For those who don’t get why Gizmodo is in deep trouble, imagine if the iPhone prototype was a new model Honda about to be released. For the truly challenged, eat some breakfast first – it improves learning, at least in schoolchildren.

Take a look at the pictured car, above. Is there anything unusual about it? The picture comes from the UK online car site, Autoexpress, and is the sort you will frequently see in car magazines who wish to appraise their readers of new models about to hit the market. This is of keen interest to potential purchasers, as well as car manufacturing competitors in terms of both the nature of their models, as well as release dates.

Often, car journalists will plaster the front of magazines with scoops of the next very popular vehicle, and it’s always possible that news of an impending update may delay the purchase of current models by prospective buyers, or at least cause them to drive a much harder bargain for the current model. Apple followers know full well the times to delay a purchase of an Apple product at certain times of the year. In the past, this was around Macworld in January.

Why the car’s disguise then? Well, clearly, after the prototypes are driven around proprietary performance tracks designed to simulate a variety of motoring conditions, at some point, “real world” testing needs to take place in the sort of conditions purchasers will use the car, but incognito. The Australian outback is often used by car manufacturers to really give their cars a workout. Boeing too, in testing out their new aircraft for certification, will fly them into all manner of conditions world wide, as well as use the time for publicity purposes. It’s unfeasible to disguise the aircraft of course, and indeed mockups of what it will look like, inside and out, are known well in advance of firm orders. The analogy only goes so far. (The 747 model below is not some disguised next model, but a modified 747 to transport 787 parts)

But the car analogy should now be obvious to those following the Apple/Gizmodo/iPhone prototype story. Soon to be released products are literally road-tested. Drivers of test cars are highly skilled, perhaps have an engineering background, but they’re not lowly courier van drivers. They have special skills necessary for evaluating the car’s performance. But is there any doubt they are NOT in the upper echelons of management?

So let’s imagine for a moment the driver of the car, above, has taken it out for an evaluation drive. It’s clearly disguised so as not to reveal its final appearance, and in this case no effort is made to disguise the disguise, unlike the iPhone. For non-car watchers, its appearance might only be that of an unusual colour scheme and bonnet protector. For those who follow auto-manufacturing, the disguise is clear, and they might want to snap a few pictures with the car on the open road, and find an eager buyer, like an auto-paparazzi. No harm done, no laws broken, as long as no entry is unlawfully made to take pictures inside the car or under the hood. As it is, auto-journalists even camp out at test tracks hoping to get pictures of undisguised cars getting the full work out, and occasionally we see long-distance grainy shots on magazine covers, screaming “Scoop!” Take a look, below, at 2007 Autoexpress story of a new Jaguar model about to be released. It’s Spy vs Spy stuff! (Note too the effort of the magazine to protect the facial ID of the driver(s).)

Let’s continue to imagine our test driver pulls over and runs into a bar because he desperately needs a restroom. As he asks the bartender where to go, he inadvertently leaves his car keys, with car registration ID, on the counter. Coming out from the restroom, he passes by the bar’s huge TV playing the world series final and the game’s all even. Let’s add some zest to it by suggesting his team is in the final which captures his interest in a moment of supreme relaxation following his restroom distress. An hour later, still at the bar, his team wins, and he high-fives all the other bar customers. A very human moment of losing oneself in an exciting event, a little like the bar discovers it’s also your birthday and everyone joins in the celebrations.

Meanwhile, the car keys left on the bar near the entrance have been knocked to the ground accidentally, where another patron has picked them up. Let’s imagine for a moment the patron glances at the keys, and notes the car registration number. He looks through the bar window and matches car to keys. But it’s a most unusual looking car. Let’s now imagine the patron is something of a car afficionado and knows a disguised new model when he sees one. What to do?

Does he call out in the bar, “Hey anyone lose a set of keys?” or “Hey, who owns the funny looking car out there – I think these are your keys”. Or does he simply hand the keys to the bartender saying, “I found these on the floor”?

If we are to take the Gizmodo line, having identified the car as say a Honda (which has research facilities nearby), he instead rings Honda headquarters’ 800 number to report he has the keys to a some funny looking Honda, who, as secretive as Apple, has no idea about any research car out in the wild, but will get back to him anyway. Our key finding patron then goes to the car, uses the key to open it (perhaps it’s a new fangled electronic opening device too) and locates the driver’s wallet and driver’s license with picture ID on the front seat. So he knows now the identity of the driver.

But instead of going back inside the bar to locate the driver, he drives the car home, where he removes all the disguising devices, takes pictures, and emails various car magazines with a potential scoop. He caused no damage to the car, used the keys to start it, and drove it without breaking any road laws, such as speeding or going through a stop sign or a one-way street the wrong way. And he didn’t hot wire the car, but used the rightful key. (At this point, it should be dawning on some readers that he has in fact stolen the car, even if he used the right key, no?)

Meanwhile, our evaluation driver has been up and down the bar trying to retrace where he might have left his keys, hopeful that someone has handed them in. After an hour or so, he gives up, calls his boss at the Honda research centre, and using a new wireless GPS device, the car is immobilized. The GPS system is still to be finalised however, and can’t be used to locate the car. Honda security is called in to try and locate the car, rather than advise police about a missing experimental car which would see its disappearance turn into a media circus.

In the days that follow, the driver keeps ringing the bar to see if the keys have turned up, the car has been returned or if someone noticed the patron getting into the car. But soon enough, an edgy car review website announces they have all the goodies on Honda’s next Accord (one of the US’s best selling cars), and here are the teardown pictures of its insides and outsides. And they tell the world they paid $250,000 to obtain the car (even though it had been mooted to sell for about $30,000). Readers of course are entitled to ask why pay so much for a car that’s about to be released in a few months anyway, but the story is the scoop and resultant website hits, not the use of the car.

And that, dear reader, is what Gizmodo, Jason Chen, and the mystery iPhone finder did, on Gizmodo’s own admission.

So, should Honda do nothing, because following their written request having seen the website announcement, the auto magazine gave back the Honda, although perhaps not in quite the same condition they found it. I mean, no damage done; after all, you’ve got back your property, right? Wrong! Apart from the initial theft, and receiving stolen goods, there is the problem of publication of trade secrets. Apple, like Honda, has every right to inform the FBI, or in this case REACT, of the theft, whether or not it is part of a delegation to the FBI of manufacturers seeking to reduce the plundering of their IP and its selling to the highest bidder, which seems to have occurred in this case. There is no conflict of interest at all. It’s like saying the Police Commissioner should ask his or her force not to investigate a break in at their office where important legal documents have been taken, regarding an upcoming serious criminal trial.

That the auto magazine believes that it can get away with its receiving the car (and they were told it could no longer be driven, yet still organised to have it put on a flatloader and driven to their offices) because of journalist shield laws would be preposterous. They know it, any thinking person knows it, and sooner or later, the court system in California would make an official decision on it, as they will with Gizmodo.

Those that dismiss the story as Apple acting like a bully, or a waste of police resources because the police never helped much when their car was stolen, or that Apple is corrupting the journalism process as in this foolish Time blog article, have their heads firmly in places the sun don’t shine.

We’re talking here of a business worth millions if not billions of dollars (read, jobs with a small J) being thwarted by those who are willing to flout the law and think by being witty bloggers they are immune from prosecution.

This matter will only get more interesting in the next few weeks. Once the identity of the mystery key finder (that is, iPhone “finder”) is known, and the full story comes out, along with a few surprises to be sure, a lot of journalists and lawyers will have much omelette on their faces.

Watch and wait.

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40 responses to “For those who don’t get why Gizmodo is in deep trouble, imagine if the iPhone prototype was a new model Honda about to be released. For the truly challenged, eat some breakfast first – it improves learning, at least in schoolchildren.

  1. Unfortunately, many people are ethically and morally challenged. They refuse to admit that buying stolen property, no matter how they rationalize it or claim that Gizmodo did not know it was stolen, is still a crime in California. It is little wonder why one out of 10 Americans have ended up spending some time in jail.

  2. The story is from the wrong point of view. The person that found the car didn’t take the pictures, he drove it home and then put the damn thing for sale on craigslist. A buyer, having recognized it’s no ordinary car works out terms based on the sellers story that he did indeed “find” it and did in fact try to locate the owner.

    The person that is in trouble is the db that found the phone in the bar and sold it to Gizmodo. When I sell my old iPhone on ebay, do I need to show my original purchase receipt in order to prove that I did not in fact steal it? No.

    Story is from the wrong POV. Gizmodo is clean, the other guy is screwed.

    • Gizmodo is not clean. They are guilty of receiving stolen property – in fact, they bought stolen property. That is a felony.

  3. Excellent, very good analogy. The best that I have read yet.

  4. The reporter (or editor) should not be protected under the “shield” laws. Receiving stolen goods is a crime and I would prosecute to the fullest extent of the law. The flaw in Gizmodo’s logic is that they paid for stolen goods — therefore they are an accessory in a crime. What has happened to common sense and “do the right thing”.

  5. Christopher Fenger

    Spot-on analysis, Mr. Posen. We all like to root for “the little guy” over the corporate behemoth, which is what I think is driving some normally intelligent individuals to side with Gizmodo, but there can only be one outcome to this clear violation of the law and it isn’t going to favor either the thief at Gourmet Haus Staudt who absconded with the phone to start this fiasco, or Mr. Chen’s journalist cred.

  6. This article contains an abundance of common sense… you should be ashamed of yourself Les. If you read all of the articles and blogs about this issue you will see that common sense has no place in this whole Apple/Gizmodo debate.

  7. Gizmodo is on very weak ground with all of this. If they were so saintly, why did they pay anyone $5,000 for a product that they can get anywhere else for a few hundred dollars.

    The EFF, too, is way off base. I can’t believe that the various laws governing this matter are meant to be applied to instances involving theft. If that were so, then thieves would be in full swing, 24/7 — and the bloggers and other ‘journalists’ would be having a field day.

    It’s time to cut this type of behavior off at the knees.

  8. Good writing, well though out. Thanks for playing “Imagine”

    • @seacube I suppose since this is a Presentation blog, and I tell stories, sometimes the best way to inform those who don’t “see” is to create a more familiar and less controversial (ie, open to cognitive bias) analogy to make the main points clear, such that hopefully the conclusion is obvious (at least for the majority).

  9. It’s likely neither the finder nor Gizmodo stopped to think about what they were doing. A phone call to a lawyer would have put a halt to the whole thing.

    Had the finder given the iphone to Gizmodo with no money changing hands, at least he’d have an argument. But once payment enters the picture, he’s allowed greed to rule his actions. Same with Gizmodo, a scoop like this will attract more ads.

    Sorry, gentlemen, this is theft. Anyone who argues it’s not is probably the kind of person who thinks nothing of stealing software, music etc. It’s the work of other people, you don’t take it without either permission or payment.

  10. I should add – the people who side with the finder and Gizmodo in many cases will also be the ones who think that the Washington teenager who steals and crashes airplanes is Mister Cool. What will you think if he crashes one of his stolen planes into your home?

  11. Nice try. close but no cigar, Les.

    The law requires the finder of lost property to make a good faith effort to contact the owner: he did so, however minimly, when he reported the phone to apple customer service.

    But could he have made an EXTRA effort by having an apple employee at an applestore take possession of it – yes. Could he have reported it to the police, yes. Could he have posted a notice on craigslist, yes. Could he have turned it over to the bartender, no (third parties aren’t given any special exemptions).

    Conclusion: the finder did not steal anything in any substantial, common-sense meaning of the word (the hair-splitting onus of California civil law notwithstanding – whose criteria would never past muster in a common law jurisdiction). he was however an ethically low weasel for not going the extra mile

    (I once stumpled across a bug in a pbx at prominent silicon valley startup (a joint venture between IBM & apple) when tryng to leave a voicemail that allowed an interloper to listen to any message — after I made a preliminary assessment of the scope of the breach (which I determined from listening to the details of the messages: they weren’t just ‘call me’, they were pleading their case why the this well-funded company should even bother to talk to them as potential business partners). Once I realized that there was /extra-ordinarilly/ sensitive info in these voicemails, I was determined to alert the company; however I was in a catch-22 sInce it was obvious they were ignoring their voicemails, I strarted dialing random extentions until someone actually picked up their phone – and then I got them to transfer me to the president for whom I repeated the exploit by confetecing me back in on another line so he could hear the procedure/bug for himself. The president expressed his gratitude by letting me by-pass the queue in business development: an NDA was dispatched & I flew in for a meeting. Bonus. sweet. But the point is that I had a real appreciation of the value of commercial confidences (I could have spyed on this company right thru launch & sold this info as a “consultant” to any number of the compay’s competitors or partners). So I did the right thing. So when I pass judge ent on the finder in this case, i do so having been in his shoes).

    It is entirely plausible for hawker to maintain they didn’t (want to) know they the device was stolen – it arrived bricked with no way to trace its owner & it was sheathed in a camoflaguing case to make it seem ordinary upon first inflection.

    Was gawker acting unethically? — yes, they did not actually pay to buy the device itself: they paid money for exclusive access to possess information about the story while they examined in an effort to determine if it was genuinely an apple prototype (and thus the property of apple proper – as opposed to a fake belonging to some prankster).

    But that is a just a fig leaf — nonetheless, it meets the most minimal standards of the law, so gawker gets a pass too.

    Les offers a really good rebutal, but it just doesn’t fully address the technicalities involved.

    • @Zahadrun: I think the law goes further than merely contact the owner, it’s displaying an effort to return the article. My dog was once lost, I received a phone call to tell me he had been found, but no further information offered. It took 10 days to use my mobile carrier and the police to trace the call, and the police to demand the dog’s return from the caller or face charges of theft. The finder turned up at the police station with the dog the next day. I didn’t press charges in my glee to have him back. It could have turned out far worse. See http://bit.ly/alc599 for the fuller story

  12. Pretty tortured analogy!

    In any event, although I think that what the finder and Gizmodo did was sleazy, it doesn’t justify a police raid on Jason Chen’s house and taking all his equipment.

    That’s becoming too much like a police state for my tastes!

    • See my reply to @Zahudran for my own real world example of why Finders Keepers doesn’t work in the world of adults. The best way to consider if you’re in a police state is to imagine you leaving your own keys behind, and when you return you see your car being driven off. That moment, a patrol car turns the corner. What do you do? Thought so. Would you want the police to follow the car, and when it pulls into a driveway enter the property and make “enquiries” of the driver? Aha.

  13. I think this hits the nail in the head. People has been acting like kids in a kindergarten school yard all over the place. Even so call journalists, it’s incredible.
    Can’t wait to find out all the twists and turns going forward.

    • @viralk It’s what got me motivated to write this blog entry; the boneheadedness of smart people is always a thing of fascination to we psychologists!

  14. Excellent analogy and analysis!

  15. LONG tortured scenario to state that anybody who considers and angle other than yours — well — it’s okay to call them a child. In other words – that you are so above them.

    Now who is the child ?!!!!

    • @say what!!! Because so many are using the childlike “Finders Keepers” rule of ethical behaviour to follow this story. And we know children learn better after a good breakfast.
      Get it?

  16. This is a good article with some common sense unlike many I’ve read on the subject.

    —-
    I find it strange that some people think it’s ok that the thief did enough to locate the owner by phoning Apple.

    If you found a rolex watch in a bar do you phone rolex? Or would you tell the bar tender or give it to the police neither of which did the thief do. (The engineer contacted the bar numerous times to see if someone returned it.)

    Instead the thief phoned Apple (probably hoping for a reward). Gizmodo had also previously put a bounty for leaks on Apple equipment. The fact that the thief phoned Apple instead of contacting the bar or police and Gizmodo paid 5000 for it shows that Gizmodo’s defense that it had to open up the device to find out whether it was really an Apple device etc is bogus. Note also Gizmodo spent days teasing the story with photos first than the opening etc. The didn’t just open it and call Apple.

    I’ve read blogs and heard TV newscasters say ‘why is Apple making such a fuss’.

    Apple made over 5 billion in revenue from iPhones last quarter 40% if their total earnings. Now that people have seen the new phone many are delaying purchases to get the new model, competitors have a heads up etc. It can potentially cost Apple many millions $. Thousands of employees and stockholders of Apple are affected.

    As for why a police raid, police raid when damages to a victim is a fraction of those millions so why shouldn’t they act now?

    • @DaveW Ta. Just like Apple actively protecting its trademark product names, even if it means going after the “little guy”, Apple must also work and be seen working hard to protect its trade secrets. They’re worth billions, and the US economy – because it has so reduced its onshore manufacturing leaving it to Asia – so rides on IP held by companies such as Apple. Those who say Apple is acting like a bully and who live in the US are biting their noses off to spite their faces.

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  18. I don’t think those journalism shield laws (which I do NOT agree with) have exceptions for high dollar value products or big companies. And they apparently have some teeth re: inadmissibility of evidence and civil penalties.

    To carry your analogy further, if some police read a website that said someone had the stolen car in their garage then went to take it, collect evidence, and arrest the perp using a defective warrat, the perp would likely walk. Even murderers walk on such “technicalities.” Not saying that’s the moral or proper result, but I don’t think we can tell yet what will happen, either.

  19. Certainly will add a little spice to their lives.

  20. the “finder”/thief knew exactly who the lost iphone belongs to. this person took the time and effort to access and download info and pics from the engineer’s facebook and flickr. and then sold it to gizmodo along with the new iphone after apple remotely disabled and wiped the iphone clean of info. so yeah, best efforts to return the phone my butt.

    and then gizmodo, they were already warned by apple legal back in jan that offering a money prize for stealing trade secrets is illegal. obviously they figure they knew the law better and believe themselves invincible. chen and gizmodo are getting what they deserve.

  21. Everyone is taking this news story at face value. But so far, we have only heard the criminals side of the story. An investigation is warranted because this story may be more convoluted than what are assumed to be facts. First, Gary Powell may have conspired to lose the phone. I doubt this, but it’s possible. Gawker media offered over $100,000 for a stolen iPad protoype just months ago. The $5000 figure in this most recent transaction is possibly a cover-up for a much larger sum of cash.

     The middle man may have been needed to cover-up an outright transaction between an employee with hardware and a media outlet with cash. The story of middle man ‘finds’ prototype and knows who to approach for cash is a little fishy. Imagine if an employee knows he can make off with 100 grand and just needs a third party to find the ‘lost’ phone. Getting drunk on the birthday could be part of a plan conjured a year in advance. Again, I doubt this scenario represents the truth. But investigating the hard drives of the criminals may reveal even more convolutions.

     For example, maybe yet another third party ‘investor’ fronted the cash for the prototype.  

    We don’t even know if Gary Powell was authorized to have that prototype because Apple has not spoken about his role in this story. 

    Damages: Apple has experienced damages that are difficult to measure, but presumably large. The 4G iPhone will be their best selling phone ever. It reveals details that carriers will upgrade their networks to handle video chat. That may be an ATT trade secret. Parts suppliers were revealed maybe even inadvertantly which could damage Apple’s negotiating position with suppliers. Prototypes are inherently expensive to create and it looks like gizmodo dissasembled this one perhaps physically damaging it. That phone may have cost as much as $30,000 to make because it’s not off of a traditional production line. The engineers milling the aluminium in secrecy are paid well. Assuming Gary Powell’s made an honest mistake and that he was authorized to have the phone, these criminals may have cost him his job and his carrier at apple. He may have had valuable stock options that were vesting and gizmodo has just jeopardized his finances. 

    Gizmodo was as greedy, dumb, naive, and unethical as can be. Buying fenced goods then admitting to it on video is just foolish.

     If gizmodo had released video of gizmodo returning a black box containing the 4G iPhone to 1 infinite loop, that would have been the honorable news story. That video would have to be released after the 4G iPhone ships in July so as not to reveal that the phone was in Apple’s pipeline.

  22. Let me start by nothing that I thoroughly enjoyed this article.

    I think, however, that you have to allow for the huge variable of the value of the item in question. In the case of the stolen car, it is much more obvious to everyone that it is wrong, because it is worth a lot of money. (Let’s ignore the economists POV about the lost potential revenue by having the next iPhone scooped, for now). This is also apparent to the police; they will certainly help you find a stolen car, but will exhibit a lot less effort to help you recover a stolen cell phone (it’s also harder to hide a car…).

    What if you took the analogy in the other direction on the value scale? What do you do if you find a $20 bill on the floor of the bar? Do you walk around and ask if this is anyone’s $20? Do you still need to make an effort to return it to the owner, or do you just pocket it, since it’s only $20?

    • Keith, if you saw someone drop a $20 bill out of their pocket while retrieving their car keys, would you tell them? If the guy tries to pay for his drinks but finds his pocket empty (“Where’s that twenty I walked in with?”) do you say, “Mate, I think it fell out of your pocket. Here it is.”

      It’s very different than finding $20 on the street with no one around.

      Now I’ll tell you a true story. More than a decade ago, near a train station I frequent, someone found a stash of money buried in the ground. In excess of $100,000 cash. Did they take it home? No, they took it to the police station just around the corner (For my Aussie readers, Balaclava Station and St. Kilda Police Station.) Several months later, in court, the money was turned over to the person as their property because no one claimed it (your guess is as good as mine as to why someone would bury this cash). Funny thing was, someone else went to the same location and dug up a similar amount some time later! And did the same re handing it in to police. I think they had to wait six months, not ninety days, but don’t quote me.

      This iPhone was one that contained trade secrets and had to have a public value placed on it. It will be up to Apple to demonstrate any damages by the public revealing of its contents and it may not want its competitors to know any more of its financial details.

      • Interesting. There may have been extra motivations for turning in $100k, though. For example, it would be difficult to spend that amount of money without attracting attention (as I understand it, this is what money laundering is for ;-). Or maybe he didn’t want to be the target of some mob hit (I think there’s a movie plot that goes something like this.)

        Regardless, I think the issue hinges on whether or not the original owner, of the phone or the money, is present and can be readily identified. I’ve certainly pointed out to people that they have dropped cash while pulling out keys/phone/whatever, and have had others do the same for me.

        In the case of the iPhone prototype, I’ve read some different accounts of the particular night in question. It’s not clear, at least not to me, whether or not anyone saw the Apple engineer leave/drop/lose the phone.

        Again, I think the car analogy is flawed; people have an expectation that their cars will remain where they leave them. This is not true of any other personal property left out on the street, as far as I’m aware.

        I still think selling it to Gizmodo was a douche move, of course ;-)

  23. in my opinion your article is very nice and very helpful

  24. Pingback: In the Gizmodo/iPhone prototype story, the journalism shield law is the side salad; the main meal is the revelation of trade secrets and how they were obtained « Les Posen's Presentation Magic

  25. Yup,

    Thats still a crime over here too (UK)
    Car analogy is pretty flawed – but well thought out.

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