Law Enforcement Reportedly Looking Into Circumstances of Lost Next-Generation iPhone

[eoblaed]

No, you wouldn't. You would put pictures and a long story about it here on MacRumors first. Or maybe you would just keep it hidden for a while and then later, when grass has grown over everything, sell it on eBay. Or just put it in a vitrine and have a fat grin on your face every time you see it.

But no. I do not believe that you would directly drive to One Infinite Loop. Nobody would.

The week 'Taken' (starring Liam Neeson) came out, my oldest daughter showed up for a visit with a bootlegged copy of the movie in hand. I take a strong stand against stealing music/movies/digital-content (just because something is easy to steal doesn't make it right -- also, I *want* to pay for what I use because I enjoy those things and want more to be made), but I was left with a tough choice: be a grade-A party pooper and refuse to allow the movie to be played in my house, or submit and be complicit in theft. A couple of minutes later, I thought of a solution and we all watched the movie she'd brought.

The next day, while shopping downtown with my wife, I had her pull the car over next to a theater. I got out, went up to the ticket booth and purchased tickets for the next showing of Taken; one for each of the people that saw the movie in my home the night before. They went in my pocket and stayed there until later that evening when I left them on the dining room table to elicit conversation.

Don't tell me I wouldn't have returned that prototype. It might be easy for others to look around the back side of their conscience with regards to things like this, but it's not so easy for me.

 

[Xian Zhu Xuande]

I hope Apple sues Gizmodo. I hope there is a surprise for us at WWDC.

Since this came out I've seen a handful of comments here and there from people who are resentful of Gizmodo for having detracted from Apple's surprise in announcing the next-generation iPhone. It sounds like that's your sentiment here as well, and perhaps I'm wrong. But to anybody thinking this way, don't browse a site called MacRumors.

 

[quagmire]

Of course no fanboys will get anything I just typed and will cite legal precedents, blah blah blah, like anyone gives a rats ass.

So if I steal your car because I don't give a rats ass about the law against stealing, you wouldn't have a problem with that?

 

[HyperZboy]

Actually, from California point of view, it absolutely makes sense to pursue the case to protect one of the most valuable employer and tax payer in the state.

Damage to Apple means damage to the state. Let's calculate

Assume the damage to Apple is 10,000 phones (my low estimate). Gross margin at 50%, selling price at $500 each (unsubsidized). That's $5 million damage to Apple in sales, $2.5 million lost income.

California business income tax rate is about 10%. So the state loses about 250K in income tax collection.

If 10% of the sales happen in California, that's about anothing 50K lost sales tax collection.

Total damage to the state: 300K.
Total damage to IRS: 600K (Apple's corporation income tax is probably around 25%)

You bet the state should pursue the case.

And how exactly Mr. Fanboy are you calculating these Willy Wonka Chocolate Factory numbers again?

LMAO

This is just too funny, no wonder Leno and Letterman are having a field day with this story.

You fanboys make for all the jokes! LOL

EARTH TO FANBOYS... APPLE WILL PROBABLY SELL MORE IPHONES FROM THIS!​

 

[BertyBoy]

The "guilty" rants still don't get it ....

If there has been a crime allegedly commited, and let's say that Apple has asked for a police report ...

Why wait over a month to file it ?

If the Apple engineer claims his phone has been stolen, as some here say he or his father has said, why wait over a month and until after you have the phone back, to report it ?

Again, I can see an HTC-paid defence lawyer ringing Apple on speakerphone in court, claiming to have found an iPhone, "it says iPhone on the back, I believe it may belong to your company or one of your employees, can you put me through to someone who can help ?", with a response, "I can't do anything without your AppleID / customer reference number sir. Goodbye and have a nice day".
Repeat, with the response "I'm sorry sir, which department does he work in ? Is there anything else I can help you with ?"
Repeat again, with the response "I'm sorry sir, I''ll check with my supervisor". Wait 5 minutes. "I'm afraid I can't help you today sir. Goodbye".

 

[Cartaphilus]

No one will be arrested for this "crime", and Apple won't sue either...what damages has Apple suffered as a result of this? what damages would they be seeking to recover? That is the basis of a Civil law suit, recovering damages...The only thing that could possibly happen is Apple will blackball Gizmodo from it's events...Surely the seller and Gizmodo could be charged with larceny, and recieving stolen goods respectively, but no one will be convicted of anything...why? BECAUSE APPLE LOST THE PHONE and attempts were made to return it before it was sold

I don't care if the jury award Apple a dollar, or if the finder and Gizmodo are found guilty and given suspended sentences, but people need to realize that you can't get away with taking something that doesn't belong to you, or buying things from someone who doesn't own what he's selling. If nothing else it may cause some of the more higher specific gravity posters on here to reconsider their concept of appropriate behavior.

 

[johnqh]

Where are you getting those numbers?

What numbers? Tax rate? Anyone who run a business would know the rough number.

Lost sales is anyone's guesstimate. Given that Apple's still 2 months before release, and they sell 8+ millions iPhones per quarter (~3 million per month), I would say 10,000 lost sales is a low estimate.

 

[gnasher729]

Since it was sold for $5,000, it is worth at least that much. Which is why I said "$5,000 or more." I was just pointing out that the lowest possible value you could assign to the phone ($5,000) is worth being investigated.

Its actual value is likely many, many times that amount.

No, the phone is worth maybe $300. What Gizmodo paid for was not the phone, but the opportunity to take photos of an iPhone prototype. If the seller had said "I'll keep the phone, but for $5000 I'll let you take as many photos as you want", Gizmodo would very likely have paid. If the seller had said "here is the phone, but you must sign a legally binding contract that you cannot tell anyone you've got it, so you can't make publish any photos", then Gizmodo wouldn't have paid anything.

 

[Scooterman1]

It looks better for Apple if they don't prosecute the guy, but are able to talk the D.A. into doing it. Saves Apple money, and doesn't get them negative press. That is, unless the investigation finds this to be a big publicity stunt on the part of Apple. Who knows..... the D.A. may never find the truth.

 

[whatever]

Please explain to me how someone losing an item, another finding it equates to theft.

Normally if you find something at a bar or a restaurant you turn it over to them. In most cases the person who lost the item will re-trace their steps which will lead them back to where they lost it.

By removing the iPhone from the bar the person starts to appear shady and then the fact that Gizmodo paid for an item which was owned by someone else...

 

[johnqh]

I have strong feelings that Gizmodo is lurking around here.

 

[Revelation78]

. I know right! If Apple wants somebody to blame, they only have to look at their drunk employee. He f@#$ed up.

The person who found the phone contacted Apple (who owned the device NOT the drunk employee). This is legally correct. The Engineer did NOT own the device.

Let me repeat this: Apple (the owner) said they it was not theirs.

So while you we got ethically merky with the $5000, not checking in at the bar, and everything else...the bottom line is this: Apple (the owner) turned the device away. When Apple said "oh no, it is ours afterall!," it was returned.

Better luck next time Apple!

If he was smart enough to realize it was an unreleased iPhone, he's smart enough to know that CS reps would have no clue about the device. He DID NOT do his due diligence to return the device - period.

This is not illegal, Apple were stupid enough to lose the device, the issue lies squarely with them. Legally the original finder tried to return the iPhone, with hindsight he could have followed the avenues opened up by the investigation as examples of how to return the phone but thats hindsight.

He rang apple and was fobbed of as the call centre doesn't have any power to do anything (Apples fault for having crap call centres they never inform of anything)

Apple deactivated the phone, ive found a few in my life, in bars, out side of work. Ive always used the phone to ring "Dad" or "Mum" in the contacts as thats the best way to get in contact with someone close to the owner, but if the phone is deactivated that stops that.

Apples faults, dont shoot the messanger.

The phone was not deactivated right away. In his own words he stated was viewed the Facebook page of Gray on the prototype iPhone. Obviously he could have used the then working iPhone to locate the party that lost it - he DID NOT, thus theft occurred.

That's a bit to wrap my head around (<3 laws), but I believe that since the iPhone was valued over $400, that constitutes grand theft. Inb4 "they're only $299.99!", that's with subsidy from AT&T.[/url]

Keep in mind, this was not a "retail" iPhone, it was a "prototype." The value of prototype units take into account R&D, I would not be surprised if Apple stated the value of the Prototype iPhone to be in excess of $1 Million USD.

The problem with this logic is the bolded phrase above. The "owner" was not the employee, but Apple, Inc. When the person who found the phone contacted Apple and tried to return the phone, AND WAS REFUSED by the owner, doesn't that confer ownership to the party who tried to return the phone? Thus, he was under no obligation to return the phone to the employee, the bar, or report the lost property to the police. The OWNER of the phone, Apple Inc., refused to take the phone back.

See my response to the quote earlier in this post. The Court of Law will not view his poor attempt at returning the iPhone as having satisfied the requirement to locate the rightful owner. Bottom line, he committed a felony and he should be charged accordingly.

When it comes to Gizmodo; if Gizmodo had full knowledge of his poor attempts and still purchased the iPhone prototype then they can be charged with a felony - receiving stolen property. I don't see Gizmodo getting charged, I do see them paying a fine.

 

[paric]

So if the individual picked up the phone and gave it to the bar owner it still would have been theft?

AT&T has an ad that says "Access to the internet makes us smarter".

They really need to spend some time here.

 

[kiljoy616]

Good. I hope they throw the book at Gizmodo.

A california and their crazy laws, what new. I remember my time in that State what a strange place.

 

[Cartaphilus]

. I know right! If Apple wants somebody to blame, they only have to look at their drunk employee. He f@#$ed up.

The person who found the phone contacted Apple (who owned the device NOT the drunk employee). This is legally correct. The Engineer did NOT own the device.

Let me repeat this: Apple (the owner) said they it was not theirs.

So while you we got ethically merky with the $5000, not checking in at the bar, and everything else...the bottom line is this: Apple (the owner) turned the device away. When Apple said "oh no, it is ours afterall!," it was returned.

Better luck next time Apple!

So I'm now convinced that some basic concepts of the legal system need to be taught in high school, and no one can graduate without passing a test on them. Theft is not a crime against ownership, it is a crime against possession. So if my company gives me a company car, and someone steals it, I am the only witness the state needs. And leaving your front door unlocked with a big sign on the lawn that says, "Valuable Jewels Inside" may be the height of stupidity, but it doesn't excuse a burglar who opens the door and takes the jewels.

This finder could have found many effective ways to return the property to Apple's employee or to Apple itself. Taking a photo of the back of it, and the code identifying it, and sending it to Apple's general counsel would have done the trick, as would simply leaving one's name and phone number with the management of the bar. Lobbing a phone call into AppleCare was some dummy's attempt to cover his backside, but that is so lame it would only hold water with a complete idiot. No offense intended.

 

[smiddlehurst]

From the same crowd that endlessly speculates & breaks down every supposed Best Buy inventory screen shot & NOW you are mad someone gave you a legit sneak peek two months early???? Give it a rest people. The engineer is a Apple employee= HE IS APPLE. APPLE LOST THE PHONE. APPLE IGNORED MULTIPLE REQUESTS TO RETURN THE DEVICE. APPLE NEEDS TO SHUT UP & GO BACK TO COUNTING THEIR MONEY.

No, they didn't ignore multiple requests. The ******* that found it deliberately chose to take the phone from the bar without reporting it to the bar's owners which would have resulted in it being returned to its rightful owner. He deliberately chose to call Apple's tech support line who (correctly based on the info they had) assumed it was a hoax instead of calling anyone at Apple who may have known what was going on. He chose not to e-mail well-known Apple address including the DIRECT LINE TO THE CEO. He didn't call Apple and ask to speak to the engineer he knew by name. He didn't leave a message on the facebook account he saw on the phone. He basically didn't make any effort beyond the absolute minimum to provide a basic legal defence and, in fact, went out of his way to steal the device instead of handing it in to either the place he found it or the local police.

As for Gizmodo I really hope Apple put them out of business. I HATE checkbook journalism at the best of times but the way they've handled themselves is just appalling. Worst of all though, they outed the poor guy who lost it for NO other reason than to get more mileage out of the story and throw him under the bus to try and cover their own ass. Seriously, what did releasing the guys name and photo mean to anyone? If it was a well known public figure like Jobs or Ives then maybe but a member of the rank and file should have damn well been off-limits. The fact they're trying to make his name into a meme is downright disgusting.

This has nothing to do with defending Apple (which, BTW, is stupid in and of itself, big corporations don't need defending by fanboys). It has EVERYTHING to do with what is right, both morally and in the eyes of the law. From what Gizmodo have freely admitted on their site they're in the wrong on both counts and deserve to feel the full force of law for that IMO.

 

[gnasher729]

Actually, from California point of view, it absolutely makes sense to pursue the case to protect one of the most valuable employer and tax payer in the state.

Damage to Apple means damage to the state. Let's calculate

Assume the damage to Apple is 10,000 phones in sales (my low estimate). Gross margin at 50%, selling price at $500 each (unsubsidized). That's $5 million damage to Apple in sales, $2.5 million lost income.

California business income tax rate is about 10%. So the state loses about 250K in income tax collection.

If 10% of the sales happen in California, that's about anothing 50K lost sales tax collection.

Total damage to the state: 300K.
Total damage to IRS: 600K (Apple's federal corporation income tax is probably around 25%)

You bet the state should pursue the case.

It doesn't matter how much damage, what matters is how much damage was caused because of illegal actions. The employee initially lost his phone. Leaving it in the bar was his fault and nobody else's. That means Apple didn't take enough care to keep its trade secret covered. And that's the thing about trade secrets; if you don't keep things secret, they lose their status as trade secrets. As soon as the phone was left in the bar, it wasn't a trade secret anymore.

It was at this point completely legal to take photos of the phone. If these photos cause damage to Apple, as long as they are taken legally, that is just tough. On the other hand, if the phone was pulled out of the employees pocket, then it _was_ still a trade secret, and all the photos would have been illegal, and Gizmodo would in fact be liable for all damage caused.

Keep in mind, this was not a "retail" iPhone, it was a "prototype." The value of prototype units take into account R&D, I would not be surprised if Apple stated the value of the Prototype iPhone to be in excess of $1 Million USD.

Wrong. Apple didn't lose any of its R&D. The value would be the cost of replacing it (in a timely manner), so that would be the cost of building another prototype. That may be a bit more than a normal phone because some person spends a day putting the parts together instead of taking a phone off the production line, but that adds at most a few hundred dollars. Apple may have lost its trade secret, but that wasn't lost because the finder kept the phone, it was lost when the phone was carelessly left in a place where anyone could pick it up.

 

[kiljoy616]

It looks better for Apple if they don't prosecute the guy, but are able to talk the D.A. into doing it. Saves Apple money, and doesn't get them negative press. That is, unless the investigation finds this to be a big publicity stunt on the part of Apple. Who knows..... the D.A. may never find the truth.

Between Steve paranoia and mad that he is not going to get his claps when he introduces the phone, and lots of bored lawyers, nothing new. They could have just tossed this one to internal failure, but not something Apple can get over, I can imagine the amount of pacing on Steve side.

As for saving money, this is rich kid games now, money has nothing to do with this.

Now he has to come up with something else to get people excited. I for one am glad I saw the new phone, I am actually more excited than if I had not, that unlike before this time I will getting it as soon as it come out, if I did not see it I would not even care until it actually came out.

Oh steve relax its not good for your heath to get so worked up.

 

[john789]

Good. I hope they throw the book at Gizmodo.

Hey......why boycott google??

 

[ddTaylor]

Yup. And that is why I was saying that I think Gizmodo will probably skate free. However, the guy that sold the phone is basically royally screwed.

Why do you say that? The phone was NOT HIS but the property of Apple. According to the posts and the 'finder' of the phone he tried to return the item to Apple but they declined. He made effort to return the phone to the rightful owner of the phone and NOT the keeper of the phone in the engineer. He was simply a keeper and tester and NOT the owner - so no need to return the phone to him was needed or required.

D

 

[UnseenLlama]

AT&T has an ad that says "Access to the internet makes us smarter".

They really need to spend some time here.

Taken out of context. You should have included both quote and reply. Andy was just making a point.

 

[Art Mark]

ugh...

Yes, why don't you personally decide how to spend taxes. It's the duty of law enforcement to investigate anything that may in fact be criminal. In the future we can have the DA call you and see if you feel it's an appropriate way to spend tax dollars.

Here we go again, way to go spending tax and resources on cr@p that won't solve or lead to anything but ice-cream news.

 

[trrosen]

I'm betting we can ad multiple counts of tax evasion to the sellers rap sheet I'm betting he will not pay CA its sales tax or declare his capital gains on his income tax. Gizmodo also is liable for not paying CA sales tax.

 

[johnqh]

It doesn't matter how much damage, what matters is how much damage was caused because of illegal actions. The employee initially lost his phone. Leaving it in the bar was his fault and nobody else's. That means Apple didn't take enough care to keep its trade secret covered. And that's the thing about trade secrets; if you don't keep things secret, they lose their status as trade secrets. As soon as the phone was left in the bar, it wasn't a trade secret anymore.

It was at this point completely legal to take photos of the phone. If these photos cause damage to Apple, as long as they are taken legally, that is just tough. On the other hand, if the phone was pulled out of the employees pocket, then it _was_ still a trade secret, and all the photos would have been illegal, and Gizmodo would in fact be liable for all damage caused.

My response was about whether it makes sense for the cops to use tax payers' money to pursue the case.

The other part (whether it is legal) has been covered multiple times. Obviously, the cops think it is not legal, and I have the feelings the DA, judge and jury wont either.

 

[*LTD*]

From the Horny One:

http://macalope.com/

Isn’t that the whole point?
April 23, 2010 by The Macalope
Lost iPhone prototype spurs police probe (tip o’ the antlers to Daring Fireball)

Any prosecution would be complicated because of the First Amendment’s guarantee of freedom of the press: the U.S. Supreme Court ruled in 2001 that confidential information leaked to a news organization could be legally broadcast, although that case did not deal with physical property and the radio station did not pay its source.

"The Macalope’s no lawyer (YOU’VE BEEN WARNED), but isn’t that what makes it complete uncomplicated? There’s no damage to the public good by publishing the information — indeed, the public good is often served in exactly this way by whistleblowers. But there is damage to the public good by making a market for stolen proprietary information. At least in the Macalope’s opinion. The law may state otherwise."