Apple vs. Think Secret

Mac rumor site Think Secret recently shutdown as part of an agreement with Apple. Apple sued Think Secret on January 5, 2005 after they published rumors about Apple’s plans to announce the iPod mini at the 2005 Macworld. Think Secret wasn’t the only rumor site at the time publishing rumors about Apple’s announcements, but Apple sued them to get the names of those that had leaked the information, and no one else, before actually making their announcments. This of course immediately lent credence to all of Think Secret’s claims, including claims that were wrong (such as price).

Many people have ventured opinions on the news, some claiming victory for Apple, some claiming Apple is a bully, others expressing disappointment in Nick Ciarelli (Think Secret’s publisher) for seemingly caving in to Apple and “damaging” the First Amendment.

I think both opinions are wrong. First, we don’t know the full extent of the agreement. All we know is Think Secret is shut down and Apple failed to get the names of those that disclosed information to Ciarelli. No information on if Ciarelli is prevented from stating another site, or working for another site. No information on if Apple paid Ciarelli any money.

I don’t think any damage was done to the First Amendment. This never went to court and no precendence setting decisions were rendered. You can’t cite agreements of this sort in a legal brief. So the First Amendment is where it was before the case began. The only precendence that might be claimed is that after 3 years a college student might get sick of a court case getting in the way of his studies.

Apple didn’t set any new claims for what is a trade secret. I’m not sure the information Ciarelli published could be considered a trade secret. The report simply stated: “Reliable sources inside and outside of Apple have confirmed Apple will announce the new pocket-size iPods in a number of capacities and in various colors, including stripes. Capacities will be 2 and 4GB — meaning users could store some 400 and 800 songs, respectively. Prices will start at around $100US”

David Zeiler at the Baltimore Sun believes Think Secret violated trade secret law because Ciarelli received information (citing the trade secret law) “knowing the same to have been stolen or appropriated, obtained, or converted without authorization”. The problem is that Zeiler doesn’t examine what a trade secret is. The law defines a trade secret as:

(3) the term "trade secret" means all forms and types of financial,business, scientific,
technical, economic, or engineering information,including patterns, plans, compilations,
program devices, formulas,designs, prototypes, methods, techniques, processes, procedures,
programs, or codes, whether tangible or intangible, and whether or howstored, compiled, or
memorialized physically, electronically,graphically, photographically, or in writing if?
    (A) the owner thereof has taken reasonable measures to keep suchinformation secret; and
    (B) the information derives independent economic value, actual orpotential, from not
        being generally known to, and not being readilyascertainable through proper means by,
        the public;

So is what Think Secret published a trade secret? I don’t think so. Part of it was finanical information, but that information was WRONG? So is wrong information a trade secret? I don’t think so, it might be harmful to Apple, but not a trade secret.

Part of it could be considered technical information, it mentions 2GB and 4GB sizes, but does this information “derive independent economic value, actual or potential, from not being generally known to…the public”?

Adam Engst contends that rumor information can be harmful to Apple by causing Apple customers to delay purchasing items. The problem is that close followers of Apple already KNOW Apple announces new products at Macworld and are waiting for that anyway. Personally I doubt those that aren’t close followers of Apple would be following Apple rumor sites, so I don’t see how they would even know to delay their purchase. At least not until Apple sued a rumor site and brought it to national attention.

Basically in the end I don’t think Apple or Ciarelli think they had an open and shut case and that is why they compromised. There are probably tangential reasons for the decisions on both sides for deciding to settle. I don’t see the First Amendment as being harmed in any way, it certainly has slowed down the flow of Apple rumors. Apple does come out looking like a bit of a bully, but it would’ve been even worse if they’d continued the law suit. I actually think Apple did the most harm to itself by filing the lawsuit to begin with, and then even worse by filing before Macworld commenced making everyone believe all the rumors Think Secret posted, including the wrong $100 price point.