Monday, April 26th, 2010

The Missing iPhone

This is a fairly long story, but I'll try to sum it up. Apple was working on the next generation iPhone, and during testing, they allow a small number of employees to field test these prototypes outside the Apple campus. This is necessary for a number of reasons, and they have done this quite a bit in the past.

In March, an Apple employee became separated from his iPhone prototype while at a bar. Person B obtained the phone, made very little effort to return the phone to its rightful owner and then sold the phone to an online blog, Gizmodo, for $5,000. Apple, realizing the phone was lost, remotely disabled the phone, rendering it useless, before Gizmodo got their hands on it.

Gizmodo disassembled the phone, taking lots of photos in the process. They published all their photos and findings online one week ago. Read the whole story here.

Gizmodo ALSO published the name and photos of the Apple employee who lost the phone. They obtained this information from Person B who sold them the phone. Person B claimed that the phone was completely operational when he obtained it, and through the Facebook app, he was able to determine the identity of the phone's owner.

Apple then contacted Gizmodo, asking for the phone back. Gizmodo returned the phone.

This kind of winded down in the middle of last week, and things were quiet for a little while. The tech community was unsure of what would happen next, and there were a LOT of unanswered questions:

1) Was the phone originally lost or stolen?
2) Did Person B actually try and return the phone to the rightful owner?
3) What is the identity of Person B?
4) Would Apple contact the police, hoping for criminal charges to be pressed against Gizmodo (really their parent company, Gawker Media)?
5) Would Apple pursue a lawsuit for publishing trade secrets online?
6) Is the iPhone prototype really the next iPhone?
7) Is this real, or could it be a publicity stunt?
8) Would Apple just ignore this whole thing, hoping it would go away?

I understand to a lot of people, this is just a phone, and it's no big deal. Move on. But this is a unique situation that has implications far beyond the possible features of the next iPhone. What is the fine line between lost and stolen property? What sort of protection (if any) does an online journalist have when publishing trade secrets? What will karma do to the online journalist who decided it was ethical to publish the Apple employee's name? How would Apple handle this situation, knowing their legendary insistence on secrecy of unreleased products?

Today we learned that police raided the house of the Gizmodo journalist who broke the story, seizing several computers, his iPad and a bunch of other stuff. He wasn't home at the time, but he arrived a few hours into the search. Yikes.

Last week I wasn't totally sure how I felt about the whole chain of events. I felt that Person B held key pieces of information that are needed to complete the puzzle. But Gizmodo lost my support when they published the identity of the Apple employee whose phone was lost. For all we know, the phone was stolen. The police apparently agree with that assumption, seeing how their search warrant was granted based on a felony being committed (purchasing stolen goods).

I don't place any blame on Apple or their employee for anything at this point. The employee either lost the phone or had it stolen - both of which I can't say wouldn't happen to me. Apple has not commented on this publicly, we don't know anything about the employment status of the guy who lost the phone (I hope he keeps his job), and we don't know if Apple is going to press charges. I expect they will press charges at some point, and it will be interesting to see how that unfolds.

Anyway, that's a long blog about stuff most people could care less about. But it's a steamy romance novel for techies, and I can't wait to see what happens next.

And the new iPhone design? It's cool. I'm happy with mine, but it's neat to see what they're working on.


24 Comments
billpearch
I know it's not quite the same situation, but it reminds of when Steve Bartman was outed following the Game 6 debacle in 2003. I don't recall what outlet did this first, but I thought it was unacceptable to publish his name and home address. The man has gone into hiding ever since.
Bill Pearch   Monday, April 26, 2010
shaa333
This is one of the few long blogs I actually read! What a cliffhanger... hehehe! i don't have an iPhone, but I don't want to take the chance of being mugged.
Sarah G.   Monday, April 26, 2010
HI DAVE, JUST SEARCHED ON MY BROTHER'S NAME DAVE HEINTZEL AND YOU CAME UP. INTERESTING BLOG TO SAY THE LEAST. I AM ALWAYS AMAZED AT BLOGGERS AND STORIES TOLD, I LEARN THINGS IN THE PROCESS. I AM A PROFESSIONAL BLOG SURFER. DAVE HEINTZEL LIVES IN ERIE PA AND IS NOWHERE NEAR THE ARTIST YOU ARE. I SENT HIM YOUR LINK AND HE GOT QUITE A GOOD CHUCKLE ABOUT IT.
PEACE OUT
KC
KAREN   Monday, April 26, 2010
billpearch
I love ALL CAPS.
Bill Pearch   Monday, April 26, 2010
daveheinzel
IT'S EXCITING!
Dave Heinzel   Monday, April 26, 2010
its just lazy sorry, not yelling
kc   Monday, April 26, 2010
daveheinzel
Ha, that's cool. Welcome to Humzoo - tell your friends!
Dave Heinzel   Monday, April 26, 2010
stevenheinzel
My guess would be that we will be hearing more in the future about lawsuits, fines, and/or jail time for Person B and Gizmodo.
stheinz   Monday, April 26, 2010
dennydeaton
Dude, I think it's totally wrong of you to out Gizmodo! Until today no one knew about the incident and now that guy's face is going to be all over the Internetz because of your blog.

Does anyone know where I can buy an iPhone 4.0? I have around $5k sitting in a Swiss Bank account waiting to be used for purchasing illegal hardware.
Denny Deaton   Tuesday, April 27, 2010
stevenheinzel
Why would someone ask $5k for an iPhone unless they knew something was "special" about it? And why would someone pay $5k for an iPhone unless they knew something was "special" about it? And how does one "just happen" to come across a $5k iPhone just lying around in a California bar? Gimme a break!!
stheinz   Tuesday, April 27, 2010
fritz
I would have contacted Apple, given it back and hoped that they would reward my honesty with the new iPhone every year and maybe a computer to go along with it. That would've been way sweeter than $5K.
fritz   Tuesday, April 27, 2010
Lionheart
From my perspective what's really interesting here is the legal pre-gaming going on. (if you've read the link re the police raid) It's true, the police cannot get a warrant for items that will identify a "source" for a police story. But! you can get a warrant for evidence of a crime or evidence of the fruits from a crime. Here the evidence is maybe both which is a fascinating legal question.

What it indicates to me is first the obvious fact that Apple has reported the phone as stolen property and maybe less obviously, perhaps Apple feels that not all of the "property" has been recovered. Property can be physical or intangible. So if, for example, Person B has retained some sort of image or downloaded information from the phone then a crime is still pending, and that stolen property could be for sale as well and the cops should be hot on their trail. Person B is likely to get outed in the course of their investigation.

Plus, I don't know who was silly enough to disclose how much they paid for the iphone prototype. Like folks have already said, that bit of info is a key indicator of the mens rea or "guilt mind" of Person B and Gizmodo.

Great blog Dave, keep us updated on what happens next!
Lionheart   Tuesday, April 27, 2010
daveheinzel
Today there weren't too many developments. It appears the police department is sitting on the evidence they seized, waiting to look through it while they reevalute the legality of the search warrant. They admit this is unusual.

Also it was reported that this investigation got kicked off from Apple
reporting the stolen device to police. Apple had something stolen, so they reported it.

So we'll see what happens. It's very interesting indeed.
Dave Heinzel   Tuesday, April 27, 2010
nheinzel
Apple had something stolen or the guy in the bar had something stolen? I think it's odd and interesting that Apple would report it to the police.
!   Tuesday, April 27, 2010
girlcarew
It's been quite interesting to hear about. I'm with you in that when Gizmodo gave the name of the guy who lost it, they totally lost me. I hadn't heard about the raid (I've been under a rock).
girlcarew   Tuesday, April 27, 2010
daveheinzel
The phone supposedly was the property of Apple, as would make sense with a prototype. It's like finding a FedEx truck in your yard - you would call FedEx, not the driver. Horrible analogy though.
Dave Heinzel   Tuesday, April 27, 2010
dennydeaton
If I found a FedEx truck in my yard I would remove all the packages, open them, play with all the stuff for a few days, package them back up and put them back into the truck and return it to FedEx. I just enjoy getting packages in the mail and opening them up and that would be the opportunity of a lifetime.
Denny Deaton   Wednesday, April 28, 2010
lgrant
Yeah, Denny, but what if you found a 4G iPhone prototype in one of the packages? :)
LGrant   Wednesday, April 28, 2010
George
Stealing by finding is what happened. The finder should have made an attempt to locate the owner. In selling the phone on, they are essentially selling stolen property. I think it was stolen anyway because your average person finding an iPhone wouldn't realize it was a prototype unless either it looked weird or they knew how to look it up somehow within the phone.
LimeyGeorge   Wednesday, April 28, 2010
hawkwolf
The Apple employee, who lost the iPhone, is an NCSU Alumnus. This incident was all the local papers here when it happened.
BeanCounter37   Thursday, April 29, 2010
hawkwolf
The phone by law belongs to Apple because it falls under the category of Intellectual Property.
BeanCounter37   Thursday, April 29, 2010
dennydeaton
Did you guys see the latest? Gray Powell got a free flight to Germany to drink beer. Awesome! http://www.macnn.com/articles/10/04/23/promotional.stun...
Denny Deaton   Thursday, April 29, 2010
daveheinzel
Person B has been identified:
http://www.wired.com/threatlevel/2010/04/iphone-finder/
Dave Heinzel   Thursday, April 29, 2010
Lucorechris12
Who is person b
Chris Lucore   Monday, June 7, 2010
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