Apple Sues Student

Computer giant accuses undergraduate of publishing trade secrets

Apple Computer, Inc. is suing a Harvard undergraduate who runs a popular Mac information website for disclosing details about unreleased Apple products, including two unveiled at this week’s Macworld conference.

Nineteen-year-old Nicholas M. Ciarelli ’08, known on the internet as Nick dePlume, has run the site, thinksecret.com, since age 13.

Ciarelli’s site announced the arrival of the Mac mini—a $499 computer—and the iLife ’05 software package two weeks before they were introduced at the Apple expo yesterday.

But in a complaint filed in the Superior Court of California, County of Santa Clara last Tuesday, Apple alleges that Think Secret has not obtained its information legally.

Apple claims that Ciarelli and his company, The dePlume Organization, broke the law when soliciting insider tips online from anonymous sources, “inducing” Apple employees to break their confidentiality agreements with the company.

The suit does not identify Ciarelli by name, saying dePlume’s “true name and identity” could not be confirmed. But a Nov. 11 letter Apple sent to Think Secret ordering the site to stop publishing trade secrets included Ciarelli’s name as publisher and editor-in-chief of Think Secret.

Ciarelli, who is also a Crimson editor, confirmed in an e-mail yesterday that he owns and runs Think Secret.

He wrote in the e-mail that he has done nothing wrong.

“I employ the same legal newsgathering practices used by any other journalist,” he wrote. “I talk to sources of information, investigate tips, follow up on leads, and corroborate details. I believe these practices are reflected in Think Secret’s track record.”

The site, for example, broke the news that Apple would release a digital music player one week before Apple released its first iPod in 2001.

Apple representatives did not return calls seeking comment yesterday. Apple’s attorney, George A. Riley, also did not respond to several phone messages.

Ciarelli, a Wigglesworth resident who hails from New York, wrote that he has not yet hired an attorney.

“Neither the dePlume Organization nor I can afford to defend a suit against Apple, and have few connections in California,” he wrote.

THE CORE OF THE SUIT

Apple’s lawsuit alleges that Think Secret is illegally soliciting Apple employees to violate confidentiality agreements and disclosing that information online without Apple’s permission.

Offering tipsters “complete anonymity,” the website contact page urges visitors to submit “news tips” and “insider information.”

According to the complaint, Apple employees sign confidentiality agreements in which they promise not to disclose information about product plans to anyone outside of the company.

“Defendants’ knowing misappropriation and disclosure of Apple’s trade secrets constitutes a violation of California law and has caused irreparable harm to Apple,” the lawsuit states.

But several experts said that Apple might have alternative motives for suing the site.

“Usually you would want to sue your enemies and not your friends,” said Gary Fine, a Northwestern professor of sociology and expert on rumors. “I can’t think of an instance in which a corporation would sue its own fans. I haven’t heard anything like this.”

Fine said that it was possible that Apple was suing Think Secret to generate publicity. The lawsuit came the week before Apple’s biannual exposition where it released its latest products.

“If [the lawsuit] gets everyone’s attention, that’s all for the good of the company. Maybe there is a quiet understanding that they’ll get media attention and [then] quietly drop the lawsuit,” Fine said.

Ciarelli denied speculation that his site collaborated with Apple to generate buzz.

“Apple’s leadership is not feeding me information,” he wrote in an e-mail.

Roger M. Milgrim, a New York intellectual property attorney and the author of Milgrim on Trade Secrets, said that Apple might be trying to scare off other sites from copying Think Secret’s tactics.

“They figure that if they place financial pressures on this fellow, they’ll stop others from doing this same,” said Milgrim, who was unfamiliar with the case. “A preliminary injunction issued by a California court is useless against a Massachusetts or New York resident. But they seek damages and this young man will have to appear and he will have to hire a lawyer.”

Milgrim and Harvard Law Professor Lloyd L. Weinreb, when told by a Crimson reporter about the case, said Ciarelli might have a difficult time defending his actions.

“If that student is inviting people to give him information that was violating a trade secret he might be liable as a contributory infringer,” Weinreb said. An infringer violates the law directly, but a contributory infringer knows about the infringement and facilitates it in some way.

Milgrim agreed, saying that even if Ciarelli had not solicited trade secrets but had simply posted them, he might still be liable under California law.

“California is one of approximately 44 or 45 states that have adopted [the] Uniform Trade Secrets Act. That statute makes it wrongful to acquire or publish without authorization information you know or have a reasonable basis to know is a trade secret of another,” Milgrim said.

“Just because you receive something on the internet does not mean you have a green light to do whatever you want with it,” Milgrim added.

He explained the type of damages that could have motivated Apple’s lawsuit. “Sometimes in the software field where advances are measured in nanoseconds, the preannouncement will permit competitors to develop products more timely,” Milgrim said.

In its complaint, Apple demands that Ciarelli and his company pay damages, hand over “gains, profits, and advantages” from the alleged “misappropriation” of trade secrets and attend a trial by jury. According to the complaint, Think Secret generates revenue from online advertising.

Apple also requested an injunction to stop Think Secret from spreading future product information.

In the past, Apple has sent at least four cease and desist letters to Think Secret to stop the site from posting Apple trade secrets. Apple is also suing the unidentified individuals who tipped off Think Secret and has urged Ciarelli to reveal their identities.

But Ciarelli wrote that he will not disclose information about his sources.

“In my view, it is crucial that a reporter have the ability to maintain the confidentiality of his or her sources. And I think the public realizes this, since the news has been filled lately with instances of journalists being forced to reveal confidential sources,” Ciarelli wrote.

According to California Superior Court records, a case management conference will be held on May 3.

—Staff writer Joseph M. Tartakoff can be reached at tartakof@fas.harvard.edu.