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3/18/2005
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Latest Online Scoops Thwart Apple's Bid For Secrecy

Apple's legal crusade to protect its trade secrets isn't working, so the parties involved are heading back to court April 12 to determine whether Apple's efforts to learn who's leaking information can be stopped by California's anti-SLAPP statute.

Apple Computer's legal crusade to protect its trade secrets isn't working. Despite a ruling in California's Santa Clara County Superior Court last week that affirmed Apple's right to force a publisher to disclose confidential sources, the leaks appear to be continuing.

AppleInsider.com this week said Apple was developing a two-button mouse and an iTunes subscription service. Think Secret this week said Apple had made a $3.6 million offer to acquire HipSolve Media, which makes E-commerce software that lets content owners distribute and sell music files online. Both of these online publications based their reports on anonymous sources.

Apple wants to know who's saying such things, as indicated by its December suit against several unnamed individuals who allegedly leaked information about unreleased products.

But the company also wants journalists to keep its secrets. Toward that end, Apple is also suing Harvard student Nicholas Ciarelli, who runs the Apple news site Think Secret under the name Nick dePlume. The company seeks to hold him financially liable for revelations about products prior to official announcements.

Ciarelli's attorney, Terry Gross of Gross & Belsky LLP, a San Francisco law firm that specializes in intellectual-property and media law, calls the case unprecedented. "They're suing a journalist and trying to hold him liable in damages for trade-secret misappropriation," he says. "They're trying to say [that] for reporting the news, you could be liable for millions of dollars."

A hearing scheduled for April 12 will determine whether Apple's complaint can be struck down under California's anti-SLAPP statute, which is intended to protect against lawsuits brought primarily to chill the valid exercise of constitutionally protected rights of petition and free speech.

Gross plans to offer two main lines of defense. The first, he says, is a First Amendment argument, relying on a long line of Supreme Court rulings stating that journalists can't be held liable for reporting the news if they obtain information lawfully.

The second line of defense questions whether news about Apple's products really reveals trade secrets. Trade secrets are generally defined as information that derives economic value from not being known and has been subject to reasonable efforts to maintain its secrecy.

"Apple can't even prove trade-secret misappropriate occurred here," Gross says, "because there's no commercial advantage in this information just a few days before issuing a press release. No competitor is going to be able to take this information and use it to their advantage. And Apple makes no claim that any competitor did do that."

But with regard to the case last week, Gary Weiss, managing partner of the Silicon Valley office of Orrick, Herrington & Sutcliffe LLP, says that the court clearly accepted Apple's claim that the leaked information qualified as a trade secret.

There's also the issue of whether scoops from Think Secret and similar tech sites are newsworthy. In the ruling last week, Judge James Kleinberg wrote, "An interested public is not the same as the public interest." Drawing a distinction between whistleblowers who disclose health and safety hazards and the online journalists in this case, he dismissed the latter as "doing nothing more than feeding the public's insatiable desire for information."

If indeed revelations about new products are newsworthy, then Think Secret may prevail. The Supreme Court ruling in Bartnicki v. Vopper supports a journalist's right to report information in the public interest, even if the journalist's source obtained that information illegally.

Gross contends Apple's actions demonstrate the news is newsworthy. "Apple challenged seven articles that were published by Think Secret," he says. "And following every one of them, within a matter of days or weeks, Apple issued a press release on exactly the same topic. So I don't see how they can make a claim that the information is not newsworthy. They're trumpeting it to the media as news."

Both Apple and George Riley, a partner in O'Melveny & Myers LLP, the firm representing Apple in the dispute, declined to comment for this story.

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