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Judges Grill Apple Lawyers in Trade-Secret-Leak Case

A case that could jeopardize the right of journalists to protect the confidentiality of sources and give companies more legal leeway to track down supposed leaks of trade secrets is now in the hands of a state appeals court.

Apple Computer Inc. (AAPL) faced tough questions before a three-judge panel of the 6th District Court of Appeal on Thursday as it argued its case seeking to identify the sources who leaked confidential information about an unreleased product to online media outlets in 2004.

Apple contended the unidentified sources — presumed to be company employees — violated its trade secrets. It subpoenaed the Internet service providers of three online journalists to turn over e-mail records to uncover the possible sources.

A lower court last year ruled in Apple's favor, but the Electronic Frontier Foundation, whose attorneys represent the online journalists of AppleInsider.com, PowerPage.org and MacNN.com appealed.

The civil-liberties organization contended Apple's protection of trade secrets in this case should not outweigh the journalists' First Amendment right to confidential sources nor the privacy protections of e-mails allowed under federal law.

The appellate panel in San Jose questioned Apple's stance, including its claim that the published diagrams of the unreleased music-related product code-named "Asteroid" amounted to a trade secret.

"It's just a picture of a product, why is that a trade secret?" asked presiding Judge Conrad Rushing. "This is just plugging a guitar into a computer."

George Riley, an attorney representing the Cupertino-based maker of Macintosh computers and iPod media players, countered there were some technical details included with the diagrams, and argued the information leak constituted "a very serious theft."

"The First Amendment is not supposed to be a shield for a journalist to shield criminal activity," Riley said.

The judges also expounded on the Electronic Frontier Foundation's claims that Apple failed to exhaust other investigative options to root out the source before going to court and issuing subpoenas. Judge Franklin Elia even suggested the company could have given lie-detector tests to its employees first.

"All you want here is the name of a snitch, so you're saying you have the right to invade the privacy of the e-mail system and to trump the First Amendment ... just to find out who in your organization is giving out inappropriate information?" Elia asked.

Other high-tech companies filed friend-of-the-court briefs in support of Apple, and Dan Bagatell, an attorney for chip-maker Intel Corp. (INTC), defended Apple during the appellate hearing.

"Unannounced products are some of the most important trade secrets here in Silicon Valley," Bagatell said.

The three online media outlets involved in the case all focus on Apple-oriented news and are part of the popular world of blogs.

But members of the mainstream media, including The Associated Press, weighed in as well, submitting court briefs asking that the online publishers be allowed to keep their sources confidential.

Apple's lawsuit, filed in Santa Clara County Superior Court in late 2004, does not directly sue the three media outlets but rather 25 unnamed individuals called "Does" who presumably were Apple employees with access to the as-yet unreleased product.

The appellate panel has up to 90 days to issue a ruling.