company that creates intellectual property or innovation ... it's human beings. The "company" is, in part, a mechanism for (parasitically) harvesting profits on that human resource, profits that accrue (without end!) to the "owners." When another company, better managed and less over-capitalized, offers those human beings a more equitable share of the proceeds of such innovation ("competing" for labor), then how is that "good" for the general public under whose authority such laws are promulgated?

Corporations are property. Corporations have no inherent "rights," only entitlements - and the entitlements of immortality, limited liability, and privacy are sheer legal fictions. When these entitlements assume a scale that infringes upon human rights, then they run afoul of the "Congress shall make no law" codicils in our highest contract: the Constitution.

[AP]

23. Those are crimes you listed, and this isn't a crime. It's a civil matter.

Well, fraudulent misrep isn't a crime, but bribery is.

As for objecting to the corporality of a corporation, I'm not sure how that has much to do with this case. If corporations couldn't do this, then corporations would all be partnerships instead, and employment contracts would be between partners of the LLC and employees, or between partnership and individuals who weren't employees. Do you think individuals shouldn't be allowed these sorts of rights in their contracts?

Here's some stuff about GA's tortious interference with the right to contract:

"The intentional and non-privileged interference by a third party with existing contractual rights and relations constitutes a tort for which an action shall lie."

A claim for tortious interference has its basis in the principle that each individual has the right to pursue a legitimate occupation and conduct business in accordance with his own plan, so long as he does not interfere with the rights of others. Perry & Co. v New South Ins. Brokers, Inc., 182 Ga. App. 84, 354 S.E.2d 852 (1987). Tortious interference also has a statutory basis in O.C.G.A. §51-12-30, which states, in part:

. . . a person who maliciously procures an injury to be done to another, whether an actionable wrong or a breach of contract, is a joint wrongdoer and may be subject to an action either alone or jointly with the person who actually committed the injury.

II. GENERAL ELEMENTS OF A CLAIM OF TORTIOUS INTERFERENCE

A claim for tortious interference with contractual or business relations has the same elements under Georgia law. The plaintiff must show:

(a) The defendant acted improperly and without privilege;

(b) Purposely and with malice and with the intent to injure;

(c) Induced a third party or parties not to continue a business relationship with the plaintiff; and

(d) The plaintiff suffered financial injury as a result.

If the elements of the CA statute aren't roughly similar, I think I'd have a problem with the statute. As I said in my last post, I think the difference is in element (c) -- the defendant in the Apple case isn't forcing a termination of the contractual relationship. He's inducing a breach, but Apple can't even indentify which employee has breached the agreement, and that person is still employed. Obviously it's going to be hard for them to find that person, but it really seems like they need to get their house in order.

It's amazing that 45 states allow this sort of claim.

[TahitiNut]

24. (a), (b), (c), AND (d)

All elements must be satisfied. It seems almost obvious that (a) and (b) are absent and (d) is, at best, arguable. The interpretation of (c) seems at issue. Is "not to continue a business relationship" equated to "breach an agreement"? Wouldn't there be a burden of proof on the plaintiff that the defendant at least knew about the specifics of any particular individual's agreement?



I lived as Apple's close neighbor in Cupertino for 10 years (83-92 inclusive) and as a further neighbor in Los Gatos for 5 years (97-02). For many years, I couldn't go to a supermarket, restaurant, bar, hiking trail, or post office without tripping over an Apploid. I had close friends at Apple. I had a phone number that was a 2-digit inversion from Woz's and got some of his calls.

I know Apple. Apple exceeded the General Motors attitude of the mid-20th century - "What's good for General Motors is good for America." After living in Silicon Valley for 15 years, I can see how the "cultist" attitude grew and is consistent with the Mammonism of the valley. Hell, they even had/have job descriptions that include the word "evangelize" ... symptomatic of religion, not enterprise.

[AP]

25. Those are questions for trial.

Apple doesn't know that unless they sue.

The guy sounds like a nice kid who isn't doing this for money. But say he were on the payroll of Dell or some PC maker, then, Apple would have a good reason to sue.

As for (c) -- I don't think your question is the important question. I think it's obvious that he must have known these were trade secrets. Not only did Apple send him letters warning him, but just the fact that people were coming to him covertly and the awareness of the fact that this was not information anyone else had should have been enough notice.

The problem -- if one is trying to make an analogy between legitimate toritous interfernce laws and this CA statute Apple is suing under -- is that you actually can't prove the breach of the underlying contract because nobody has any idea where the information is coming from.

And that's most interesting because it's a real Catch-22.

(It may be that you're allowing personal feelings you suggest from your last two paragraphs cloud your interpretation of the law. Regardless of how you feel about the corporate culture at Apple, these are legitimate legal questions to raise, IMO.)

[TahitiNut]

27. In commenting on (c) ...

... I think you may ignore the likelihood that such information may come second- or third-hand. I seriously doubt the kid cares. The point is that the defendant (Nick) is solely seeking information ... not just as a byproduct of some more malicious motive. That's much of where my prima facie evaluation, merely assuming some accuracy in the article, leads me to concluding that this action on the part of Apple is frivolous and over-reaching. IOW, I think a summary judgment should go against Apple.

Hell, the kid is evangelizing Apple and Apple products. I don't see any indication whatsoever that the elements of malice are indicated in any way. (Remember, it's not battery to hug someone you love tightly.)

[AP]

28. Apple sent him letters asking him to stop and telling him that...

...it was hurting the roll out of their campaigns.

For a political parallel: I heard the following rumor, and I don't know if it's true.

John Edwards planned to have an announcement of his intention to run for president in Jan 03. He spent something like 50K preparing for an event in Robbins SC. Someone leaked to the press that he was going to announce, so instead of having the press show up at Robbins for the big announcement, they ambushed him on his driveway. They got a completely different photo in the media. Edwards wanted to say something about where he came from, and not just about where he was at. But the media got pictures of him in front of his big house in Raleigh instead. Edwards not only wasted 50K of campaign money for the Robbins event, he had to restrategize and figure out another way to tell people about where he came from when he would have rather been building on the seed he had already planted.

So, Apple, I believe, is entitled to roll out their own strategies just like, say, a presidential candidate should be allowed to roll out his or her strategies.

Now, say Apple warned this guy that he was getting information from people who were breaching conf. agree's and that it was very costly to Apple and that it would be great if he would stop.

So he doesn't stop. What are they to do? They have a statute in CA that says it's gives rise to a claim for damage. I don't know what the elements of the statute are, but if it does require malice, how is Apple to know if there's malice or not without a trial? They warned him. They told him that it was hurting them. They told him that there was a statute that would give them damages.

Don't you think they'd be entitled to find out in a court of law if there was malice (presuming malice is required)?

[TahitiNut]

30. An 'expectation' does not, per se, create an entitlement.

I may invest, plan, and rely upon driving a particular route to a job which, if I arrive late, I lose. So, somebody gets in my way. I tell them not to get in my way. They do it again. I send them a letter. They do it again. I lose my job. Should I sue them?

Let's reverse it. Say I'm the one who "gets in the way" of another person, but I'm not breaking any law and I don't know them from Adam. I'm merely "in pursuit of happiness." Should I be sued?


(I realize that anyone can file suit against anyone for any or even no reason. I ask in the sense of justice, not irresponsibility.)

[AP]

32. Some harrassment laws require that the harrasser intends that

they are causing the harrassed person distress. So, what you do is you get your lawyer to send a letter to the harrasser saying that continued contact with my client is causing her (or him) great distress. Subsequent contact thus creates the presumption the harasser was doing it in order to cause distress.

This is similar to what Apple was doing. They don't know if the guy is intending to cause malice. That he's a Harvard student might suggest that he already has contact with people whose fathers might have an economic interest in Apple not doing well. They send him a letter saying that he is costing them money. He doesn't stop. What can they presume from that?

It's for the jury to decide if he meets the elements of this statute (unless they settle).

[TahitiNut]

31. Oh... and in re: my "personal feelings"

I actually regard Apple somewhat more favorably than many other corporations in Silicon Valley with which I have comparable or more extensive experience. Inferring a bias isn't productive.


Let's say we're talking about dogs instead of corporations. Both are property. I like dogs. A lot. But let's say dogs could influence legislation to the degree corporations could. Am I impelled to accept their feces? Am I impelled to shrug and say "Oh well" when the run through an opened door and eat the dinner off my table? Am I impelled to accept the protestation of their owners that "they shouldn't be on leashes because it's not natural"? There are a LOT of parallels that could be drawn. Corporations are, by the definition of their very being, greedy. That's their entire raison d'etre. When people, acting on behalf of a corporation, adopt the motives of the corporation only, we've unleashed the dog.

[AP]

33. Hey, I hate corporations doing evil things just as much as the next person

but I don't think confidentiality agreements are evil things at all.

Sometimes employees don't understand that they're jeopardizing their salaries and the salaries of their fellow employees by divulging know-how, show-how, and marketing strategies.

Conf. Agrees help make the point.

As for this statute re inducement to breach employment contracts, I don't know enough about it. I'm suspicious, but I definitely think it might have its place. I have no problem, generally speaking, with tortious interference of the right to contract.

[BadGimp]

8. amen

eom

[bobweaver]

9. Well, Bin Laden is still running free while Martha Stewart's locked up.

[DrZeeLit]

19. Yes, they are trade secrets and they belong to Apple. As a shareholder,

it's disconcerting that insider information is stolen from Apple. It affects stock trading which affects millions of people, some of whom rely on stock in IRA's and pensions. Apple stock over the years has run the gamut from shaky to volitile to great. A lot of that value is based on revelation of new products and competition to be "first."

I agree they are probably trying to find the leak. They should. They are proud of their products and have the right to unveil them.

As for Novak -- everyone knows what he did and where he is. They should lock him up and throw away the key. He is a criminal.

[TahitiNut]

21. "have the right to unveil them"??

We must cease using the word 'right' so profligately. Corporations have no 'rights' - only entitlements. 'Rights' accrue only to human beings, not to the legal fictions called "corporations."

[DrZeeLit]

22. So, the human beings who work hard at Apple have no rights?

They work for years to develop a product and they don't have the right to take pride in their work and unveil it?

According to my online dictionary (via Apple's Sherlock), entitle means: v 1: give the right to; "The Freedom of Information Act entitles you to request your FBI file".

Some sneaky information thief (aka human being) has the right to ruin the long, hard work of these creative humans at Apple? I can understand how they feel. I'd feel my rights were trampled if that was me. And if I incorporated myself, as many writers do, would I have less right to my work?

All corporations aren't unjust "legal fictions." Many pay taxes, take care of employees, and play by the rules. When they work hard to create products, they do have the right to unveil, market, and tout their hard work.

I'm not a legal mind, but it just makes sense. If a successful rock band creates new music, don't they have the right to unveil those songs? What if someone steals their work? Haven't their rights been violated? What's the difference?

I don't want to start some "war or words." It just bothers me that everyone immediately considers the "kid" more viable than Apple because the corporation is the giant stomping on the kid. He's not automatically the good guy; Apple has a side to this. That's what I was seeing.

[TahitiNut]

26. Your fallacious (strawman, hyperbole, amphibole, etc.) post ...

... bears no logical relationship to the content of my posts.

When I read something extolling the (mythical) virtues of corporations, I'm reminded that Mussolini was lauded for "making the trains run on time." Ascribing human virtues to corporations is a comfortable paradigm ... and we're constantly encouraged to be comfortable in that paradigm. Belief is often far more comfortable than knowledge. So is childhood - a least retrospectively.

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

"Government is not reason; it is not eloquence; it is force! Like fire, it is a dangerous servant and a fearful master." -- George Washington.

I commend and suggest reading ...
"When Corporations Rule the World" by David Korten
"Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights" by Thom Hartmann

There are no "gospels" ... only aids in breaking out of those "comfortable paradigms."

[AP]

34. DrZeeLit had a good post without any srawmen, hyperbole, etc.

Those were good points DrZeeLit made.

Comparing Apple to Mussolini is the hyperbole.

[TahitiNut]

36. BULLSHIT! Read the Subject line!

"So, the human beings who work hard at Apple have no rights?"

That's a strawman, right at the outset!! :grr: (I won't bother with the rest.)

[AP]

38. How is that a strawman?

The people who work at apple are human beings and they're collective interest is in employees with knowledge of confidential information not breaching the terms of their employment agreements.

[AP]

35. Then, apple, as an enterprise, is entitled to pace its releases...

...according to a strategy that will maximize the likelihood that its employees will have good, well-paying jobs, for as long as possible. And they're entitled to use the remedies the law provides.

I'd be surpised if the CA legislature has given them a remedy that rises to the level of fascism. But if they have, I hope the courts correct that mistake.

[TahitiNut]

37. They're entitled to try. They're NOT entitled to guaranteed success.

They have more leaks than a sieve. They have "embargoed" press releases. They have employees in the options markets. They have suppliers who know. They have sales people eager to jump the gun. In fact, they undertake a whole host of activities that're antithetical to this one interest. They literally create the incentives themselves for their employees and agents to act in manners that serve one of their interests and dis-serve another of their interests. In taking their whining to a member of the public, they seem to me to be externalizing yet another cost of doing business.

I'm sorry.
I'm just not a fan of publicly-protected "coming out" parties for debutante companies.
That's just aristocratic crap.


I subscribe to the maxim that "A secret isn't a secret as soon as two people know."

[AP]

39. Where you see "artistocratic bullshit" I see a corporation trying ...

... to beat Microsoft on playing field titled against them so that they can provide a good place to work for a lot of employees, some of whom might not appreciate the millions of dollars that could be lost just by not having a well-timed and coordinated advertizing campaign.

[bobweaver]

10. He's giving Apple better publicity than any amount of money can buy!

[JohnLocke]

11. Good luck, Mr. Ciarelli. Keep on fighting.

[QC]

12. Think Litigious! n/t

[sendero]

15. So much ....

... for the apparently mistaken idea that Apple is a progressive company.

I doubt if they have much in the way of law to support their case, but since they are a deep pockets company against a kid who probably doesn't have $100, they'll shut him up for sure.

[Downtown Hound]

40. Hmmm...this seems pretty silly to me

I don't really think the kid did anything wrong. He's just publishing information that was told to him, and I've never really cared for Apple's obsession with secrecy anyway. Everyone knew the $500 mac was coming out in advance and how did that really hurt Apple any? Apple is overreacting here.

It does seem like they are after the leaker and not the kid himself, but they don't need to be going after him just because they can't find whoever it is. Apple, your profits have jumped enormously this past year. Explain to me how this kid is hurting you, because it sure isn't showing up in your bank accounts.