TMO Reports - Apple Handed Major Defeat as Appeals Court Sides with EFF

by , 4:50 PM EDT, May 26th, 2006

Apple Computer was handed a major defeat in its efforts to root out internal leakers by accessing the e-mail records of Web sites that had published leaked information about unannounced Apple products. In a 69-page ruling, the California Court of Appeals, 6th Appellate District ruled in favor of PowerPage publisher Jason O'Grady and AppleInsider publisher Kasper Jade, saying that online journalists are entitled to the same protections accorded by California's Shield Law as traditional media reporters are, and that the Stored Communications Act prohibits a litigant (Apple) from gaining access to private e-mail communications through a third party ISP.

"Today's decision is a victory for the rights of journalists, whether online or offline, and for the public at large," said EFF Staff Attorney Kurt Opsahl in a statement. "The court has upheld the strong protections for the free flow of information to the press, and from the press to the public."

The Case

The case involved the publishing of information about a product Apple ended up not releasing called Asteroid, a FireWire breakout box designed to make it easy to use real instruments with Apple's then-new GarageBand. Both AppleInsider and PowerPage published details of the product, reports Apple said were based on confidential materials that constituted trade secrets.

Apple sued 25 John Does, presumably Apple employees and others covered by NDAs with Apple, and then subpoenaed Messrs. O'Grady and Jade for access to their e-mail records in order to determine the identities of those John Does.

When the subpoenaed parties invoked the California Shield Law, Apple argued with the trial judge that they were not legitimate members of the press, and that they merely engaged in the act of misappropriating and disseminating trade secrets. Accordingly, Apple argued, they were not entitled to Shield Law protections. The trial judge ruled in Apple's favor on these issues, but the Appellate Court disagreed.

California Shield Law

The issue of whether or not PowerPage, AppleInsider, Think Secret, or any other Mac "rumor" site are legit members of the press is an issue that has garnered fierce debate everywhere from the Mac Web to traditional newspaper circles, and everything in between. While a variety of old and new media publishers weighed in on the topic because of this case (including friend of the court briefings on both sides), most defended online news outlets (or blogs, depending on who was doing the talking) as legit news outlets.

It was on this issue that the court made one of its most decisive rulings, and perhaps the more important ruling in the case when it comes to having an effect outside of the world of Apple.

"We decline the implicit invitation to embroil ourselves in questions of what constitutes 'legitimate journalis[m]'," wrote the court. "The shield law is intended to protect the gathering and dissemination of news, and that is what petitioners did here. We can think of no workable test or principle that would distinguish 'legitimate' from 'illegitimate' news. Any attempt by courts to draw such a distinction would imperil a fundamental purpose of the First Amendment, which is to identify the best, most important, and most valuable ideas not by any sociological or economic formula, rule of law, or process of government, but through the rough and tumble competition of the memetic marketplace." [Emphasis added]

In an interview with TMO, EFF Staff Attorney Kevin Bankston said, "I'm very excited that the court recognized the fact that Apple had failed to exhaust its other sources. It went straight to the journalists, which it shouldn't have done."

The Stored Communications Act

The court also ruled that Apple's request to obtain e-mail records started by a third party, particularly by Jason O'Grady's ISP Nfox, violated the Stored Communications Act (SCA). PowerPage and AppleInsider asserted that the SCA protected them from Apple's efforts at discovery through Nfox, while Apple asserted the SCA included exceptions that applied to civil cases such as Apple's. The court ruled vociferously against Apple on this point, saying:

"Ironically, Apple accuses petitioners of circular reasoning when they point out that if a contemplated disclosure is not authorized by the Act, the refusal to disclose cannot subject Nfox and Kraft to sanctions, and the disclosure cannot be incidental to the protection of their interests. This is at best a "tu quoque" argument, seeking to excuse the circularity in Apple's argument by accusing petitioners of the same vice. But in fact petitioners' argument is sound, while Apple's is not."

Furthermore, in its opinion, the court said that permitting such civil discoveries through third parties such as ISPs acting as information conduits would impose too much burden without offering a corresponding benefit.

"Prohibiting such discovery imposes no new burden on litigants," the court wrote in its ruling, "but shields these modes of communication from encroachments that threaten to impair their utility and discourage their development. The denial of discovery here makes Apple no worse off than it would be if an employee had printed the presentation file onto paper, placed it in an envelope, and handed it to petitioners."

Mr. Bankston hailed the ruling as a victory for online media through the country, saying: "In addition to being a free speech victory for every citizen reporter who uses the Internet to distribute news, today's decision is a profound electronic privacy victory for everyone who uses email. The court correctly found that under federal law, civil litigants can't subpoena your stored email from your service provider."

Looking outside Apple

As pointed by TMO readers in the comments, this case was a California state case, and as such holds precendent only in California.

Mr. Bankston pointed out, however, that many e-mail providers are located in the same district. "This could have an impact on similar cases in other courts."

"Other courts could find this persuasive," he added.

Both Apple and Jason O'Grady declined request for comment on the ruling. In discussing the case with The Mac Observer, the EFF pointed out that Apple can seek review by the California Supreme Court within 40 days.

Brad Cook contributed to this story.