Apple lawsuit shutters rumor website
Nearly three years after Apple (AAPL) sued Think Secret — a rumor-gathering blog launched by a teenager that had become a thorn in Steve Jobs' side — the site has ceased publication as part of a settlement with the company.
The news was announced in a Think Secret press release issued Wednesday:
Apple and Think Secret have settled their lawsuit, reaching an agreement that results in a positive solution for both sides. As part of the confidential settlement, no sources were revealed and Think Secret will no longer be published. Nick Ciarelli, Think Secret's publisher, said "I'm pleased to have reached this amicable settlement, and will now be able to move forward with my college studies and broader journalistic pursuits." (link)
The case drew national attention because it raised important questions about press freedom, trade secrets and how First Amendment protections extend to blogs. It was triggered by a pair of Think Secret items that described the $499 Mac Mini and the iLife '05 software suite — two weeks before Jobs was to unveil them at Macworld.
Both posts have been removed from Think Secret's site, but at least one of them is still available on the Internet Archive here. It began:
EXCLUSIVE: Apple to drop sub-$500 Mac bomb at Expo
December 28, 2004 - With iPod-savvy Windows users clearly in its sights, Apple is expected to announce a bare bones, G4-based iMac without a display at Macworld Expo on January 11 that will retail for $499, highly reliable sources have confirmed to Think Secret.
Apple sued the site a week later, charging that it had illegally solicited Apple employees to violate confidentiality agreements. "Defendants' knowing misappropriation and disclosure of Apple's trade secrets constitutes a violation of California law and has caused irreparable harm to Apple," the suit alleged.
What the suit didn't mention was that "Nick dePlume," Think Secret's editor, was an undergraduate at Harvard. In fact, Nicholas Ciarelli was 13 when he launched the website from his parents' home in upstate New York and did much of his best reporting on Apple while he was still in high school.
The specter of Steve Jobs, a billionaire computer executive, seeking damages from a teenage Apple fan for stealing the thunder from a Macworld keynote address caught the eye of the national press, including the New York Times and the Washington Post. The Electronic Frontier Foundation helped arrange legal representation and Ciarelli was soon firing back at the company. As Think Secret reported:
"Apple's lawsuit is a affront to the First Amendment, and an attempt to use Apple's economic power to intimidate small journalists," [it] wrote in court filings seeking dismissal of the suit. "If a publication such as the New York Times had published such information, it would be called good journalism; Apple never would have considered a lawsuit." (link)
Apple's lawyers complained in particular about a box on Think Secret's front page headlined "Got Dirt?" that invited Apple insiders to submit anonymous tips. They claimed the solicitation was a violation of The Uniform Trade Secrets Act, adopted in one form or another by California and 44 other states.
Such statutes forbid you from acquiring or publishing without authorization information you know or have a reasonable basis to know is a trade secret. They are usually invoked when the secret that is revealed gives a competitor an advantage. In this case the primary effect was to spoil the surprise of a piece of classic Steve Jobs event marketing.
The First Amendment is often cited in defense of trade secret violations, but it hasn't always fared well in the courts.
Apple will sometimes give the press a preview of major product announcements, but it is usually done under nondisclosure agreements and only with handpicked outlets with a national reach. A few weeks before it released the iPhone, for example, it issued review units to the New York Times, the Wall Street Journal, Newsweek, and USA Today.
It's unlikely that Apple was able to collect much in the way of damages from Think Secret — which didn't have a lot of assets to begin with. Nor did the company succeed in prying the names of the blog's sources out of Ciarelli. But the suit sent a warning shot across the bow of dozens of similar rumor sites — and it did manage to shut down one of the originals.
Ciarelli, who became an editor at the Harvard Crimson and is scheduled to graduate this spring, may be forgiven if he wants to move on with his life. Cult of Mac has already offered him a job contributing to Wired News, but he probably has bigger things in mind.
I am not an Apple apologist, but the fact that CNN included Apple's letter about iPod improvements in its "Dumbest Moments in Business" list really makes me question the savvy of the people putting together that list. There are very good reasons for every company, not just Apple, to take this approach to user "suggestions." Why you ask? Suppose a company incorporates an upgrade to one of its products and it happens to to be one that was also suggested by some nutjob in one of these unsolicited letters. They could quickly find themselves in a dispute with said nutjob after s/he thinks that some remuneration is due for coming up with the idea in the first place. I'm sorry CNN, but this wasn't "dumb," just sound business practice. Unfortunately, news outlets don't seem to pick up on the smaller nuances anymore. This only made news because the correspondence was with a nine-year-old and oh god, how could a company be so thoughtless, etc… Notice the item doesn't mention if Apple knew anything about who the letter came from. Most likely, it looked like a nice enough letter very similar to the tons of other letters Apple gets with other suggestions, landed on somebody's desk in the legal department and got the form response that Apple sends to all.
ex ped: I had nothing to do with that list, but you should know that Fake Steve Jobs has already pointed out that the letter was actually written in 2006, not 2007, and for that reason alone should not have made the list. –Philip Elmer-DeWitt
Whether you hate or love Apple, the same attitidue from that company comes across both in the "Think Secrets" debacle as well as in this blurb from CNN's 101 Dumbest Moments in Business:
No. 51. Apple
One, two, three, four, we'll sue you if you send us more
Nine-year-old Shea O'Gorman sends a letter to Apple CEO Steve Jobs suggesting ideas for improving her beloved iPod Nano, including adding onscreen lyrics so people can sing along. She gets back a letter from Apple's legal counsel stating that the company doesn't accept unsolicited ideas and telling her not to send in any more.
"industrial espionage"? Get real. He didn't steal technical designs for their products, he just reported a rumored upcoming product announcement/pricepoint that turned out to be true. His sources may well be in violation of nondisclosure agreements or other contractual obligations, though.
I will admit that this is a slightly thorny area in terms of "trade secret" protection. In some cases leaking information like this could damage a company's marketing efforts (in particular, potential customers who believe a newer/cheaper product will be available soon may not want to buy one at the current prices.) It's the same sort of thing that comes up each year with Black Friday circulars being leaked early, etc. But it's not like he represented this as an official announcement from Apple; had he been completely off-base, nobody would have cared.
The problem here is that, when you come across information that *might* be considered a trade secret, there is no real way to know whether publishing it would get you in trouble in advance. Saying that journalists are not allowed to speculate about a company's future actions without approval from the company's PR department is not exactly an ideal solution, as in their opinion ANY information they did not explicitly give permission to be publicly disseminated should be considered a "trade secret". That would have a rather chilling effect on any sort of investigative journalism.
Apple and Steve Jobs in particular, should be ashamed of themselves. They are acting more like "1984" Big Brother all the time. Jobs line should be "Think Different–Think what we tell you." These people are raving fans of Apple and the only reason anyone pays any attention to them is that Apple is way too paranoid about giving information out.
Actually, what harm was done here to Apple? I bet they couldn't show 10 cents in revenue they didn't get because of this kid.
Minor correction: The way the article is worded, it looks like Apple sued a 16 year old rather than a 19 year old. FYI, Nick is 22 now.
And how do you know how many/what value the assets of ThinkSecret were? Assuming facts not in evidence, Your Honor. 
People love to throw the First Amendment around like it's the answer to everything. But plain and simple, this is industrial espionage. The kid got off lightly.
I didn't realize "using" the first amendment is punishable by lawsuits these days. It's a shame a kid has to go through these kinds of things if you ask me.
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