COMPUTER, INTERNET, AND TECHNOLOGY LAW

APPLE COMPUTER SUES FAN IN QUESTIONABLE MOVE

In what may turn out to be a questionable move from a PR perspective, Apple Computer, Inc. has sued 19-year-old Nicholas M. Ciarelli in state court in California for allegedly posting Apple’s trade secret information on his website.  According to an article in the Washington Post on January 14, 2005, http://www.washingtonpost.com/wp-dyn/articles/A7937-2005Jan13.html, Apple contends that the Harvard University freshman improperly obtained Apple’s trade secret information, including by inducing Apple employees to violate their confidentiality agreements.  Ciarelli was also featured in a story in the Harvard Crimson, http://www.thecrimson.com/article.aspx?ref=505326.

Apple charges that Ciarelli’s website, ThinkSecret.com, http://www.thinksecret.com/, which Ciarelli operates under the pseudonym Nick dePlume, posts secret information that was improperly obtained from informants and tipsters who were bound to keep the information confidential. 

Apple may have a viable claim.  If Ciarelli obtained Apple’s trade secrets from sources that he knew had an obligation of confidentiality to Apple, Ciarelli may be found liable for violating California’s version of the Uniform Trade Secret Act.  That Ciarelli may have done just that is suggested by an open invitation on the ThinkSecret website to submit insider – read, confidential – information anonymously.  A link on the first page reads: “Do you have insider news to share? Contact us.”  The link takes the reader to a page – http://www.thinksecret.com/contact/ -- that explains how anonymous tips can be left by e-mail, phone and fax, allowing a tipster “to contact us under complete anonymity.” 

But, even if Apple has a claim, it may not have been smart to sue Ciarelli.  Ciarelli is an ardent Apple fan, and his site contains enthusiastic news about Apple products to be released in the future.  Apple’s aggressive move against such a fan will probably offend its other fans and customers.  Indeed, Apple’s other fans have taken note, and they are not pleased.  Read some of the buzz on Spymac, http://www.spymac.com/forums/showthread.php?threadid=148150, Slashdot http://yro.slashdot.org/yro/05/01/12/2052258.shtml?tid=123&tid=149&tid=3, and MacFora http://www.macfora.com/forums/lofiversion/index.php/t16969.html.

Other articles on this topic:http://www.livingroom.org.au/problogger/archives/the_risk_of_blogging_a_scoop.php; http://www.pcpro.co.uk/news/67693; http://www.eweek.com/article2/0,1759,1744213,00.asp

Third Circuit Holds that Employer’s Access of Employee’s E-Mail Does Not Violate ECPA

The Third Circuit joins other federal circuits in ruling that an employer does not violate the federal Electronic Communications Privacy Act, 18 U.S.C. §§2501-2521 and 18 U.S.C. §§2710-2710 (“ECPA”), by accessing the employee’s e-mail.

Richard Fraser worked as an independent insurance agent for Nationwide Mutual Insurance Company.   Fraser prepared letters to two competing insurance companies, Erie and Zurich, seeking to determine whether they would be interested in acquiring certain Nationwide policyholders.  Nationwide terminated Fraser, accusing him of disloyalty.  Nationwide claimed that, when it learned about these letters, it became concerned that Fraser might also be revealing company secrets to its competitors.  It therefore searched its main file server--on which all of Fraser's e-mail was lodged--for any e-mail to or from Fraser that showed similar improper behavior. Nationwide's general counsel testified that the e-mail search confirmed Fraser's disloyalty.  Fraser complains that he was wrongfully fired for other reasons, including making complaints to the state Attorney General about Nationwide, and he sued Nationwide for wrongful termination.  He also sued for violations of the ECPA arising from Nationwide's search of his e-mail.

Fraser argued that, by accessing his e-mail on its central file server without his express permission, Nationwide violated Title I of the ECPA, which prohibits "intercepts" of electronic communications such as e-mail.   The statute defines an "intercept" as "the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device."  18 U.S.C. §2510(4).  The Third Circuit rejected Fraser’s argument, noting that every circuit court to have considered the matter has held that an "intercept" under the ECPA must occur contemporaneously with transmission.  See United States v. Steiger, 318 F.3d 1039, 1048-49 (11th Cir.2003);  Konop v. Hawaiian Airlines, Inc.,302 F.3d 868 (9th Cir.2002); Steve Jackson Games, Inc. v. U.S. Secret Serv., 36 F.3d 457 (5th Cir.1994); see also Wesley College v. Pitts, 974 F. Supp. 375 (D. Del.1997), summarily aff'd, 172 F.3d 861 (3d Cir.1998).  The Third Circuit agreed with those decisions, concluding that stored e-mail cannot not be “intercepted” within the meaning of Title I of the ECPA.

Fraser also argued that Nationwide's search of his e-mail violated Title II of the ECPA, which creates civil liability for one who "(1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or (2) intentionally exceeds an authorization to access that facility; and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system."  18 U.S.C. §2701(a).  The statute defines "electronic storage" as "(A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and (B) any storage of such communication by an electronic communication service for purposes of backup protection of such communication."  Id. §2510(17).  The Third Circuit rejected Fraser’s arguments.  It noted that 18 U.S.C. §2701(c)(1) excepts from Title II seizures of e-mail authorized "by the person or entity providing a wire or electronic communications service."    Noting that there is no circuit court case law interpreting this exception, the Circuit Court cited Bohach v. City of Reno,932 F. Supp. 1232 (D. Nev.1996), which held that the Reno police department could, without violating Title II, retrieve pager text messages stored on the police department's computer system because the department "is the provider of the 'service' " and "service providers [may] do as they wish when it comes to accessing communications in electronic storage."    The Third Circuit followed this reasoning and read §2701(c) literally to except from Title II's protection all searches by communications service providers.  Thus, the Third Circuit concluded that, because Fraser's e-mail was stored on Nationwide's system (which Nationwide administered), its search of that e-mail falls within §2701(c)'s exception to Title II. 

Therefore, the Third Circuit concluded, Nationwide did not violate the ECPA in searching Fraser's e-mails. 

Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107 (3d Cir. Dec. 10, 2003).