Exposing next-gen iPhone online leads to investigation


Trade secrets are part of Silicon Valley's fabric and they're taken very seriously. Gizmodo is now caught in the crosshairs of an investigation to find out who stole Apple's secret iPhone.

The District Attorney's Office in San Mateo County has seized four computers and other digital storage media from the Fremont home of Gizmodo blogger Jason Chen.

Chen posted a story last week with details of a prototype of what is likely to be Apple's next iPhone model. An investigation appears to be underway to determine whether trade secrets were sold and whether Gizmodo was in possession of stolen property.

The iPhone prototype had been left at a Redwood City restaurant last month by an Apple engineer, disguised in a case not to reveal its new design and new features. It's widely believed that Apple plans to release an updated iPhone later this year, perhaps by summer.

Gizmodo's Jason Chen told ABC News technology reporter Becky Worley that $5,000 was paid for the device. Chen is no longer talking to the news media, according to company spokesman Chris Mascari. The prototype was returned to Apple after its chief legal officer demanded the return of the company's property.

"It's a crime to offer money to obtain an article that contains a trade secret, so just the exchange of money is an element of the crime. The other thing that's significant here is that Gizmodo by its own admission offered $5,000 for an iPhone," says ABC7 Legal Analyst Dean Johnson.

Gizmodo's parent company, Gawker Media, is protesting the seizure of Chen's computers, claiming it is a violation of the state shield law that protects sources and unpublished notes from search warrants. The Oakland based First Amendment Project's executive director, David Greene, argues that internet bloggers are covered by the shield law.

"The question is not whether or not they're a blogger. The question is whether or not they're a journalist employed upon or connected with a periodical publication, and courts have applied that to online publications the same way they have print publications," says Greene.

San Mateo County Chief Deputy District Attorney Steve Wagstaffe told ABC7 News that the seized computers and digital media have not been examined, and will not be examined, until the legal objection is resolved.

"We're taking a further look and told them we won't search the computer until we've completed that and expressed to them our view on what they've given to us," says Wagstaffe.

The seizure occurred on Friday, conducted by a team from a special multi-agency investigative unit that specializes in high-tech crime. It's called REACT or Rapid Enforcement Allied Computer Team Task Force and is based in San Jose. The search warrant inventory indicates four computers, digital cameras, external hard drives, flash drives, a server, and an iPhone were among the property taken from the Gizmodo editor's residence.

The identity of the person who found the lost iPhone and sold it to Gizmodo has never been revealed.

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