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March 12, 2005

Comments

Scote

Alex in Los Angeles wrote:
"But, I sure wish some of Dan's readers would stop confusing NDA with Trade Secret. Just because company X makes people sign an NDA does not mean they can now sue any journalist who publishes NDA covered information. That company better be sure it has a trade secret in question before it tries to sue the NY Times. In the same sense that the journalist has to show the story is in the public interest, a company should need to show that their secret is truly a trade secret."

This is wrong on a couple of points. One, the trade secret definition is extremely broad and can be interpreted to mean just about anything:

"d) "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."

Second, AinLA assumes that the purpose of the subpoenas is to file lawsuits under for illegally disseminating Trade Secrets. However, subpoenas against websites have often been used just to get the names of people to fire. While it may be within Apple's rights to fire an employee over this matter, that doesn't meant that it should be able to sift through the records of the News Site's ISP.


David Harris

In all the diatribes I've read never is the word honesty mentioned. The persons who revealed this information signed nondisclosure statements. They broke their word and tried to stab Apple in the back. This is dishonest, unethical, dishonorable, contemptible.....

Sorry, but my Appleworks thesaurus has run out of synonyms. Where's your sense of values folks? I certainly would not look to the press for any.

Herb

"The information you requested could be used to commit fraud. The information about Apple's upcoming product can't."

Sure it could. Take the iPod shuffle for example - have you seen the LuxPro 'Super Shuffle'? One could imagine that had the iPod's design been leaked earlier, LuxPro could have had their knock-off out to market before the iPod Shuffle was announced.

Or in the case of 'Asteroid' (which is what the ruling is about), the product hasn't even been *announced* yet, much less released which could result in damages.

" As many have pointed out, Apple has not done a thorough internal investigation first. '

So what is a thorough investigation? Would conducting a search of its own internal email and asking all employees + contractors to sign affidavits suffice?

"Secrecy is used to cover up a variety of ill"

Free speech is used to cause harm. Sometimes, in a free society, you have to take the good with the bad.

Jeff

I would like to hear anyone's comments on the following hypothetical scenario and how it is similar or dissimilar to the Apple lawsuit.

Let's say the criminals that recently stole the personal information of about 150,000 people from Choicepoint decided to give that information to some blogger and he published the information on his website. If you were one of the people whose personal information was made public by the blogger, would you feel it is your right to sue the blogger to reveal the source of your personal information? Or, would think that he should be able to invoke journalistic privileges to hide his sources?


Other jeff

Dan, why am I feeling this is an "all or nothing" issue with the press?

Where is the concept of "reasonable" here? Like the old yelling "fire" free speech limitation freedom of the press has it's limitations. Today it's the limits under liable and slander laws while tomorrow it may include the use of knowingly printing stolen information for NO OTHER REASON than to publish it.

Make no mistake there are no Bob Woodward's here looking for corruption or cooked books, but a few guys going out of their way to uncover and publish a specific company's trade secrets, and exploit them for personal or business gain.

These guys, who by the way are NOT bloggers, went out of their way to specifically induce, tempt, and feed of people's desire to be seen as "in the know" to break a their legal agreement with Apple. If the judge ruled your way NDA's and confidentiality contracts wouldn't be worth the paper they were printed on.

These people knew, and I think based upon his ruling the Judge agreed, they were getting confidential and sometimes stolen information. They did so not as journalists but some guys making a little cash on the sale of banner ads but more, like the guys that feed them the info, out of a desire to look like they are "in the know". These guys even knew they were doing damage to Apple and often admitted as much when they would say things like, "we've embargoed come details until we see the release get closer so not to...bla ...bla..."

I am all for a free press, and freedom of speech, but I am also for the implied "right of privacy" and if people can break business agreements, how long before my accountant can give my tax returns to a local newsperson and hide protected behind that newsperson's shield.

Anyway, I have a lot of respect for your opinion, but I hope your new venture doesn't blind you to what's right and wrong in some idealistic quest to protect what you see as the next great estate.

The Other Jeff

Scote

Herb, claiming the product release info could be used for fraud:

"Sure it could. Take the iPod shuffle for example - have you seen the LuxPro 'Super Shuffle'? One could imagine that had the iPod's design been leaked earlier, LuxPro could have had their knock-off out to market before the iPod Shuffle was announced."

Why yes, I have seen the Super Shuffle, and it is an interesting case. But it is not an example of fraud. Apple may have a trade dress, or design pattent lawsuit they can file against Luxpro; however, that kind of legal protection for IP requires *public* information and registration of the trade dress or patent--not secrecy.

Part of the problem with the iPod shuffle is that it doesn't represent any kind of technological innovation, so it is super easy to copy, even without any inside information. In fact, the Supper Shuffle has *more* features than the Apple iPod Shuffle because of Apple's deliberate policy of feature paucity. Apple decided not to use a number of features built-in to the off-the shelf chip they used as the Shuffle's guts, including WMV, DRM-WMV and FM-Radio support. However, Apples proprietary DRMed ACC iTunes Music Store format has me locked in to Apple players. Other than ACC support, the Supper Shuffle may be a superior product, in-spite of its copycat origins.

Chuck

What is wrong with a DNA? If you don't want to be privy to information, then don't sign it. Pretty straightforward to me. Once again, it assumes people are trustworthy and that is how the system will work. But when someone signs it and then decides, for whatever purpose, to break the agreement, then they should be punished (unless criminal activity is involved). This is elementary school logic here, but some of you want to pretend it's something to haggle over in a judge's chambers for posterity's sake. Please. Get over it. I think the Internet and open-source software has turned some people in the Tech community into Communists: people have a right to anything...for free! Free software, free data, free information. "As long as I can get my hands on it I can pass it around because it belongs to all of us." No thank you. The Wall fell years ago. I prfer Capitalism where privacy and profit can provide people a safe and secure income. Linus Torvald and his Linux fellows can trade free software all day long, but let's understand there is a difference when a company like Apple decides to protect its assets, no matter how THEY decide.

Chuck

Sorry about the typo above. Should have read "NDA."

Scote

"The Wall fell years ago."

And has been replaced by a new wall--one constructed by borderlines matrix of corporate and government collusion. This new, invisible wall treats corporations with more rights than individuals and protects corporate profits and business models as if the corporation is the public interest.

What is wrong with NDAs? If NDAs were only an occasional requirement, used sparingly, I'd say they were fine. But increasingly, companies require NDAs, Non-compete agreements and binding arbitration agreements. Companies can even fire you for drinking a competitors beer, *on your own time*!

I'm not saying that the NDAs in Apple's case are wrong, but the ability of Apple to go into the private records of a newsite to satisfy its corporate curiosity about who might have leaked the info is too much. Perhaps they should be allowed to just put Carnivore on the internet and search for any email that mentions "Apple" and "Asteroid?" Why not? After-all, the only way people could put those two words together is if someone broke an NDA...

Scote

"borderlines matrix" should read "a border-less matrix"

anon

Scote...

"Part of the problem with the iPod shuffle is that it doesn't represent any kind of technological innovation, so it is super easy to copy, even without any inside information."

Me...

Scote, you really don't know what you're talking about here. I can think of no Apple product that has not included components or technology that Apple has patented over the course of its development. Even their optical mouse ended up resulting in something like 30 patents over the course of its development, even though, from the outside, it seems like nothing unique.

Details such as the ball bearings that secure the cap to the USB jack, the battery technology, the software integration, the OS, even the buttons or the plastics could have included research and technology that previosly didn't exist and that is being patented/has been patented. Apple does patent the techbology they develop for their new devices prior to release. Doing so does not then make the final product or its relevant IP no longer a trade secret. It's one thing to patent a technology or a component and make that bit public. It's another thing entirely for someone to publish details on the product utilizing those components and technology. The product is what generates Apple's revenue.

The fact is that this leak resulted in concrete damages to APple's bottom line, and, in turn, to the value of my own investments as a stockholder.

In California, it is against the law to knowingly publish information that is a trade secret, precisely for this reason. Doing so defrauds the owner of the secret and, in this case, resulted in damages.

Apple has a right to prosecute (and an obligation to its stockholders to do so), and the only way to uphold this right is to demand that the journalists reveal their sources. These sources are not protected, according to the law. Simple as that.

You seem to have an attitude that corporations are inherently evil. This is irrational on several levels. Corporations are comprised of the "workers" you are so fond of, as well as more "workers" who hold a stake in the company. Our legal system is just as much obligated to protect this amalgamation of "workers" as it is to protect any single one of them.

Scote

"Scote, you really don't know what you're talking about here. I can think of no Apple product that has not included components or technology that Apple has patented over the course of its development. Even their optical mouse ended up resulting in something like 30 patents over the course of its development, even though, from the outside, it seems like nothing unique."

You point actually undermines your argument. The patented Apple technology is not harmed by being revealed, it is *patented*. A patent is legal protection an individual gets (the constitution patents cannot be awarded directly to corporations) by publicly registering all of the details of a novel invention with the Patent Office. Patents are the opposite of a trade secret. There is no such thing as a secret patent, and secret patent is, in fact, an oxymoron.

"The fact is that this leak resulted in concrete damages to APple's bottom line, and, in turn, to the value of my own investments as a stockholder"

The leak of Asteroid has not resulted in "concrete" damages. Name the exact, concrete damages, other than hypotheticals. Hypotheticals are the opposite of "concrete."

The California Trade Secrets Law is way too broad, as quoted earlier:
"d) "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."

This means that *any* information that a company has that could lower its stock value can be called a Trade Secret, whether that information is about projected sales, poor investments, defective products, illegal accounting. All of those things could be used by someone to drive the stock price up or down allowing " other persons [to] obtain economic value from its disclosure or use."

This broad language that comprises what can be a Trade Secret means that a corporation could legally sue any news enterprise over any internal information they report that could affect the stock price.

The Apple ruling is extremely bad for the ability of a free press to accurately report the news. This is why the rulings allowing for subpoenas need to be as few and infrequent as possible and only for major breaches of Trade Secret IP, like source code and schematics and such, not just about the release of some general information about an upcoming product. Apple is using police state level powers over a fairly minor breach.

"You seem to have an attitude that corporations are inherently evil. This is irrational on several levels. Corporations are comprised of the "workers" you are so fond of, as well as more "workers" who hold a stake in the company. Our legal system is just as much obligated to protect this amalgamation of "workers" as it is to protect any single one of them."

No, corporations are not inherently evil, they are inherently amoral. Ambrose Bierce described what a corporation is rather sucinctly:
"CORPORATION, n.
An ingenious device for obtaining individual profit without individual responsibility."

Yes publicly held corporations are made up of individuals, but those individuals are not the corporation. The corporation is a legal entity made to maximize shareholder profit and the best interests of the legal entity are not necessarily the best interests of the individuals who work there. For the most part, employees at a corporation are a commodity, to be bought at the lowest possible price.

Because corporations are inherently amoral, we need strong laws with big financial consequences to financially encourage corporations to act morally for the good of the public as well as the good of the individual company.

Owen

Scote...an NDA is effectively a contract granting access in return for an agreement not to betray private information. Journalists sign them every day, as do software designers, advertising agencies, government workers, researchers and many other occupations. It's a serious, legally binding document, whether you or anybody else thinks the protected information is worth the NDA.

The "Is a blogger a journalist" red herring isn't the question, nor is the right of Apple to fire, sue or otherwise punish violators of the NDA in their employ. The question the judge addressed was Apple's right to sue for disclosure of private data. His decision makes me nervous, but so does disrespect for anybody's rights, even those of an "amoral" company.

Dan, your petulant reaction to the decision...to demean a company and product you've lauded in the past...is childish and unworthy.

Scote

"The question the judge addressed was Apple's right to sue for disclosure of private data."

Except, in this case, the question is if Apple can subpoena information from news organizations *who are not parites* to the NDA and have not signed it. You may note that the judge didn't decide if the Apple news sites were legitimate news sites. That is part of the problem, he said that his ruling would apply to any news organization.

Because any and everything can be a "Trade Secret" under the overly broad definition of the Trade Secret law, the judge should have set the far bar higher for Apple's attempt to use the Apple news sites as its personal spy agency, to ferret out an *alleged* breach of an NDA--since we don't know who leaked the information we don't know that person even signed an NDA.

Mayuresh

Dan,

Your comment about not waiting to buy a Mac simply based on Jobs and Apple's obsessive nature with secrecy and their willingness to fight over what is rightfully theirs is IMHO misplaced.

I have great respect for what you are trying to do with journalism but the facts in this case are quite simple. Yes, the bloggers have rights under various laws and the US constitution, yes they are independent and have the right to express their opinions freely, but with rights comes responsibility.

I agree with Chuck above who has very well said that good journalism is transparent journalism.

These websites have knowingly breached trade secrets, period, and they should pay the price for it.

Mayuresh

Scote

"Yes, the bloggers have rights under various laws and the US constitution, yes they are independent and have the right to express their opinions freely, but with rights comes responsibility."

The right to free expression for journalists is null and void when any company can hang the possibility of ruinous litigation over the head of a News site for doing basic reporting. Apple is going on a fishing expedition. They don't know who the leaker is or even if the leak is by someone who has signed an NDA with them, so they have subpoenaed *multiple* website's ISPs for records because they don't know what they are looking for.

Why not add every blog that has covered the issue to the list? I've been rather strong in my opinion in support of the Apple news sites, so it is possible that I'm the mole; therefore, under your reasoning, Apple could sue Dan's blog, typepad and any related ISPs for the IP logs of every comment posted. And, since Dan is a technology journalist, he undoubtedly "knows something," so subpoena him, too. Granted, my example may seem a little extreme, but that is my point. Apple's subpoena's are extreme, too.

"These websites have knowingly breached trade secrets, period, and they should pay the price for it."

First off, you are making an accusation that could be considered libel. You don't know for a fact that any of the websites "knowingly" breached trade secrets--you are making an assumption and declaring it as fact. Not even the judge in the case claimed that the websites knowingly breached trade secrets--he very specifically did not comment on the merits of Apple's case. So, perhaps the websites should subpoena Dan's records so they can get your name and sue you for libel? Based on your standards of what it is ok to subpoena from a news site, your IP address would clearly qualify as a fair target.

So, what should the websites do? Under your proposed standards, Mayuresh, what is legitimate? Printing old Apple press releases, talking about old products? Do the Apple news sites have to ask their sources to only tell them things that are guaranteed to be false, so they can be sure they are not reporting "Trade Secrets?" With all of the speculation about Apple products some guesses are bound to be true, so should Apple be able to sue them for every correct guess?

Without the ability to talk about things companies don't want you to talk about, thre can be no critical news reporting about the tech industry, or industry in general.

Owen

"Without the ability to talk about things companies don't want you to talk about, thre can be no critical news reporting about the tech industry, or industry in general." Hogwash...first of all, journalists can use other sources and their own thought processes to speculate, analyze, research and opine to their heart's content. Secondly, the opinion doesn't address content, but sources.

As I said earlier, there are troubling aspects of the decision, to which point Dan and many contributors here have very eloquently referred. But taking the arguments to the all-or-nothing, sky-is-falling poles of the debate over access vs. privacy does nothing to advance either understanding or resolutions.

The Other Jeff

Just got to thinking, and not sure this has been asked, too many posts! ;-) Dan, have you ever knowingly violated an NDA? Would you have ever gone to Apple for a briefing and then turned around and published the info? Did you simply not take NDA meetings? If so were you ever approached with what you knew was "confidential" information and then publish it? Just wondering where you personally stand on the conduct apart from the law.

-The Other Jeff

Scote

Quote:
"Without the ability to talk about things companies don't want you to talk about, thre can be no critical news reporting about the tech industry, or industry in general." Hogwash...first of all, journalists can use other sources and their own thought processes to speculate, analyze, research and opine to their heart's content.
Unquote

And where will those magical "other sources" information come from? And what will the journalists "own thought processes" be based on? News organizations will be stuck looking from the out side, with no access to any real information about companies, only press releases and sanitized quarterly releases. This would be like Jacques Cousteau trying to do a documentary on octopi by filming only from dry land.

Every dirty dealing done by Enron and Worldcom was also potential trade secret (see my explanations above) and a potential lawsuit for any reporter brave enough to research these companies. Not every lead on these companies is going to pan out and every bit of information a reporter dug up could be another chance for these companies to sue over "Trade Secrets."

PS, to the "Other Jeff"
What you didn't ask Dan was anything that was analogous to the situation in question, where a reporter printed information about an upcoming product but the *reporter* had never signed an NDA with that company.

Owen

Much intelligence gathering...for military, market research, investment or old-fashioned news reporting purposes...comes from hard work, not having illegal data dropped in your lap. Interviews, publicly available data, SEC filings, product and market trends, gossip and unrestricted company sources are among the sources of data a competent researcher or reporter will explore and...here's the tough part...actually think about it to form conclusions.

I've worked with a lot of reporters over the years. The good ones are smart, informed and hard working; the bad ones are superficial, lazy and not very analytical.

Scote

"Much intelligence gathering...for military, market research, investment or old-fashioned news reporting purposes...comes from hard work, not having illegal data dropped in your lap. Interviews, publicly available data, SEC filings, product and market trends, gossip and unrestricted company sources are among the sources of data a competent researcher or reporter will explore and...here's the tough part...actually think about it to form conclusions."

Your summary seems a fair one with one gaping problem, with the over broad Trade Secrets law, "gossip and unrestricted company sources" are out. There is no such thing as an unrestricted company source now, because they need not specifically be under an NDA in order for a company to claim "Trade Secret" status on internal company information.

Viewing a company solely from the outside severely restricts good journalism, and could never have revealed the biggest business scandals. Your obvious remarks that good reporters "are smart, informed and hard working; the bad ones are superficial, lazy and not very analytical" has nothing to do with what a good reporter needs to do a story. Your implication that only lazy reporters would use inside sources is not borne out by examples of good journalism where reporters combine inside sources and with other information from outside to make a complete and insightful story.

Certainly, there will be some form of reporting that can continue under this threat of Trade Secrets litigation, but it will be an emasculated form of reporting, and much more domesticated and "business friendly."

Alex in  Los Angeles

Scote,

I agree with you.

My point about NDA's and Trade Secrets assumed that trade secrets must reach a high bar. If you are correct that trade secrets are practically anything the company wants, then I sure hope Apple or someone sues the NY Times as quickly as possible. Why? Because the NY Times would teach any business and this judge in CA a thing or two about journalism in America.

I also agree with you that CA's trade secret law is overly broad and needs to be challenged in court. Maybe Apple's Asteroid secret is a big deal and Apple deserves to pressure journalists over its leak, but I really think the burden of proof should be on Apple.

Most of Dan's readers seem to think journalists should be automatically sued for posting anything a business was trying to keep secret, however innocuous(interested public vs. public interest). In fact, many seem to feel that innocuous data (public curiosity) of seeming little public interest value makes for a stronger legal case against the journalist. IMHO, this is backwards in that the constitution protects Freedom of Speech not freedom to keep secrets. Secret keeping, even by your favorite corporate daddies, should be a more limited right than journalism.

In other words, if a journalist wants to gossip about business secrets, however pissed off the company and however protected the secret, a high burden of proof should be on the company to prove the information is not in the public interest and the data's secrecy trumps our freedom of the press. Of course, both rights are limited, and obstensibly, the Judge made this determination. I would hope we as the public don't just take this case as a cue to dump our freedom of the press in all similiar cases. Make the businesses work to limit our freedom of the press.

Cheers!

Alex in  Los Angeles

"Make the businesses work to limit our freedom of the press."

Well, that didn't come out right. I think I meant, "make businesses prove they deserve protection of their secret at the expense of freedom of the press."

However, this raises the thought of bullying lawsuits. See this story by Andrew Lark, at corante.com
http://www.corante.com/brandshift/archives/2005/03/13/apple_ruling_has_implications_for_brand_communicators.php

Alex in  Los Angeles

See also this CNET story:
http://news.com.com/Apple+lawsuit+Thinking+different/2010-1047_3-5611497.html?tag=nefd.ac

John

Scote: You should read the Neo articles at Macsimumnews.com. He uses everything but trade secrets to make all sorts of connections on future Apple products and services. I can even make reasoned guesses as to what is coming next without reading a protected internal Apple document. Can't you?

Alex: The Constitution also places a high value on protection of real (as in real-estate-type real) and personal property. Information is personal property. And secret information is personal property. There's plenty of information about you that would be illegal for any business, media, or the government to make public, except under special circumstances. In the same way, businesses and the government have secret information that would be illegal for anyone else to make public, except under particular circumstances, of which two are noted in the UTSA - illegal activity and legal evidence. Have you ever read Hernando de Soto's book called The Mystery of Capital? Then you might appreciate the real value of property.

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