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Sorry to tell you, but Think Secret was wrong

I know I'm going against popular sentiment here – almost everything I've read in the past two days has berated Apple over its settlement with Nick Ciarelli of the rumor site Think Secret. But it's very clear that what Ciarelli did was wrong, and that Apple was well within its rights to go after him.

For those who somehow missed it, here's the news: In December of 2004, two weeks before Macworld, Ciarelli published information on his Think Secret Web site about the forthcoming $499 Mac Mini and iLife '05 software – information obtained from at least one Apple employee who had signed a non-disclosure agreement. Ciarelli was spot on, and Apple was irked.

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So Apple sued Think Secret to get the names of the employees who had blabbed to Ciarelli in violation of their NDA. Ciarelli, with the help of the Electronic Frontier Foundation, countered with a First Amendment defense, even filing a motion under California law intended to prevent baseless lawsuits that inhibit free speech.

Yesterday's settlement was the first development in the case in over two years. Ciarelli agreed to shut down Think Secret and Apple agreed to give up on getting the names of its rogue employees. While the details of the settlement are confidential, most observers believe Ciarelli received a substantial cash payment from Apple to end the litigation.

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Virtually every Mac Web site, and quite a few mainstream news sites, have interpreted the settlement as "bad for journalism" and evidence "Apple is a bully" that answers Web critics with lawsuits.

Such knee-jerk reactions fail to take into consideration the facts of the case, and the laws that apply to it.

The Apple employees who passed on the information -- considered trade secrets -- broke the law. The NDA they signed is a legally binding agreement. Apple's unannounced products fit the definition of a trade secret: "a process, method, plan, formula or other information unique to a manufacturer, which gives it an advantage over competitors."

One can violate the federal trade secret law in several ways. Transmitting the information, as the Apple employees did, is one way. Receiving information "knowing the same to have been stolen or appropriated, obtained, or converted without authorization" is another. That's what Ciarelli did. He even solicited such information with a "Got dirt?" message and phone number on the Think Secret site, a second violation. Even an attempt to commit one of the offenses breaks the law.

Over at the All Things Digital site, John Paczkowski compares what Ciarelli did to what Piper Jaffray's Gene Munster and other analysts do when they survey Apple's suppliers to ascertain what the company is working on. He suggests Apple doesn't sue them or media like the New York Times because they're large, powerful organizations. Wrong. Apple doesn't sue them because they don't break the law in obtaining their information. It's unlikely any major newspaper would publish information in violation of a federal law unless that information was vital to the public interest.

Furthermore, Apple can't sue people just for criticizing the company. In this blog I have frequently criticized Apple and never have received so much as an e-mail of complaint. The First Amendment protects commentary on public companies and public figures (like Steve Jobs). It's not designed to protect people who publish information that violates other laws.

It's easy to paint Apple as a bully in this scenario. Ciarelli, 13 when he launched Think Secret, was still a teenager when Apple (now a senior at Harvard), the multi-billion dollar corporation, sued him. Many have hailed Ciarelli as a talented journalist who dug up info no one else had while heroically protecting his confidential sources.

As a journalist myself for more than 20 years, I view Ciarelli with ambivalence. Yes, he got the goods, but he obtained it illegally. Even journalists need to obey the law. News of the new Mac Mini was not worth violating the law.

Ciarelli did protect his sources, and I commend him for that. Those people would have lost their jobs at Apple immediately had he exposed them. But then, Ciarelli's actions put them in jeopardy in the first place.

Many also have questioned why Apple would seek to punish an Apple-boosting Web site like Think Secret, which they say benefited Apple by fostering interest in the company and its products. True, but beside the point.

Apple's intent was not so much to intimidate a scrappy young journalist who stepped over the line but to protect the secrecy of its products. Not only does hiding its unannounced innovations from competitors until the last possible moment serve Apple's business interests, but secrecy is also a key to its marketing strategy.

How much media coverage does Dell or Hewlett Packard get when they announce a new model of PC? Does anyone even notice? Consumer electronics companies bring out new products all the time, many of them quite good, but no one gets the avalanche of media attention Apple does.

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Much of that has to do with the element of surprise. Apple publishes no product "road maps" as do other tech companies, and employees are legally bound with NDAs to keep quiet. When Steve Jobs announces a stunning new product, it's a surprise to everybody – and consequently news.

If Apple allowed its employees to yak to the Mac rumor sites unchecked, there would be no Macworld surprises (or any surprises, ever). Apple would lose some of that fawning free publicity and a chunk of its mystique as well.

I realize everyone feels sorry for Ciarelli and the loss of Think Secret. Hey, I enjoy reading Apple rumors as much as the next guy. But let's keep it in perspective. This settlement threatens no one on the Mac Web who follows the rules.

Ciarelli is lucky Apple elected to settle (probably to avoid the bad publicity of a full-blown trial). He could have ended up leaving Harvard not for a "promising career in journalism," but for an extended stay at a federal prison.

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