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Monday, March 14, 2005
Apple Wins Trade Secrets Legal Dispute

A California judge on Friday ruled that three independent online reporters may have to divulge confidential sources in a lawsuit brought by Apple Computer Inc., ruling that there are no legal protections for those who publish a company's trade secrets.

Apple sued 25 employees who allegedly leaked confidential product information to three Web publishers. The Cupertino-based company said the leaks violated nondisclosure agreements and California's Uniform Trade Secrets Act. Company attorneys demanded that the reporters identify their sources. The reporters sought a protective order against the subpoenas, saying that identifying sources would create a "chilling effect" that could erode the media's ability to report in the public's interest.

But Santa Clara County Superior Court Judge James Kleinberg ruled in Apple's favor, saying that reporters who published "stolen property" weren't entitled to protections.

"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," Kleinberg wrote. "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."

Free speech advocates and attorneys for the reporters criticized the ruling, insisting that all journalists should enjoy the same legal protections as reporters in mainstream newsrooms. Among those are protections afforded under California's "shield" law, which is meant to protect journalists and encourage the publication of information in the public's interest.

"This opinion should be concerning to reporters of all stripes, especially those who report in the financial or trade press and are routinely reporting about companies and their products," said Electronic Frontier Foundation attorney Kurt Opsahl, who represented the reporters.

He said the trio would appeal the judge's ruling.

Apple spokesman Steve Dowling said the ruling affirmed the company's view that "there is no license conferred on anyone to violate valid criminal laws."

The case has been widely watched in the fast-growing world of Web logs - or blogs, Web sites that contain articles or diary entries and that recently have propelled stories into the mainstream.

Kleinberg, however, ruled that no one has the right to publish trade secrets that only could have been provided by someone breaking the law.

"The journalist's privilege is not absolute," Kleinberg wrote. "For example, journalists cannot refuse to disclose information when it relates to a crime."

In December, Apple sued several unnamed individuals, called "Does," who leaked specifications about a product code-named "Asteroid" to Monish Bhatia, Jason O'Grady and another person who writes under the pseudonym Kasper Jade. Their articles appeared in the online publications Apple Insider and PowerPage.

In a court hearing last week, Apple attorneys said that Bhatia, O'Grady and Jade weren't necessarily journalists - merely people who disseminated product releases and other data, adding little analysis or journalistic context.

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