Apple’s Upcoming iPhone and Possession of Stolen Goods

Regular readers of this blog know that I’m interested in electronic gadgets. One of my favorites is my Apple iPhone, so I’ve watched with great interest the saga unfolding over at Gizmodo, a leading gadget blog. (This will eventually connect to North Carolina criminal law, I promise.)

The basic facts appear to be as follows: Apple’s working on its next-generation iPhone, which has been rumored to have lots of fantastic new features, like a super-high-resolution screen, a front-facing camera for videoconferencing, etc. An Apple employee — who happens to be an N.C. State alumnus — was field-testing a prototype of the new phone. He went to a bar in Redwood City, California, likely drank a few beers, and accidentally left his phone on his bar stool when he headed out. Another patron picked up the phone, and when the Apple employee didn’t come back, took it home with him. He eventually noticed that it wasn’t a current model iPhone, made some effort to contact Apple about it — more on which below — and after he couldn’t get through to anyone in authority, decided to sell it to Gizmodo for $5,000. Gizmodo examined and disassembled the phone, and posted about it in exhaustive detail. Eventually, Apple asked for the phone back, and Gizmodo agreed to return it.

There’s been some talk about whether Apple will sue Gizmodo under California’s Uniform Trade Secrets Act, which at least one commentator believes “makes it pretty clear that buying a stolen prototype, determining it is authentic and includes valuable information in the form of trade secrets, and then publishing the information to earn money and notoriety for doing so is something that will expose you to legal liability.” Needless to say, I don’t know anything about that. But imagine that this whole saga played out in North Carolina. Could Gizmodo — or whichever employee of Gizmodo actually bought and tinkered with the phone — be prosecuted criminally for possession of stolen goods? I think so.

The starting point for the analysis is whether the phone was, in fact, stolen. Gizmodo might argue that it was not stolen, but found. However, this argument would be unlikely to prevail in light of State v. Moore, 46 N.C. App. 259 (1980). In Moore, the defendant and two friends found a bag marked “Bank of North Carolina” lying on a sidewalk outside a pharmacy. They picked up the bag and split the money they found inside. The defendant was charged with, and convicted of, receiving stolen goods. She argued on appeal that the money was found, not stolen, but the court of appeals affirmed. It held that when a person finds lost property, “the duty of the finder is to keep the property for the purpose of finding the owner,” at least where there is a “clue to ownership,” i.e., some way to determine who the owner is. Furthermore, the finder “must use reasonable means for the purpose of finding the owner.”

Applying this precedent to the Gizmodo situation, the phone clearly was lost at the bar, not abandoned. So the bar patron who found it was obligated to try to return it to its owner. The Gizmodo story says that the patron “called a lot of Apple numbers and tried to find someone who was at least willing to transfer his call to the right person, but no luck. No one took him seriously and all he got for his troubles was a ticket number.” So could Gizmodo argue that the patron did everything required by Moore? And that Apple effectively abandoned the phone by rebuffing the patron’s attempts to return it? Of course, it could argue anything, but I doubt that the argument would work. After all, the patron had apparently seen the Facebook application on the phone, which revealed the specific identity of the Apple employee who had lost the phone. He could have tried contacting the employee several different ways, or could have asked the police to do so. Given that the patron recognized the phone as a prototype, he might also have returned it to Apple directly, by mail or even to a retail store. I doubt that making a few phone calls to “Apple numbers” was enough, though knowing more facts would be helpful. As it stands, given that the patron apparently was playing with the phone, rummaging through its contents, and exploring its features, and that he eventually sold the phone to the highest bidder, one could reasonably question how hard he tried to return the phone.

Assuming that the phone was stolen, the rest of the possession of stolen goods analysis is pretty straightforward. Although Gizmodo claims that it didn’t know the phone was stolen when it bought it, it’s awfully hard to believe that it would have paid $5,000 for the phone unless it believed that it was an authentic Apple prototype. Perhaps Gizmodo could argue that the patron who sold the phone overstated his efforts to return it, in which case, Gizmodo might claim that it reasonably believed that the patron had complied with his duty under Moore and that the phone was effectively abandoned by Apple. But given Apple’s famously tight security for new products, it’s hard to imagine that Gizmodo really thought that Apple didn’t want the prototype back. And in fact, later events demonstrated that Apple did want it back. So it seems to me that a pretty convincing criminal case could be made against Gizmodo under North Carolina law.

I don’t know whether California law is similar, and I don’t know whether Apple or the California authorities are interested in a criminal case. I’m not suggesting that they should be, necessarily. Heck, this whole imbroglio has been nothing but free publicity for Apple, so maybe Steve Jobs is laughing about it over coffee with the Gizmodo staff right now.

2 thoughts on “Apple’s Upcoming iPhone and Possession of Stolen Goods”

  1. Under California law you have several ways this can go. One is “Misappropriation of Lost Property,” which states:

    485 PC. One who finds lost property under circumstances which give him
    knowledge of or means of inquiry as to the true owner, and who
    appropriates such property to his own use, or to the use of another
    person not entitled thereto, without first making reasonable and just
    efforts to find the owner and to restore the property to him, is
    guilty of theft.

    Based on the details of the case it appears he had “knowledge of or means of inquiry” including the facebook account, phone numbers in the phone book etc.

    The key is “guilty of theft,” making this a violation of 487(a)(1) PC (felony, theft of item over $400 or grand theft, which I can reasonably assume the iphone is worth more than $400). So by him selling this phone to Gizmodo, he is guilty of 496(a) PC, also a Felony.

    that doesn’t even include distribution of trade secrets which I think would fall under 499c PC.

    • Part of it got cut off, add Gizmodo in violation of 496(a) PC, a felony, also for receiving the phone, and both in violation 182(a)(1) PC and the other charges for conspiracy to commit a felony.


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