Police Said Close to Expanding iPhone Prototype Probe

Greg Sandoval contributed to this story, which originally appeared on CNET News.com.

The criminal probe into Apple's errant iPhone prototype is expected to broaden, a law enforcement source with knowledge of the investigation told CNET.

San Mateo County's investigation may expand beyond Gawker Media's Gizmodo.com, which acknowledged buying the prototype for $5,000, and the unknown person who sold it to the gadget blog, the source said. Police obtained a warrant to search a Gizmodo editor's home on Friday evening. CNET was the first to report an investigation was under way earlier that day.

One reason for an expanded investigation is obvious: law enforcement wants to learn who found the so-called 4G prototype and offered it for sale. California law makes it a crime for someone to find lost property but not return it.

Josh Topolsky, Engadget's editor-in-chief, said police haven't contacted anyone in his organization as of Monday evening. Engadget had communicated with the person who found the iPhone prototype, reportedly in a Redwood City, Calif., bar in San Mateo County, and posted a handful of photographs on April 17.

CNET has not been able to confirm whether the felony investigation is targeting Gizmodo staff, the iPhone seller, or someone else. A blog post at NYTimes.com, citing unnamed law enforcement officials, said charges could be filed against the buyer of the phone--meaning Gizmodo employees.

"If I were prosecuting, I'd go after (any blogger who bought the phone) vigorously," said Michael Cardoza, a prominent San Francisco defense attorney and former prosecutor. "I'd fight them tooth and nail to see that they wouldn't get protection under the shield law. I'd play hardball in this case. They didn't find the phone as part of their reporting but instead bought property that they knew or should have known wasn't the property of the seller."

Cardoza, who has represented high-profile clients including the partner of a woman mauled to death by two of her neighbor's dogs in 2001, said that Gawker Media and Gizmodo have a moral obligation to reveal the seller. "Why wouldn't you reveal the name?" Cardoza said. "Unless you're planning on receiving stolen goods in the future and want to make sure anyone who comes to you with stolen property knows that you will protect their identity, why wouldn't you identify them?"

Gaby Darbyshire, the chief operating officer of Gawker Media, said on Monday that she and others had "met in person with the authorities today." Darbyshire wrote a letter to Detective Matthew Broad over the weekend asserting that the search warrant was invalid because it targeted a journalist.

Editors at Gizmodo, part of Gawker Media's blog network, last week said they paid $5,000 for what they believed to be a prototype of a future iPhone 4G. The story said the phone was accidentally left at a bar in Redwood City, Calif., last month by an Apple software engineer and found by someone who contacted Gizmodo, which had previously indicated that it was willing to pay significant sums for unreleased Apple products.

Soon after Gizmodo disclosed details of the raid by the San Mateo County Sheriff's office, including the search warrant for editor Jason Chen's Fremont, Calif., home, a debate erupted over whether bloggers qualify as journalists and should benefit from federal and state laws limiting newsroom searches.

To understand this debate, know three things:

•  Under a California law dating back to 1872, any person who finds lost property and knows who the owner is likely to be--but "appropriates such property to his own use"--is guilty of theft. There are no exceptions for journalists. In addition, a second state law says that any person who knowingly receives property that has been obtained illegally can be imprisoned for up to one year.

•  A federal Privacy Protection Act broadly immunizes news organizations from searches, effectively requiring police to use subpoenas in most cases instead. It applies not just to traditional media but anyone "reasonably believed to have a purpose to disseminate to the public a newspaper, book, broadcast, or other similar form of public communication."

•  A similar California law prevents judges from signing warrants that target writers for newspapers, magazines, or "other periodical publications," a definition that a state appeals court explicitly extended (PDF) to shield Apple rumor sites.

"I don't think a lot of law enforcement are aware of" the Privacy Protection Act, says James Chadwick, a partner in the Silicon Valley offices of Sheppard Mullin who specializes in media law and litigation. "This is a federal law. It's been on the books a long time but doesn't get enforced a lot."

Prosecutors Reviewing Gizmodo Claims

"What Gizmodo is saying has been addressed to us and is being looked at by us and the prosecutor assigned to the investigation," Stephen Wagstaffe, chief deputy district attorney for San Mateo County, told Bloomberg on Monday; TechCrunch reported that the forensic examination of the seized computers was on hold until the legal analysis was complete. Wagstaffe did not return immediately calls from CNET on Monday evening.

Jennifer Granick, an attorney at the Electronic Frontier Foundation, has said she believes the search warrant aimed at Gawker was problematic. But, Granick said, because Gawker already appears to have retained lawyers, "we are just watching at this point."

One possible hitch: newsroom search laws are intended to protect only journalists. And as the Village Voice's blog pointed out, the site's editors have previously said: "We may inadvertently commit journalism. That is not the institutional intention."