Apple Wins: Sites Must Reveal Sources

Friday, Santa Clara County Superior Court Judge James Kleinberg ruled that an online journalists' Internet service provider can be obligated to identify confidential sources to Apple's legal counsel.

The ruling rejected the defense's arguments that California's shield laws, which protect the anonymity of sources, apply to PowerPage because trade secrets were revealed in violation of state penal code. Kleinberg said the site's status as legitimate press was a moot point.

The legal wrangling stems from a "John Doe" lawsuit filed by Apple against Web sites, including Sean O'Grady's PowerPage, that disclosed the company's plans for a FireWire-based interface for GarageBand code-named "Asteroid".

Apple contends that its "trade secrets" were unlawfully disclosed and issued subpoenas demanding that the sites reveal their anonymous sources. The defense claims that online reporters are protected by shield laws in the California constitution and under the First Amendment guaranteeing free speech.

"The posting of Mr. O'Grady contained an exact copy of a detailed drawing of 'Asteroid' created by Apple. Apparently the drawing came from a set of slides marked "Apple Need-to-Know Confidential," the judge wrote in his decision. The circumstances under which those slides were obtained convinced the judge that O'Grady was in violation of a state statue that protects intellectual property from being disclosed.

"Compelling interest of disclosure...outweigh First Amendment rights. The United States and California Supreme Courts have understood that trade secret laws apply to everyone regardless of their status, title or chosen profession," Kleinberg wrote.

The judge interpreted California's shield law to be "unique" in that it provides "limited protection" against being held in contempt of court and does not grant special rights to news people. "Whether he fits the definition of journalist, blogger or reporter 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 Electronic Frontier Foundation, which represented O'Grady, was quick to respond. "We're disappointed that the trial court ignored the Supreme Court's requirement that seeking a journalist's confidential sources be a 'last resort' in civil discovery," said EFF Staff Attorney Kurt Opsahl.

"Instead, the court asserts a wholesale exception to the journalist's privilege when the information is alleged to be a trade secret. This is a broad-brush ruling that threatens journalists of all stripes," said EFF Legal Director Cindy Cohn.

When asked if ruling could set precedent that could conceivably affect other reporters, Cohn told BetaNews, "State court rulings at the lowest court level (called the Santa Clara County Superior Court) are not citable."

While the EFF may be diametrically opposed to the ruling, others accept the judge's thinking in so far as it pertains to California law.


"Based on the judge's ruling, I would conclude there is legitimate cause to assume that Apple trade secrets had been leaked. But many other vendors could make similar arguments about leaks -- the aforementioned free marketing -- if they wanted to," said Jupiter Research senior analyst Joe Wilcox.

"Apple may have won the battle, but I'm not convinced it will win the war, if the result is the alienation of enthusiasts that are the core of the Mac community. Apple also depends on the goodwill of journalists and product reviewers," noted Wilcox.

In his decision, which singled out O'Grady's PowerPage, Kleinberg wrote, "An interested public is not the same as public interest." But what is in the public's interest is a grey area and not everyone sees eye-to-eye.

"I have a broad view of what customers need to know. They need to know when a company is killing a product; altering its roadmap; or delaying the introduction of a system due to bugs. Users need to have this information to make informed decisions. And we as journalists are obligated to provide it," said Mary Jo Foley, editor of Ziff Davis' Microsoft Watch newsletter.

"The idea of potential harm is what shouldn't be limited. If you are a user of apple products and you have a limited IT budget, you will be harmed if you make the wrong decision."

The EFF says it will appeal the decision.

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