Let's assume a different sequence of events, to help separate the issue of trade secrets and stolen property. Let's say that the phone was left behind at the bar, someone picks it up and hands to you, thinking your friend, who is currently in the wash room, left it behind. You've had a couple of beers and you know your friend has an iPhone, so you put it in your pocket for when he comes back.

10 minutes later (there was a line) he returns and you order another round, forgetting about the phone in the process. You don't remember you have it until you get home at 3am, having had a few more glasses of "golden liquid" (as Gizmodo would refer to it).

Realizing you have someone's phone, and it's probably not your friend's, you turn it on, seeing the last thing the guy used before leaving it behind: his Facebook page. Good, you have a way to contact him. You thumb through the apps, try the camera, and then decide to go to bed.

In the morning, you wake up groggy, and find the phone has bricked itself overnight. You didn't write down the name from the Facebook page because, well, you were drunk. So now what? You are now in possession of a "lost" item, meaning that, according to California law, you are "a depositary for the owner, with the rights and obligations of a depositary for hire."

While pondering your situation, you notice something odd about the device. It looks like a 3GS with a case, but the buttons aren't the right shape. You take the cover off to investigate. It is immediately clear that this is not a 3GS. Knowing you have something interesting on your hands (even if it's a fake) you grab your trusty Nikon, and photograph the device from every angle.

Once you're satisfied you have good pictures of it, you put the case back on and head down to your local police station to turn in the device, as required by California law. When you get home, you sell the photos you took to Engadget for $500.

According to my (limited) understanding of trade secret law, Apple would have no case against you on the basis of trade secrets because, by bringing the phone out in public and leaving it behind at a bar, they clearly did not make reasonable efforts to keep it secret.

Of course, the events of that night aren't nearly as clear, but, unless Apple can show that the phone was not lost but stolen (and not technically stolen because the guy misappropriated lost property, but stolen from the guy's pocket) there is no basis for a trade secret suit.

This whole narrative leaves out the potential for other charges, like criminal theft by misappropriating lost property, or a civil suit against the "finder" for misappropriating lost property, but that's kind of the point. I'm trying to separate the issues so we can discuss them a little more clearly.

Naturally not, but one might easily lose the keys, and I read your example of the car as a proxy for the phone prototype.

I see where you are going with the bar example, but I'm not sure I get your point. Presumably in the case of the Facebook identity the finder of the phone remembered it at least well enough to assist Gizmodo with finding the Apple employee. And obviously it did not get handed into police or anyone else, (like the bar or an Apple store).

Anyway, rather than arguing by increments I'll cut to the chase: if I were actually a lawyer seeking to take action against Gizmodo, I'd be basically arguing a claim of misappropriation under section 3426.1.(b).2.C of the California civil Code (which is basically the Uniform Trade Secrets Act), as follows (heavily edited for clarity):

"... (b) Misappropriation" means: ... (2) Disclosure or use of a trade secret of another without express or implied consent by a person who: ... (C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

In plain English, we might dismiss the guy in the bar as a tipsy opportunist who was told there was a reward on offer (and who had no especial duty to guard Apple's secrets, vs. a duty to hand in lost property in general). However, Gizmodo had reason to know an iPhone prototype would be a secret thing: they published entire articles demonstrating their knowledge of Apple's secretive policies, as well as recent C&D letters from Apple's outside counsel asking Gawker to stop offering money for secret information. As I said before, they may not have known for sure if this device was a real Apple prototype, but they surely hoped that it was - it wouldn't have had news value if it wasn't. If it had just been a first-gen iPhone, there'd be no story. They materially changed their position by exchanging money for it. And they knew it had fallen into the hands of the seller by accident (at best).

If the fellow who sold the phone had instead taken pictures and set up weird_found_iphone.com, he could plead ignorance about the significance of his find. But it seems very hard to me for Gizmodo to claim the same thing. $5000 says they perceived the thing to have major newsworthiness. The prototype didn't cease to be secret just by virtue of its being lost and found; were that the case, then it wouldn't have been worth paying for. On a side note, there have been successful prosecutions for sale of trade information by a waiter employed to help cater a boardroom dinner; the careless sharing of company information to this non-employee's benefit didn't lessen the information's secret nature.

So Gizmodo purchased the device with the specific intention of exploiting its secret nature. The employee who was (we assume) field-testing it was meant to keep it secret, and did so by leaving it in its plastic disguise as an iPhone v3. He failed to keep it securely on his person as he should have: but whether careless, drunk, or both, this was surely a mistake. It's not as if he handed it to someone saying they should check it out, and then wandered off and never retrieved it. Nor did he disclaim ownership by throwing it in a garbage can or something. Loss is involuntary by its very nature; the guy called the bar repeatedly in hopes of finding it (as any reasonable person would expect). And while the finder might not have appreciated just how Apple would feel about their prototype, Gizmodo could hardly have been more aware, being in receipt of formal warnings from the company.

So my argument is that they distributed and used the info (as news to attract traffic and sell ads); they did so knowing it belonged to Apple; and knowing that Apple would not be happy; and knowing it was a prototype of an unreleased product; and knowing that it had come into the seller's possession by accident; and handing over a large sum of money because they understood the huge potential benefits of gaining this specific information.

Don't even get me started on the legalities of dissecting, photographing, and publicizing the innards of the thing.

If you were right, then every new product leak that Gizmodo, Engadget, The Wall Street Journal, and the New York Times report on would be a violation, which clearly isn't the case. As would every teardown article that's published by iFixit and the like.

Apple may have a case for theft against the "finder", and they may have a case for purchase of stolen goods against Gizmodo, but they don't have a trade secrets case against either.

Rather than attempting to bulldoze you, since we disagree about this fundamental distinction and have no judge handy to rule on it, here's some extra information which I feel underscores my view of things, and which you might find interesting:

http://euro.ecom.cmu.edu/program/law/08-732/TradeSecrets/Not... Washington U. Law quarterly, particularly pp945-950;

http://www.bc.edu/bc_org/avp/law/st_org/iptf/articles/conten... a more general article (but a little out of date, from 1999);

http://www.computerworld.com/s/article/9175839/Apple_demands... about the Gizmodo incident in particular, with some commentary by an IP lawyer. FWIW, Mr Church seems to agree with the basic argument I've been making, although obviously we're all limited by our awareness of the actual facts.