There are plenty of legal ambiguities surrounding Gizmodo.com's purchase of an iPhone prototype misplaced by an Apple employee, an event that's made no end of news this past week. Here's a fresh one: If the phone is determined to be stolen property, what, exactly, is the worth of that property?
It's not a purely academic question. With a criminal investigation proceeding apace, the answer could determine what sort of charges, if any, employees of Gizmodo or the individual who sold them the device end up facing. (Wired.com identified that person on Thursday as 21-year-old Brian Hogan, who says he regrets not trying harder to return the phone before selling it.)
Under California's penal code, theft of property is a felony if the property is worth $400 or more. Less than that and it's petty theft, a misdemeanor.
What's the Cost of a Prototype?
You can buy an iPhone for a lot less than $400. But this, of course, was no ordinary iPhone -- it was a prototype of a fourth-generation iPhone, which won't be available to the public until June. Getting ahold of it cost Gizmodo owner Nick Denton $5,000. Apple could conceivably claim the cost to produce it was even more than that, since it presumably wasn't mass-produced.
"If charges get filed, the odds are overwhelming it'll be a felony," says Paul J. Wallin, founding partner of the California law firm Wallin & Klarich.
But Gawker Media didn't pay all that money to own a chunk of metal and plastic. What it wanted was the information to be had from examining the phone -- a fact it underscored by giving the device back to Apple once its examination was complete. If the phone was in working shape when Apple got it back -- a big "if," considering that Gizmodo's editors cracked it open and poked around inside -- that limits somewhat the restitution prosecutors could seek to secure for the company in the event of a conviction.
Trade Secrets, Marketing Campaign
That's only focusing on the immediate, material damages, however. The potential restitution could pile up fast were the prosecutor to claim that the exposure of trade secrets damaged Apple's competitiveness, or that the premature unveiling of the device undermined an expensive marketing campaign. A court isn't supposed to award restitution for such "speculative" damages, but ultimately it's up to the court to determine what is or isn't speculative.
"It's going to be up to the judge as to where it stops," says Wallin. "There's not a clear answer in the law because it's often left to the court's discretion. It's always, excuse my French, a pissing contest."
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