No Trade Secret Liability for iPhone, Part 2 – Wrongful Appropriation

I explained previously one reason why, in my opinion, there were no protectable trade secrets embodied in the Apple iPhone prototype which led to a police raid on a blogger’s home. That reason was, in short, that Apple did not use reasonable efforts to secure any alleged trade secrets.

Here let me explain a second and independent reason there should be no cause of action under trade secret law in this case: There was no wrongful appropriation.

In California, the Uniform Trade Secrets Act requires, for liability, that the alleged wrong-doer have engaged in “misappropriation” of the alleged trade secret. It is not illegal, without more, to take someone’s trade secret. The taking must be of a kind that counts as “misappropriation.” Under California Civil Code 3420.1::

   (b) "Misappropriation" means:
   (1) Acquisition of a trade secret of another by a person who knows
or has reason to know that the trade secret was acquired by improper
means; or
   (2) Disclosure or use of a trade secret of another without express
or implied consent by a person who:
   (A) Used improper means to acquire knowledge of the trade secret;
   (B) At the time of disclosure or use, knew or had reason to know
that his or her knowledge of the trade 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; or

Here, based on the facts as we understand them, there was no misappropriation, since the phone was lost, not stolen, and after it was lost, the retention of it was neither illegal nor wrongful.

My previous posts explain both of these aspects, that retaining the iPhone was, under the circumstances, in compliance with the law and not wrongful.

Since it was okay for the person who found the phone to keep it, it was similarly okay for him to sell it, and for someone to buy it.

Trade secret law is a serious matter. Trade secret law allows injunctions, huge damage awards, and felony convictions. After being utterly careless with their phone and then totally nonresponsive to phone calls, Apple is attempting to bring down the very heavy hand of the law to claw back what it regretted letting go of. A system of law that allows Apple to do this creates a travesty of justice.

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