O'Grady v. Superior Court

• Decision Date: 26 May 2006
• Docket Number: No. H028579.,H028579.
• Citation: 139 Cal.App.4th 1423,44 Cal.Rptr.3d 72
• Parties: Jason O'GRADY et al., Petitioners, v. The SUPERIOR COURT of Santa Clara County, Respondent; Apple Computer, Inc., Real Party in Interest.
• Court: California Court of Appeals Court of Appeals

44 Cal.Rptr.3d 72

139 Cal.App.4th 1423

Jason O'GRADY et al., Petitioners, v. The SUPERIOR COURT of Santa Clara County, Respondent Apple Computer, Inc., Real Party in Interest.

No. H028579.

Court of Appeal, Sixth District.

May 26, 2006.

Law Offices of Richard R. Wiebe, Richard R. Wiebe, Berman DeValerio, San Francisco, Tomlinson Zisko, Thomas E. Moore, III, Palo Alto, Electronic Frontier Foundation, Kurt B. Opsahl, Kevin S. Bankston, Los Angeles, for Petitioner Jason O'Grady et al.

O'Melveny & Myers, George A. Riley, David R. Eberhart, Dhaivat H. Shah, San Francisco, James A. Bowman, Los Angeles, Ian N. Ramage, San Francisco, for Real Party in Interest Apple Computer Inc.

Thomas W. Newton, San Francisco, James W. Ewert, for Amicus Curiae for Petitioner California Newspaper Publishers Assoc.

Lucy D. Dalglish, Gregg P. Leslie, Grant D. Penord, for Amicus Curiae for Petitioner Reporters Committee for Freedom of the Press.

Center for Internet & Society, Lauren Gelman, Stanford, for Amicus Curiae for Petitioner Center for Internet & Society.

Paumilia & Adamec, Justene Adamec, Pasadena, WLF The Williams Law Firm, J. Craig Williams, Newport Beach, Enterprise Counsel Group, Jeffrey Lewis, Benjamin P. Pugh, Irvine, for Amicus Curiae for Petitioner Bear Flag League.

Akin Gump Strauss Hart & Feld, Elizabeth H. Rader, San Francisco, for Amicus Curiae for Petitioner United States Internet Society et al.

Keker & Van Nest, Michael D. Celio, Steven A. Hirsch, Clement S. Roberts, San Francisco, for Amicus Curiae for Real Party in Interest Genetech, Inc.

Ann Brick, San Francisco, for Amicus Curiae for Real Party in Interest ACLU.

Perkins Coie Brown & Bain, Dan L. Bagatell, Joel W. Nomkin, Phoenix, AZ, Covington & Burling, Sonja D. Winner, San Francisco, for Amicus Curiae for Real Party in Interest Intel Corp., et al.

Quinn Emanuel Urquhart, etc., Robert W. Stone, Kathleen M. Sullivan, Redwood Shores, for Amicus Curiae for Real Party in Interest Information Technology Industry Council.

RUSHING, P.J.

Apple Computer, Inc. (Apple), a manufacturer of computer hardware and software, brought this action alleging that persons unknown caused the wrongful publication on the World Wide Web of Apple's secret plans to release a device that would facilitate the creation of digital live sound recordings on Apple computers. In an effort to identify the source of the disclosures, Apple sought and obtained authority to issue civil subpoenas to the publishers of the Web sites where the information appeared and to the email service provider for one of the publishers. The publishers moved for a protective order to prevent any such discovery. The trial court denied the motion on the ground that the publishers had involved themselves in the unlawful misappropriation of a trade secret. We hold that this was error because (1) the subpoena to the email service provider cannot be enforced consistent with the plain terms of the federal Stored Communications Act (18 U.S.C. §§ 2701-2712); (2) any subpoenas seeking unpublished information from petitioners would be unenforceable through contempt proceedings in light of the California reporter's shield (Cal. Const., art. I, § 2, subd (b); Evid.Code, § 1070); and (3) discovery of petitioners' sources is also barred on this record by the conditional constitutional privilege against compulsory disclosure of confidential sources (see Mitchell v. Superior Court (1984) 37 Cal.3d 268, 208 Cal.Rptr. 152, 690 P.2d 625 (Mitchell)). Accordingly, we will issue a writ of mandate directing the trial court to grant the motion for a protective order.

FACTUAL AND PROCEDURAL BACKGROUND

Petitioner Jason O'Grady declared below that he owns and operates "O'Grady's PowerPage" an "online news magazine" devoted to news and information about Apple Macintosh computers and compatible software and hardware. PowerPage has its principal place of business in Abington, Pennsylvania, and has been published daily since 1995. O'Grady acts as its publisher and one of nine editors and reporters. Since 2002 the site has occupied its present address on the World Wide Web, where it publishes 15 to 20 items per week. Over the two years preceding the execution of the declaration, the Web site received an average of 300,000 unique visits per month.¹

Under the pseudonym "`Kasper Jade,'" a person identifying himself as "primary publisher, editor and reporter" for Apple Insider declared that Apple Insider is an "online news magazine" devoted to Apple Macintosh computers and related products.² He identified petitioner Monish Bhatia as the publisher of "Mac News Network," which provides hosting services to a number of Web sites, including "Apple Insider." Apple Insider has published "daily or near-daily technology news" at the same web address since 1998 at an average rate of seven to 15 articles per week. In July 2004, it received 438,000 unique visitors.

Over a period of several days in November 2004, PowerPage and Apple Insider published several articles concerning a rumored new Apple product known as Asteroid or Q97. The first article appeared on PowerPage on November 19, 2004, with O'Grady's byline. It stated that PowerPage had "got[ten] it's [sic] hands on this juicy little nugget about a new FireWire breakout box for GarageBand that Apple plans to announce at MacWorld Expo SF 2005 in January."³ The article described a device that permitted the user of an Apple computer to record analog audio sources, such as microphones or guitars, using an existing Apple application known as GarageBand, the primary function of which is to facilitate the production of digital audio recordings.⁴ The article included a drawing of a smallish box with a few input/output connectors. Next to the drawing was a list of further details: "FW [i.e., FireWire] based audio input device," "[t]wo inputs, two outputs," "powered from FireWire," "[s]oftware driven input gain control," and "[l]imiter circuit to automatically prevent `clipping.'"

On the following Monday, November 22, 2004, PowerPage published an article entitled "Apple's Asteroid Breakout Box Part II: Product Details," also with O'Grady's byline. It gave additional product details plus a "[t]arget price," "[t]arget intro date," and "[t]arget intro q[uanti]ty." Also included was a "concept drawing," attributed to "Bob Borries," which diverged substantially from the simple box depicted in the first article, more nearly resembling a small audio mixing board.

On November 23, 2004, PowerPage ran another article by O'Grady addressing Asteroid's integration into GarageBand. The article said, "Today we have some juice on new GarageBand functionality for extremely easy setup, recording and playback through Asteroid." It listed a number of details concerning the anticipated integration.

Also on November 23, 2004, an article appeared on the Apple Insider site, authored by "Kasper Jade," entitled, "Apple developing FireWire audio interface for GarageBand." It stated that the device would "allow users to directly record audio using any Mac and Apple's GarageBand music studio application," and that "[a]ccording to reputable sources, the company is on track to begin manufacturing the device overseas next month." Included was an "[a]rtist rendition" of the device "based on Apple prototype design and . . . likely [to] change." The illustration was attributed to "Paul Scates," whose email address was provided. The article recapitulated the technical details noted on the PowerPage site, adding that "a more advanced version" of the device had been "recently seen floating around the [sic] Apple's Cupertino campus" with an additional output port of a stated type. The article stated that it was "unclear which version the company will ultimately send to manufacturing." It noted that the device, "code-named `Q97' or `Asteroid,'" had been "under development" for "the better part of a year." It reported some details concerning the history of the product, identified a named Apple subsidiary as having participated in its design, and named a company with whom Apple had already contracted for its manufacture. The article stated that a production run of a specified number of units was to occur in a matter of weeks and that the product would probably be announced at an upcoming trade show. It specified a price range for the product and stated that it would "aggressively target similar products," examples of which were provided. Even at the upper end of its anticipated price range, the article opined, the product would "represent one of the lowest priced FireWire breakout boxes on the market...." Allusion was also made to "internal company estimates" concerning expected quarterly earnings from the product.

On November 26, 2004, PowerPage ran "Part IV" of its series on Asteroid, entitled "What's it all mean?" The article was bylined "Dr. Teeth and the Electric Mayhem." It alluded to an "article at createddigitalmusic," to which a hypertext link was provided, which had gone "further into the rumored Apple audio interface Asteroid, as reported here on PowerPage." Readers were advised not to "get too excited, as this hardware is similar to hardware already available, though you can probably expect a very cool box and some new software integration features . . . that may ultimately benefit even competitive audio interfaces . . . ." "Dr. Teeth" wrote that the device reflected in the "concept" drawing in the November 22, 2004 article was "probably more interesting than the product that's actually coming," as to which "[i]nside reports suggest . . . a simple 2-in, 2-out box, NOT a control surface with knobs and faders . . . ." The image shown in Apple Insider was said to be "probably dead-on" in making the product "Apple white," and "appears to be adapted from the same prototype image posted on the PowerPage," though it got one detail wrong, i.e., it showed one type of connector while "rumored specs" pointed to another, more...