Apple demands missing iPhone's return

Has further legal options, including federal espionage act, says attorney

Apple confirmed that the next-generation iPhone obtained by a technology blog is the company's, and it has asked for it back.

In a letter yesterday to Gizmodo, the site that paid $5,000 for the iPhone prototype, Bruce Sewell, Apple's general counsel, requested that the smartphone be returned.

"It has come to our attention that Gizmodo is currently in possession of a device that belongs to Apple," wrote Sewell in the three-sentence letter. "This letter constitutes a formal request that you return the device to Apple. Please let me know where to pick up the unit."

Gizmodo's editorial director, Brian Lam, who received Sewell's letter, said the iPhone would be returned. He also acknowledged that the device, at least legally, had been stolen, not lost. "Just so you know, we didn't know this was stolen [as they might have claimed. meaning, real and truly from Apple. It was found, and to be of unproven origin] when we bought it," Lam said in the reply to Sewell posted on Gizmodo.

Yesterday, Gizmodo claimed that the iPhone had been left in a Redwood City, Calif., bar by an Apple software engineer in mid-March. According to Gizmodo's account , the iPhone had been taken by a bar patron, who tried to return it to Apple but hit dead ends when he contacted the company.

Gizmodo paid the bar patron $5,000 for the iPhone, then took a series of photographs, wrote up its findings and concluded that the device was Apple's next-generation smartphone.

An Apple iPhone repair and tear-down expert yesterday judged the errant iPhone to be the "real deal" based on apparent fit-and-finish of the device and the short time between now and the expected June or July launch of the upgraded phone.

Gizmodo noted the device's new industrial-style design and several other new features, including a front-facing camera, an improved back-facing camera, a camera flash, a higher-resolution screen and a larger battery than previous models.

"If I was advising Apple, I'd tell them to move on, and thank you for the publicity," said Terry Church, an intellectual property attorney at Morgan Miller Blair in Walnut Creek, Calif. "Apple's not really been harmed by it, as long as Gizmodo hasn't delivered the device to a testing lab and torn it apart to look at the designs inside."

Gizmodo published a series of photographs of the iPhone's exterior, but only one of its interior; the latter did not reveal, as traditional tear-downs do, the provenance of the chips and other components on the device's logic board.

Even so, Apple has legal options if it wants to take on Gizmodo, said Church. "Gizmodo may well have known or suspected it was stolen, and if so, there's a question of, what is their obligation?" he said. "Their lawyers should have told them to give it back. The law doesn't want to set up a mechanism whereby someone can stick their head in the sand and say they didn't know something was stolen property."

In fact, Church continued, Apple could argue that Gizmodo violated the Economic Espionage Act, a statute that makes misappropriation of trade secrets a federal crime. "The act says you can't go snoop around your competitors," said Church. "So if someone gets hold of something, like this iPhone, and knows it's stolen, what's the difference between that and breaking into a lab? An argument could be made that something like this is in violation [of the act]."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

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