No Trade Secret in the iPhone, Part 1 – Reasonable Efforts

There has been a fair amount written about the search-and-seizure and receiving-stolen-goods aspects of the iPhone police raid (background here), but much less about the trade secrets aspect. At the root of Apple’s complaint is (undoubtedly) a claim that the iPhone contained trade secrets.

The Explainer column at Slate, written this time by Brian Palmer, says that Jason Chen and Gizmodo could be in trouble for violation of the California trade-secret law. I’ve got to say, I find this conclusion extremely dubious. To the extent it turned out to be true that Chen or Gizmodo were held liable under a trade-secret theory, then, in my opinion, the outcome would have more to do with stellar lawyering and a court’s admiration for Apple rather than fealty to the law.

In California, the law governing trade secrets is California’s version of the Uniform Trade Secrets Act. For a piece of information to qualify as a trade secret, that piece of information must be:

the subject of efforts that are reasonable under the circumstances to maintain its secrecy

Allowing an employee to carry a slim phone-sized device in a pocket out to a bar does not qualify as reasonable measures. Palmer’s Slate piece acknowledges the problem for Apple along these lines. But Palmer ventures that taking the phone to a bar is not dispositive. He writes:

[T]he fact that Apple disguised the experimental device to make it look like an ordinary iPhone 3GS would likely be enough to convince a judge that the company intended to keep their new toy hush-hush.

If a judge were convinced in this way, I think it would be a travesty. First of all, “intent” to keep something secret is an entirely separate question from reasonable measures. The key question is not what you intended to do, but what you did do, and whether that was reasonable.

So, was what Apple did “reasonable under the circumstances” to protect alleged trade secrets in a phone? The answer is clear: Of course not.

The reality is that phones get lost. Everybody knows this. Phones especially get lost at bars. Mobile phones, at the whiff of beer breath and chicken wings, will leap out of the pockets of your Dockers faster than you can say, “What do you have on tap?” A finding that what Apple did here counts as reasonable measures, would, in my mind, be absurd.

There are other reasons that the iPhone did not embody trade secrets. I’ll cover those in future posts.

One other note: I don’t mean to beat up on Brian Palmer. He does a great job with the Explainer. (He consulted me last month on a piece about The Hurt Locker.) And with regard to the iPhone, I think he did a fine job of teeing up the issues. He also consulted two bona fide experts for the piece – Eric Claeys at George Mason and Elizabeth A. Rowe at Florida-Levin. And the fact is, courts often take a very expansive view of trade secrets. But if Palmer’s piece ends up being on target about the existence of trade secrets here, then, in my mind, that will be more on account of subpar jurisprudence than a correct interpretation of the law.

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