The Trade Secrets Blog

Following Trade Secrets Litigation

First Amendment v. Trade Secrets – The Curious Case of Think Secret

The Think Secret Blog, a popular Apple rumor blog, has settled its trade secrets case with Apple–the confidential settlement requires Think Secret to shut down, but it does not require Think Secret to reveal its sources inside Apple. InformationWeek.com is reporting the story here.

If you haven’t been following the case, Think Secret posted information from an inside source at Apple. Apple subsequently sued Think Secret, and its owner Nick Ciarelli, for publishing its trade secrets and getting information from individuals who were subject to a confidentiality agreement. Ciarelli contended that the information was legally obtained (via the same type of newsgathering practices as other journalists). Ciarelli has said “I talk to sources of information, investigate tips, follow up on leads, and corroborate details. I believe these practices are reflected in Think Secret’s track record.” Based on this, Ciarelli argued that he was protected by the right to free speech. A journalist cannot be prohibited from publishing lawfully obtained information according to the U.S. Supreme Court.

There are many issues raised by this very curious case: (1) Are bloggers truly journalists; (2) Did Think Secret use the same types of newsgathering practices as other journalists, i.e., is it a journalistic practice to ask people to violate confidentiality agreements and should such a practice be protected; (3) was the information legally obtained if individuals were asked to violate confidentiality agreements; and (4) did Ciarelli disseminate information that he knew, or should have known, was confidential?

This case has generated no small amount of anger by the blogging community because of the potential precedent it sets. While I believe that bloggers should have the same rights as “journalists” if they are reporting on newsworthy items, I do not believe that the first amendment allows anyone to disseminate information which they know, or should know, came from sources which are under confidentiality agreements to keep the information secret. Apple’s beef here was that Ciarelli knowingly encouraged his sources to breach their confidentiality agreements. The salient question of fact is whether he “knowingly” encouraged someone to breach the confidentiality agreements. If he did, then I believe he would be liable under most states Uniform Trade Secrets Acts.

In California, at Civil Code § 3426.1, “misappropriation” is defined as:

(1) Acquisition of a secret of another by a person who knows or has reason to know that the secret was acquired by improper means; or
(2) Disclosure or use of a secret of another without express or implied consent by a person who:(A) Used improper means to acquire knowledge of the secret; or (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use. (emphasis added)

Based on these definitions, I believe that Ciarelli was more than likely liable under the Act by virtue of receiving information he knew was confidential and was acquired by improper means (i.e., encouraging an individual under a confidentiality agreement to violate that agreement). Here’s an opposite view.

This case is also fascinating in that Ciarelli was not required to give up the names of his sources to Apple. What Faustian bargain was struck we may never know, but it is interesting to speculate as Don Reisinger of The Digital Home blog has done here.

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December 21, 2007 - Posted by | confidentiality, confidentiality agreement, Intellectual Property, misappropriation, trade secret theft, Trade Secrets, Uncategorized | , , , , , , ,

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