Apple is famously secret about the new features coming in its unannounced products. As a result, there is always a lot of speculation about what is coming in its next generation products and a lot of (free) publicity for Apple when the product is finally announced, especially when Steve Jobs himself unveils the new product. For example, everyone expects a new iPhone to be unveiled by Apple this summer, perhaps in late June, so normally we would expect a lot of speculation for the next two months, followed by the big reveal, followed by a ton of buzz and excitement. Presumably, the end result would be a boost in sales of the next generation iPhone.
For this sequence to work best, Apple needs to keep the details of a new device secret. It is difficult to generate buzz when people already know what is coming. However, this past Saturday, Engadget posted blurry photographs of what it claimed to be the next generation of the Apple iPhone. And then yesterday, Gizmodo revealed that it actually had the device in question because it paid $5,000 to a person who picked it up in a bar after an Apple employee mistakenly forgot the device on a bar stool.
The story that has unfolded over the last 48+ hours is fascinating, as reflected in the following:
- Original Engadget story on Saturday with blurry pictures purporting to show the next generation iPhone.
- Followup Engadget story on Sunday asserting that the pictures are real.
- Monday morning post on Gizmodo revealing that the site had acquired the device, including video and photos of the device, and listing the new hardware features such as a camera on the front (presumably for video chat), a flash next to the camera on the back, a possible secondary mic on the top of the device for noise cancellation, split buttons for volume, and improved display, a flat back made of glass or ceramic, a larger battery and a more squared off design.
- Monday morning tweet by Nilay Patel, an attorney who is an editor at Engadget, stating that “in California, the
finder of a lost item is required to tell the police and turn it over
to rightful owner.” Patel subsequently tweeted that he was referring to Cal. Civ. Code § 2080. - Monday afternoon tweet from Nick Denton, head of Gizmodo’s parent company Gawker, confirming that Gizmodo had paid for the device.
- Monday night post on Gizmodo identifying the Apple employee who they assert lost the device and the alleged details on how it was left in a bar on a bar stool by mistake.
- Monday night AP story saying that Gizmodo paid $5,000 for the device.
- Monday night online New York Times story (printed this morning on page B1 of the newspaper) outlining the sequence of events.
- Late Monday night post on Gizmodo by Brian Lam stating that the Apple had called during the day to ask for the device back, Gizmodo responded it wanted a formal demand [in other words, something that Gizmodo could publish on its website], and that in response Apple’s Senior VP and General Counsel Bruce Sewell sent a formal demand letter. Note that Brian Lam says in his reply to Apple: “Just so you know, we didn’t know this was stolen when we bought it.” Stolen? By the way, if you want to know more about Bruce Sewell, I posted about him last September when Apple hired him as its new general counsel.
[UPDATE: This is an interesting post by Ian Betteridge, who is not an attorney, about the potential civil and criminal liability of Gizmodo and the person who the site paid $5,000. Link via Daring Fireball.]
Thus, it appears that the device that Gizmodo asserts was left in a bar on March 18, 2010 is indeed Apple’s property. Of course, this doesn’t necessarily mean that the device is exactly what Apple will reveal this summer. It could be just one of several possible prototypes with some features that will not be included and missing other features that will be included. One can only speculate. But whether or not the device itself is what we will see this summer, I agree with John Gruber who noted on his Daring Fireball website that “the story behind this unit is almost certainly more interesting than the device itself. And the device
is fascinating.”
And if the device really was mistakenly left in a bar by an Apple employee as Gizmodo asserts (although its latest post does say “stolen”), I feel bad for the Apple employee who made that mistake. We’ve all had moments in our life when we wish we could go back and change just one thing that we did that causes a big fallout. This would be one of those moments.
From a legal standpoint what are people’s view of the mislaid property/receiving stolen property issues?
I see a potential that Apple will go after the finder and Gizmodo under the respective theories at the least.
Its inherently clear that the finder converted it to his own use taking it home and deprived the true owner of their property (as well as didnt turn it over to the premises owner).
Its also clear from the facts that Gizmodo purchased the device knowing how it was obtained.
At least under the common law theories it all seems to fit relatively nicely. I dont know much about the trade secret area, but maybe some potential liability for exposing confidential trade secrets?
Do we really believe that the anonymous finder called little known Gizmodo, instead of Apple? Who would even know how to contact Gizmodo, and if the “finder” knew this, why wouldn’t he also be techie enough to examine the thing and tweet/blog about it himself? This was a guerilla publicity stunt, pure and simple.
[Jeff responds: I strongly disagree that this was an Apple publicity stunt. First, Engadget has said that they were also offered the device for a fee, so the finder of the “lost” iPhone shopped the device around to try to get the best deal. Anyone can figure out how to contact Engadget and Gizmodo — they have contact info right there on the sites. If the finder had posted it to his own website, he wouldn’t be able to stay anonymous and wouldn’t get much money through ads etc., whereas a site like Gizmodo can get millions of page hits and lots of ad revenue. By taking $5,000 he stood to gain a lot more than he would be posting it himself.
Second, Apple doesn’t do publicity stunts like this. They keep things quiet until they make a big announcement. Indeed, Apple would gain nothing from a stunt like this because the premature release of product details could only cause some people to delay a purchase of an iPhone (something often called the Osborne effect) and has the additional bad result of taking away some of the spark when the next iPhone is announced. The only thing that Apple does from a pre-release standpoint is give review units to a few key reporters like Walt Mossberg, David Pogue, etc. subject to an embargo to ensure that there is good day-of-announcement coverage by key media outlets. I know that I often say that anything is possible, but in this case I really think that there is zero chance that this was an Apple publicity stunt.]
Why tweet/blog about it when you can make a buck? Its not such a stretch to believe.
And plenty of people know that things like this bring big bucks to the media, just like pics of celebrities bring big bucks just for their media value.
Its not such a stretch that ordinary people read tech blogs like Engadget and Gizmodo.
Perhaps. But the fact remains that this “accident” has garnered huge publicity. I knew about the pending release of a new device, so it didn’t seem that huge to me at first. But others, including my wife and a law professor friend, had no idea. Neither of them have ever heard of Gizmodo, but both now know I will be getting a new iPhone in June! Point being if you step back from the insider’s point of view, past the interested onlooker’s point of view to the REST of the cell phone world, It was a huge media coup.
[Jeff responds: Fair point, but I still disagree. Here’s why. Right now, people like your wife and your friend know about a product that won’t be on sale for months. They can’t do anything with this knowledge, except stop buying current iPhones. And when the new iPhone does come out, the “new” features will, after the leak, seem like “old news.” Had this leak not happened, Apple would have made its announcement this Summer and — if history serves as a guide — there would have been widespread media coverage and excitement. So instead of hearing about it today, your wife and friend would hear about it in June/July when they have the ability to actually go out and buy the phone. It is not a huge media coup to cause the world to (1) stop buying your currently available products and (2) dampen the excitement and buzz that could lead to a sale when the product eventually is available. I fully understand your point of view, and of course the traditional wisdom is that any publicity is good publicity, but I believe that Apple understands the difference between mere good publicity and great publicity. Any good publicity that it got from this leak is not as beneficial to sales as the great publicity that it would have gotten had the new features of the next phone remained secret until the phone is actually available. This is why Apple only preannounces hardware when it is a new type of product and therefore will not cannibalize existing Apple sales. Examples include the preannouncements of the original iMac, the original iPod, the original AppleTV and the original iPhone.]