Opinion: Apple, reporters, and judicial cowardice

The Court of Appeals for California’s sixth district recently ruled that Apple may not serve subpoenas to discover who leaked information of an upcoming product to Macintosh news and rumor sites. While hailed as a victory for online journalists and bloggers — one that extends California’s reporter’s shield to online writers of all stripes — MWJ’s careful review of the ruling reveals that it does no such thing. What’s more, in the process of reaching its decision, the court committed so many errors in logic that they’re hard to count.

First, a refresher on the basic facts. In late 2004, Jason O’Grady’s PowerPage and AppleInsider published details of an Apple product allegedly in development. The product, code-named “Asteroid,” was to be a FireWire breakout box — an audio interface between an electric guitar and GarageBand. In early 2005, Apple Computer filed suit against unnamed individuals for misappropriation of trade secrets; as part of that lawsuit, Apple discovered that O’Grady uses an ISP named Nfox for his e-mail. Since O’Grady might be considered a reporter under California law and therefore immune from punishment if he ignored a subpoena for his e-mail about “Asteroid,” Apple instead subpoenaed Nfox for all documents relating to “Asteroid” in its e-mail servers.

Nfox was moving to comply with that subpoena when O’Grady, AppleInsider operator “Kasper Jade” (a pseudonym), and MacNN publisher Monish Bhatia petitioned the court hearing the lawsuit — the Superior Court of Santa Clara County, California, where Apple’s headquarters is located — for a protective order that would bar Nfox from complying with the subpoenas. The court ruled in favor of Apple, finding that whether or not O’Grady and Jade were covered under California’s shield law, their near-verbatim publishing of a stolen document was not a protected act of journalism.

O’Grady and Jade appealed the court’s denial of their request for a protective order. The Court of Appeals for California’s Sixth Appellate District heard arguments on the case in April, and issued its ruling May 26 — for the petitioners and against Apple in every major respect. The appellate court’s ruling is bizarre and contradictory; here’s an opinionated in-depth look at what the court said and did, and what it all might mean.

The reporter’s privilege

Almost all of the attention in this case has gone to the argument that Jason O’Grady’s piece on “Asteroid” was news, and O’Grady was functioning as a reporter, so his notes and other communications are protected by California’s reporter’s “shield” — a section of the state’s constitution and statutes that prohibits finding a reporter in contempt of court for refusing to honor a subpoena.

You may recall that the trial court sidestepped the issue of whether O’Grady was a reporter or not, instead finding that since O’Grady had published Apple’s trade secrets, he wouldn’t be protected by the shield anyway. The trial court cited U.S. Supreme Court precedent that “affirmed the co-equal status of trade secrets with patents as methodologies for protecting proprietary information,” and said that accepting Apple’s claim that the information was a trade secret — a claim that O’Grady and EFF did not rebut, despite the court’s direct inquiry on the subject — meant that the information about Asteroid was “stolen property, just as any physical item.” The trial court said:

What underlies this decision is the publishing of information that at this early stage of the litigation fits squarely within the definition of trade secret. The right to keep and maintain proprietary information as such is a right which the California legislature and courts have long affirmed and which is essential to the future of technology and innovation generally. The Court sees no reason to abandon that right even if it were to assume, arguendo, movants are “journalists” as they claim they are.

Here’s where the appellate ruling starts to go off the rails. Normally, to reverse this finding, the appellate court would have to explain why it was in error. The Sixth District Appellate Court, however, found that “Since this controversy turns on questions of statutory interpretation, it is subject to review entirely independent of the trial court’s ruling. In addition, because it implicates interests in freedom of expression, we review all subsidiary issues, including factual ones, independently in light of the whole record.” (Emphasis in original; citations omitted.)

Judicial cowardice

The twists and turns on this road are somewhat dizzying. In the portion of the appeal dealing with the potential conflicts between disclosing e-mails and the Stored Communications Act of 1986, the Sixth District Appellate Court approvingly cited Rancho Publications v. Superior Court (68 Cal. App. 4th 1538 [1999]), a Fourth Appellate District case, because it justified the court intervening in a case of reporter privilege. In its briefs, Apple cited the same case because it notes that the burden is on the journalist asserting immunity to “prove [that] all the requirements of the shield law have been met.”

If the appellate court agrees that Rancho Publications is on point, it must agree with the idea that journalists who claim the privilege must establish that they were engaged in “legitimate journalistic purposes” or “exercising judgmental discretion in such activities.” The trial court found O’Grady did not meet that burden, a significant reason for denying O’Grady’s request for a protective order against Apple’s subpoena to his ISP. If the appellate court wants to grant O’Grady the journalist’s privilege, it should have to find evidence that he met this burden. Right?

Not so much. The appellate ruling states:

We decline the implicit invitation to embroil ourselves in questions of what constitutes “legitimate journalis[m].” The shield law is intended to protect the gathering and dissemination of news , and that is what petitioners did here. We can think of no workable test or principle that would distinguish “legitimate” from “illegitimate” news. Any attempt by courts to draw such a distinction would imperil a fundamental purpose of the First Amendment, which is to identify the best, most important, and most valuable ideas not by any sociological or economic formula, rule of law, or process of government, but through the rough and tumble competition of the memetic marketplace.

In two consecutive sentences, the court refuses to define the “legitimate journalistic purposes” that previous rulings require petitioners claiming the journalist’s privilege to demonstrate, and then declares that O’Grady was involved in the “gathering and dissemination of news .” The court refuses to explain what the required “journalistic purposes” are but declares, by fiat, that petitioners were engaged in exactly those undefined purposes!

At the very least, this is a stunning abdication of judicial responsibility; at most, a craven display of judicial cowardice. It means that in the Sixth Appellate District of California, as of right now, news is like pornography — the justices refuse to define it but know it when they see it. The appellate court goes on at some length about how horrible it would be for any court to distinguish between “legitimate” and “illegitimate” news, even though a previous ruling that the court already cited approvingly says that’s exactly what the court must do. And while refusing to distinguish between the two on principle, the court blithely charges forward and decides that petitioner O’Grady was engaged in the very action that the court won’t define.

Apple’s argument that publishing its document and drawings verbatim was not “journalism” did not impress the appellate court. It ruled, “An absence of editorial judgment cannot be inferred merely from the fact that some source material is published verbatim.” The court theorizes that the only reason newspapers and magazines haven’t published source material “at length” before is “the constraints of pre-digital publishing technology, which compelled an editor to decide how to use the limited space afforded by a particular publications.”

Digital publications don’t have that problem, the court said, and should be commended for providing full source material instead of subjecting readers “to the editors’ own ‘spin’ on a story.” The problem with this view, of course, is that no newspaper or magazine publishes verbatim documents from confidential sources without significant articles around them, as O’Grady allegedly did with his “Asteroid” piece. If a magazine came into possession of a copy of the manuscript for the next “Harry Potter” book, could it publish that manuscript in full, or even give away key plot points, with impunity?

No, says the appellate court: “Disclosure of that information may expose [journalists] to liability, but that is not the question immediately of concern; the point here is that such conduct constitutes the gathering and discussion of news, as that phrase must be understood and applied under our shield law.” As it did in an earlier part of the ruling on the Stored Communications Act, the court is basically telling Apple to sue O’Grady directly if it wants recompense for his publication of the company’s private (or “stolen”) documents. And again, the court says that O’Grady was engaged in conduct that meets the definition of “news” that it so conspicuously refuses to provide.

Reversed logic

Wait, it gets better. When finding that e-mail is immune from civil subpoena under the Stored Communications Act, the Sixth District Appellate Court said that since there was a specific list of exemptions in the act, and since civil discovery was not among them, then Congress must not have intended to allow stored e-mail to be subject to non-criminal subpoena.

Similarly, the California reporter’s shield law, both in statute and in the state’s constitution, explicitly lists who is covered in section 2(b) of Article 1, the “Declaration of Rights:” “a publisher, editor, or other person connected with or employed upon a newspaper, magazine, or other perodical publication or wire service.” (Another part of Article 1 covers radio and TV reporters.) Nowhere does this list Web sites, online journals, newsgroups, or any other online medium.

Following the court’s own logic from its analysis of the Stored Communications Act, since neither the voters (in amending the state constitution to include the shield) nor the legislature has listed online writers as protected by the law, and since both bodies are certainly capable of doing so at any time, then it only follows logically that O’Grady is not covered by the shield, as he does not meet any of the enumerated qualifications of the shield law.

But the Sixth District Appellate Court completely reversed its own logic from the first part of this very same ruling. It found that since the purpose of the law was to protect people gathering news, then the law must protect O’Grady, even though his job is not one of those explicitly protected, and even though the court can’t identify how his gathering of “news” is any different than anyone else who’s not covered by the shield. The court wrote:

We can think of no reason to doubt that the operator of a public Web site is a “publisher” for purposes of this language; the primary and core meaning of “to publish” is “[t]o make publicly or generally known; to declare or report openly or publicly; to announce; to tell or noise abroad; also, to propagate, disseminate (a creed or system).” (12 Oxford English Dict. (2d ed. 1989) pp. 784-785.) … Moreover, even if petitioners’ status as “publishers” is debatable, O’Grady and Jade have flatly declared that they are also editors and reporters, and Apple offers no basis to question that characterization.

It’s almost beyond credulity that the court can “think of no reason to doubt that the operator of a public Web site is a ‘publisher’” for purposes of the shield law, because the shield law defines who is covered and O’Grady is not on that list. When “civil subpoena” wasn’t on the list of exemptions specifically listed in the Stored Communications Act, the court shrugged its judicial shoulders and said, “Sorry, but it’s not there, so it’s no exemption and that’s that.” When O’Grady’s job was not on the list of those covered by the shield act, the court all but ignored the list and said it could “think of no reason” not to add O’Grady’s job to the list, because surely lawmakers would have meant to do that had they thought of it.

It is not enough that Apple does not question that O’Grady and Jade are editors and reporters — they must be “connected with or employed upon a newspaper, magazine, or other periodical publication” to qualify for the shield. The court knows that, too, because the very next section of the ruling starts, “We come now to the difficult issue, which is whether the phrase ‘newspaper, magazine, or other periodical publication’ applies to Web sites such as petitioners’.” (Citations omitted.) If the court can’t connect O’Grady’s job to a periodical publication, he’s not eligible for the shield.

The court quickly concedes that O’Grady’s Web site is not a “newspaper,” but quotes an Oxford English Dictionary draft entry for e-zine as “[a] magazine published in electronic form on a computer network, esp. the Internet,” and a legal encyclopedia that says, “Magazines may be published solely on the Internet, or as electronic adjuncts of a print magazine.” O’Grady and petitioners describe their Web sites as “magazines,” but that doesn’t necessarily make it true any more than printing a stolen document is “journalism” just because they say it is.

O’Grady and his counsel want the court to declare that Web sites, known only as Web sites and not as “e-zines” or “magazines,” are protected by the shield law. The court realized it couldn’t declare a Web site to be a magazine, though it appears to have been tempted to accept O’Grady’s word for it since Apple didn’t explicitly argue against it. Instead, it suggests that when the California legislature amended the shield law in 1974 to include magazines and “other periodical publication[s]”, it couldn’t have predicted the rise of digital publications — and yet could not “have meant to exclude them.”

Thanks to the phrase “other periodical publications,” the court believes that the legislature intended to protect “news” beyond what was understood to be a newspaper or magazine in 1974. You might say that the difference from the first part of the ruling is that when writing the Stored Communications Act in 1986, Congress clearly knew that civil subpoenas existed and did not include them, so Congress did not intend for civil discovery to apply to stored e-mail. On the other hand, the California legislature could not have predicted O’Grady’s PowerPage in 1974 (and let’s face it, who could?) so it included an escape clause to let the law apply to other news gatherers.

The court then admits that the legislature specifically described radio and television separately from “other periodical publication[s]” because “the broadcast media represent a radical departure from the preexisting paradigm for news sources. Because no one thought of those media as ‘publications,’ an explicit extension was necessary to ensure their inclusion.”

By that logic, since the Internet was also a radical departure from the preexisting paradigm for news sources, the law would require an explicit extension for that medium as well. But the court doubles back on itself again: “The explicit inclusion of television and radio in the shield law does not imply an exclusion of digital media such as petitioners. As we have noted, the electorate cannot have intended to exclude those media because they did not exist when the law was enacted.”

That argument doesn’t quite add up. The California legislature strengthened the shield law in 2000, when both PowerPage and AppleInsider were a few years old. The legislature clearly understood the existence and prominence of the Internet in the year 2000, and yet chose to revise the law without extending its protections to online journalists.

The court then turns to trying to define “periodical,” to see if O’Grady’s site can possibly be considered one. Unfortunately, the plain definition of “periodical” does not lean in O’Grady’s favor. The court wrote, “It does not appear that petitioners’ Web sites are published in distinct issues at regular, stated, or fixed intervals. Rather, individual articles are added as and when they become ready for publication, so that the home page at a given time may include links to articles posted over the preceding several days.”

However, the court brushes this aside by pointing out that an online dictionary of library science refers to Slate as a periodical. But “periodicals” like Slate and Salon still act like magazines. Every Friday, Slate publishes a Microsoft Word file with every article published that week. Salon Premium subscribers can also get each day’s “issue” in PDF format. That online dictionary of library science mentions Slate because Slate takes steps to act like a periodical. O’Grady’s PowerPage does not.

The court concludes, “It seems likely that the Legislature intended the phrase ‘periodical publication’ to include all ongoing, recurring news publications while excluding non-recurring publications such as books, pamphlets, flyers, and monographs.” The court therefore finds that the petitioners are entitled to protection under the shield, because they are engaged in gathering news — the activity the court refused to define. It’s a lot of work, and a lot of flawed logic, to get to where everyone else already was: Apple did not assert that O’Grady was not a “journalist,” merely that he wasn’t engaged in activities that the shield law protects, like reporting actual news.

The Mitchell Test

O’Grady and the other petitioners are not out of the woods at this point — the California reporter’s privilege is not absolute. As we noted last year, the five-part test for granting the privilege under California law is called the Mitchell test, from the case in which the California Supreme Court created the test, Mitchell v. Superior Court (1984, 37 Cal.3d 268). The trial court ruled that the subject at hand (a potential FireWire audio interface from Apple) was not a matter of the “public interest.” Relying on that, the trial court found that on balance, the Mitchell test leaned towards requiring O’Grady to disclose his source to Apple.

You should know what’s coming next: the Sixth District Appellate Court, rather than find error, decided to ignore the trial court’s finding and decide it all over again: “Because a constitutional privilege is implicated, we must subject the trial court’s order to the relatively searching standards of ‘constitutional fact review.’”

Only at this point does the appellate court finally recognize that Apple did not dispute that petitioners might be entitled to the reporter’s qualified privilege, just that they were not engaged in actions that triggered the privilege. Had the court acknowledged that earlier, however, it would not have been able to set a precedent that “online journalists” enjoy the protection of the state’s shield law, and that’s clearly where the court intended to go, no matter how many twists it took to get there.

Exhausted sources

The first two parts of the Mitchell test are an assessment of the reporter’s role in the litigation and whether the subpoena is crucial to the case at bar. We discuss these in more detail in MWJ 2006.05.31, but suffice it to say that they split the middle. Test 1 favors not forcing O’Grady to disclose his source because he is not a defendant; test 2 favors disclosure because the identity of the leaker is crucial to Apple’s lawsuit against that unknown person.

We then come to the third test, which favors forcing the journalist to disclose his sources only if all other means of discovering the information have been exhausted. Apple questioned 29 people who had access to the presentation that was sent to O’Grady, and under pain of losing their jobs for lying, all of them denied leaking the information. The trial court found that to be adequate.

The appellate court laughed at that idea, saying that this factor “weighs decisively against disclosure.” Specifically, the ruling chastises Apple for not questioning these 29 people under oath. The court noted that since Apple would probably fire anyone who admitted to leaking the information, the threat of being fired for denying the leak has no teeth.

Genentech, filing an amicus brief supporting Apple, told the court that deposing employees is “needlessly disruptive and demoralizing,” and that employers “should not be required to traumatize the workforce to protect their trade secrets.”

The court responds, “Of course no one is requiring Apple to traumatize its employees. It is entirely for Apple to decide what risks and costs to incur in pursuing the source of the leak.” In other words, no one is forcing Apple to do it unless the company wants to subpoena a reporter. “Genentech would have us relieve the employer of this dilemma by shifting its burdens onto third party journalists. Such a shifting, however, would impair interests of constitutional magnitude. There is no countervailing constitutional interest in identifying faithless employees without inconveniencing their fellow workers.”

Even if internal investigations are insufficient, the court goes back off the rails when explaining why depositions are better: “Questioning under oath exposes the person to criminal prosecution for any willful falsehoods. That is no guarantee of truthful answers, but it certainly provides a stronger incentive to tell the truth than the mere risk of discharge — a risk which, we have noted, was not obviated by truthful answers. An employee involved in a possibly criminal theft of trade secrets might invoke the privilege against self-incrimination rather than answer questions under oath, but even that would provide Apple with an extremely valuable investigative lead, to say the least.” (Emphasis in original; references omitted.)

It’s beyond laughable for the court to complain about courts being used “as an adjunct of an employer’s personnel department” and then, three pages later, say that the company has not exhausted all other means of finding the information if it doesn’t use the district attorney as an adjunct of its personnel department. Most DAs are too busy to prosecute criminal perjury complaints from their own criminal trials. The very thought that overworked and habitually underfunded prosecutors would spend their resources to seek criminal convictions or slots in an overcrowded jail for an Apple employee or contractor who leaked to a rumor site is off-the-charts ludicrous. And this from a court in Silicon Valley!

The silliness continues as the court recounts Apple’s description of its internal investigation into the leak, finding the process “conspicuously vague.” EFF, in its appeal on O’Grady’s behalf, went so far as to argue that Apple should search the home computers of employees with access to the “Asteroid” presentation, an invasion of privacy that you would normally expect to see EFF strongly oppose. As part of that, petitioners argued that Apple didn’t conduct an adequate “forensic” investigation.

The court agrees, but does so by second-guessing Apple’s procedures. The company testified that the presentation was “distributed… electronically” to 25 recipients, but because the testimony does not spell out exactly how that was done, the court seems to assume that Apple doesn’t actually know how to investigate these things. “We are left to guess at what this means. Was the file emailed? Placed on an intranet server? Handed to the recipients on a CD-ROM or other portable medium? Each of these possibilities would present its own opportunities for, or obstacles to, further investigation.”

In other words, since the appellate court decided to ignore the trial court’s findings and relitigate everything, and since Apple didn’t provide microscopic detail on its investigation to the trial court (which found Apple’s investigation suitable) or to the appellate court (which didn’t ask), the appellate court assumes that the investigation was not thorough enough to qualify as exhaustive under Mitchell.

Trade secrets

The fourth part of the Mitchell test requires the court to judge how important it is to let the reporter’s source remain anonymous. The Mitchell decision itself says, “[W]hen the information relates to matters of great public importance, and when the risk of harm to the source is a substantial one, the court may refuse to require disclosure even though the plaintiff has no other way of obtaining essential information.”

This part of the appellate ruling is truly frightening and far, far outside mainstream jurisprudence. In this section, the Sixth District Appellate Court literally states that there can be no accountability for a reporter publishing a trade secret, that First Amendment rights trump property rights, and that Apple’s planned FireWire audio interface is a monumental development in human history akin to Gutenberg’s invention of movable type:

Apple first contends that there is and can be no public interest in the disclosures here because “the public has no right to know a company’s trade secrets.” Surely this statement cannot stand as a categorical proposition. As recent history illustrates, business entities may adopt secret practices that threaten not only their own survival and the investments of their shareholders but the welfare of a whole industry, sector, or community. Labeling such matters “confidential” and “proprietary” cannot drain them of compelling public interest. Timely disclosure might avert the infliction of unmeasured harm on many thousands of individuals, following in the noblest traditions, and serving the highest functions, of a free and vigilant press. It therefore cannot be declared that publication of “trade secrets” is ipso facto outside the sphere of matters appropriately deemed of “great public importance.”

The court must know that this argument is disingenuous. Apple did not argue that a company’s trade secrets are never in the public interest, especially since the Mitchell test itself requires a court to determine if the information being protected is in the public interest. Nothing in the information about Apple’s FireWire audio interface, disclosed or undisclosed, could “avert the infliction of unmeasured harm on many thousands of individuals” or “serve the highest functions of a free and vigilant press.” Yet by ignoring the plain language of Mitchell, the appellate court seems to rule that the public has a right to know a company’s secrets if they can be discovered. This turns decades of law on its head, including U.S. Supreme Court rulings cited in this case that put trade secret and patent law on equal footing.

The court continued:

Apple alludes repeatedly to the notion that the publication of trade secrets cannot be found to serve the public interest because of the policy embodied in trade secret law itself, which presupposes that trade secrets possess social utility justifying special protections against wrongful disclosure. This is, of course, a false dichotomy. It is true that trade secrets law reflects a judgment that providing legal protections for commercial secrets may provide a net public benefit. But the Legislature’s general recognition of a property-like right in such information cannot blind courts to the more fundamental judgment, embodied in the state and federal guarantees of expressional freedom, that free and open disclosure of ideas and information serves the public good. When two public interests collide, it is no answer to simply point to one and ignore the other. This case involves not a purely private theft of secrets for venal advantage, but a journalistic disclosure to, in the trial court’s words, “an interested public.” In such a setting, whatever is given to trade secrets law is taken away from the freedom of speech. In the abstract, at least, it seems plain that where both cannot be accommodated, it is the statutory quasi-property right that must give way, not the deeply rooted constitutional right to share and acquire information.

The trial court famously said, “An interested public is not the same as the public interest,” as part of a section distinguishing that the public’s thirst for gossip and rumor is not the same as information that serves the entire body public. The appellate court’s quotation here again turns that upside down, and the court apparently hopes you won’t notice.

Beyond that, though, this paragraph is a substantial rewrite of First Amendment jurisprudence. The “deeply rooted constitutional right to share and acquire information” has been constitutionally limited by property rights since the founding of the nation. They’re called copyrights and patents, and as noted, the US Supreme Court says that trade secrets and patents share equal footing.

Again, we propose the manuscript of the next “Harry Potter” book as an example of why the court’s analysis is fundamentally flawed. Imagine that someone managed to steal that manuscript and leak it to a reporter whose Web site (or even newspaper) published it in its entirety, or even published substantial sections that gave away the secret plot and outcome. No court would say that the reporter’s right to free expression trumps J.K. Rowling’s property rights to her own creation, even though literally tens of millions of people around the world would very much like to know what that manuscript says. While it sounds good to say that First Amendment rights trump a “quasi-property right,” it’s flatly ridiculous to believe that someone else has the right to publish your works and ideas without your permission, and that the courts should leave you with no recourse for justice.

To those who would say that the details of a FireWire audio recording device cannot possibly be in the public interest, the court says otherwise. Amicus briefs on Apple’s side pointed out the DVD copy protection case ( DVD Copy Control Association v. Bunner ) that allowed a trade secrets injunction against the online publication of code to remove DVD copy protection. The court noted these briefs, but said that in the DVD case, the published information “convey[ed] only technical information about the method used by specific private entities to protect their intellectual property.” But for “Asteroid,” the court distinguishes:

Here, no proprietary technology was exposed or compromised. There is no suggestion that anything in petitioners’ articles could help anyone to build a product competing with Asteroid. Indeed there is no indication that Asteroid embodied any new technology that could be compromised. Apple’s own slide stack, as disclosed in sealed declarations which we have examined, included a table comparing Asteroid to existing, competing products; there is no suggestion that it embodies any particular technical innovation, except perhaps in the fact that it would integrate closely with Apple’s own home recording software — a feature reflecting less a technical advance than a prerogative of one who markets both hardware and software. The newsworthiness of petitioners’ articles thus resided not in any technical disclosures about the product but in the fact that Apple was planning to release such a product, thereby moving into the market for home recording hardware.”

Make no mistake: in this passage, the appellate court that sets precedent for Silicon Valley is saying, unambiguously, that plans to introduce a product cannot be a “trade secret.” Later on the same page, the court tries to back out of expressly saying that, but then winds up saying it again in different words:

Publishing a computer manufacturer’s proprietary code may thus be compared to publishing a miller’s secret recipe for a breakfast cereal. What occurred here was more like publicizing a secret plan to release a new cereal. Such a secret plan may possess the legal attributes of a trade secret; that is a question we are not here required to decide. But it is of a different order than a secret recipe for a product. And more to the point, the fact of its impending release carries a legitimate interest to the public that a recipe is unlikely to possess… Whether or not confidential marketing plans constitute trade secrets under the governing statutory language, it cannot be seriously held that their protection has any direct and obvious tendency to serve the central purposes of the law.

Something is either a trade secret or it is not. If the appellate court says that protecting confidential marketing plans does not serve the central purpose of the law, it is saying that those plans are not trade secrets, no matter how many times it also says that it’s not deciding whether they’re trade secrets or not. The court cannot say that it doesn’t know if the “Asteroid” document was a trade secret or not, and then rule that the document doesn’t “serve the central purposes of the law” so its disclosure is no big deal. As the court repeatedly told Apple, you can’t have it both ways.

The next section of the ruling is all but indescribable:

More generally, we believe courts must be extremely wary about declaring what information is worthy of publication and what information is not. At first glance it might seem that Asteroid is nothing more than a hobbyist’s gadget with no ponderable bearing on the great issues of the day. But such an impression would be, in our view, erroneous. With the release of this product, one of the world’s leading manufacturers of personal computing products would be throwing its considerable muscle behind the development of sophisticated devices for creating high-quality audio recordings on a home computer. Such a development would inevitably contribute to blurring the line between professional and amateur audio production, and hence between professional and amateur composing and performing, in much the same way that the personal computer coupled with telecommunications technology has blurred the distinction between commercial and amateur publishing. The decentralization of expressive capacity represented by such developments is unquestionably one of the most significant cultural developments since the invention of the printing press.

While it may be tempting to think of Asteroid as a mere gizmo for nerds, such a device may also be the means by which the next Bob Dylan, Julia Ward Howe, or Chuck D conveys his or her message to the larger world. Music is of course a form of speech, from the stirring hymns of Charles Wesley to the soaring meditations of John Coltrane.

Who knows what latter day Woody Guthries may be lifted from obscurity by this new technology, in defiance of the considered judgment of recording executives that once might have condemned them to obscurity? Apple’s commitment to such a product could prove to be an important step in democratizing the production and publication of music, as other digital technologies have democratized the publication of news and commentary.

If this is true, then by definition, any product that Apple Computer makes is of “public interest,” and the company has no recourse for the leaking of any of its product plans. While Apple fanboys may think that’s a fine idea, there are obviously dozens of companies that would love to know what new iPod features Apple has planned, and would do whatever they could to help someone publish them as “news.”

These observations are intended not to demonstrate the innate newsworthiness of petitioners’ articles but rather to illustrate the peril posed to First Amendment values when courts or other authorities assume the power to declare what technological disclosures are newsworthy and what are not. The digital revolution has been compared to the Industrial Revolution in terms of its potential impact on society and citizens. Apple is widely seen as a central figure in this cultural sea change. The online version of a leading business magazine has quoted a securities analyst’s descriptions of Apple as “ ‘the nexus of [the] digital lifestyle revolution’ “ whose products “frequently incorporate disruptive changes in technology” and whose innovations “fundamentally alter the way we li[v]e.” The dry technical detail that pervaded petitioners’ articles should not be permitted to obscure the fact that any movement by such a cultural leader into a whole new area of expression — as was promised by the Asteroid product — is newsworthy.

In the first sentence of this paragraph, the appellate court says that courts should not declare what technologies are or are not newsworthy. In the last sentence of the same paragraph, the same court, with no ambiguity or wiggle room, declares the Asteroid technology is newsworthy.

It is often impossible to predict with confidence which technological changes will affect individual and collective life dramatically, and which will come and go without lasting effects. Any of them may revolutionize society in ways we can only guess at. The lawful acquisition of information necessary to anticipate and respond to such changes is the birthright of every human, formally enshrined for Americans in our state and federal constitutions. The publications at issue here fully implicated that birthright and the interests protected by those constitutional guarantees.

We’re going out on a limb here, but we’ll guess that not even Jason O’Grady’s mother believes that her son’s Apple rumor site affects the birthright of all Americans, enshrined in constitutions, to anticipate how dramatically a FireWire audio interface — one that the court already said was similar to several products that existed in November 2004 — will change individual and collective life dramatically.

The court is overselling O’Grady’s site to compensate for the plain fact that a FireWire audio box does not affect the general public. No one is at risk, no paradigms are shifting, and no one expects the history of the planet to be forever changed by this device — except the Sixth District Appellate Court, which finds it so compelling that it has to destroy trade secrets law so we can learn more about this magical box.

Yet even in the end, the court is forced to admit that Apple has shown enough to prove that the “Asteroid” presentation was a trade secret after all. The fifth and final part of the Mitchell test is whether the plaintiff has a strong case on the merits, for a weak case would lean against disclosure. There’s no need to break a reporter’s confidentiality with his source for a case that the plaintiff obviously cannot win.

The court wrote, “Here it can be reasonably inferred from the circumstances shown by Apple that someone violated a duty not to disclose the information in question, and that the information constituted a trade secret. Apple has thus presented enough evidence to support a reasoned inference of wrongdoing on someone’s part. Therefore this factor favors disclosure, or more precisely, does not weigh against it.”

But for the court, it’s too little and too late, as the ruling concludes: “On balance however, neither this factor nor the other factors favoring disclosure possess sufficient weight on this record to overbalance the countervailing factors, particularly the inadequacy of Apple’s showing that it exhausted alternative avenues of investigation.” The court then concluded by issuing a writ of mandate requiring the trial court to “set aside its order denying petitioners’ motion for a protective order and to enter a new order granting that motion.”

What’s next?

Although Apple has not commented publicly on the ruling, it’s all but certain the company will appeal the ruling, in one form or another, to the California Supreme Court. Partners like Intel and Genentech will all but demand an appeal — unlike the trial court, which went out of its way to affirm that its decision was in one specific case and had no bearing on others, the Sixth District Appellate Court authorized its ruling for publication.

Lawyers in any relevant case in the district, including Santa Clara and Santa Cruz counties, can cite this ruling to bolster their claims. If other courts cite this ruling as justification for granting shield protections to online writers, then it will become the far-ranging precedent that is missing from the actual text but that so many people ardently assume is already there. That includes the horrible analysis of trade secrets. Right now in Silicon Valley there is no such thing as a “trade secret,” because the state court for the area has ruled that the First Amendment right to express yourself always trumps the right to protect a trade secret or other intellectual property. Companies like Genentech must be close to incontinent over the ramifications of that.

However, Apple has other options before, or in addition to, an appeal to the state’s highest court. As the ruling noted more than once, Apple could simply name O’Grady as a defendant in the case, and allege that he knew (or should have known) that the information he published was Apple’s trade secret and that he did it anyway to increase circulation.

If O’Grady becomes a defendant in the suit, he loses a lot of the shield’s protections. The law was never intended to make reporters immune from liability for their actions, but to insure that they’re not used as a shortcut to information that a plaintiff can’t easily discover in other ways. Apple risks a countersuit and damages if it loses such a case, but even the appellate court agrees that naming O’Grady as a defendant probably pierces the reporter’s shield.

The issue of exhausting other possible sources for the information raises some interesting possibilities as well. The appellate court told Apple that it had to question its employees under oath to come close to exhaustive investigation, and noted that if any of the 29 people who had access to the “Asteroid” presentation refused to cooperate or invoked their Fifth Amendment right against self-incrimination (because misappropriation of trade secrets can be a crime), that would tell Apple a lot by itself.

The court also rather obliquely noted that while Apple cannot subpoena Nfox for O’Grady’s e-mail, that Nfox has every ability under the Stored Communications Act to turn over those e-mails with the consent of one of the parties to the communication. Applying the former logic (and reminding that we are not lawyers), it seems at least possible that Apple could require all 29 people who had access to the “Asteroid” presentation to sign a waiver consenting to Apple obtaining their communications with O’Grady from Nfox.

If any one of those 29 people is the leaker, then that person’s waiver allows Nfox to deliver the information to Apple whether O’Grady likes it or not, just as you can redistribute a copy of an e-mail you sent or received without the consent of the other party (ignoring copyright issues, since they wouldn’t come into play for messages that the leaker authored). If any refuse to sign a narrow, specific waiver that applies only to e-mail that those people might have sent to O’Grady through Nfox, then as the court said, that will tell Apple much.

If they all sign waivers and Nfox says that none of those people communicated with O’Grady, that may not tell Apple much. Nfox would only be able to examine the communications identified as from those people. If “Bob Smith” was the leaker and signed a waiver, but sent the information to O’Grady as

kewldude@gmail.com
, Nfox would not know that the address belongs to the person who signed the waiver unless the waiver includes that address. Apple could question its employees under penalty of perjury about every e-mail address they’ve used, but unless they find the right one to put on the waiver, Nfox can’t connect the dots.

Any of these actions might tell Apple what it wants to know long before the California Supreme Court would rule on any appeal. If the parties then took any remaining federal issue disputes to the U.S. Supreme Court, there’s absolutely no chance the court would hear the case before the October 2007 term, probably rendering a decision in the first half of 2008. Nonetheless, it’s difficult to imagine Apple not appealing the trade secrets and some of the shield questions to the California Supreme Court. The precedent is just too awful to let stand unchallenged, and only Apple has standing at present to challenge it.

Excerpted with permission from the May 31 issue of MWJ, published by MacJournals.com. Copyright 2006, GCSF Incorporated. For a free trial to MWJ, visit www.macjournals.com.

Subscribe to the Best of Macworld Newsletter

Comments