| | Apple Sues Web Site
Run by 19-Year-Old
For Revealing Secrets
By VAUHINI VARA
THE WALL STREET JOURNAL ONLINE
January 14, 2005
Apple Computer Inc. has filed a lawsuit against the mysterious mastermind behind a Web site that has gained fame among Mac-lovers -- and notoriety among company executives -- for spilling secrets about Apple's products before they are launched.
The target of Apple's legal assault: a 19-year-old Harvard University freshman and Apple enthusiast known to most of his fans simply as "Nick dePlume."
Nicholas Ciarelli started ThinkSecret.com at age 13 as an online hangout for fellow enthusiasts of Apple's Macintosh computers. It has since become one of the most influential Web sites about the company, drawing analysts and industry watchers eager to read the site's guesses about Apple's next move. "Whenever there's a hot rumor, I'm there," says Andrew Green, vice president of marketing and creative director at Digital Lifestyle Outfitters Inc., which makes accessories for Apple's hot iPod music players.
Piper Jaffray analyst Gene Munster says Think Secret's early reports of a sub-$500 Mac spurred him to put out a research note on the speculation two days later. The report was confirmed when Apple announced such a computer this week. He said he was "shocked" to learn Mr. Ciarelli's age. "I kind of thought it was a 55-year-old guy who had been around the Mac world for the last 20 years," he said.
Few knew the identity of the person behind Think Secret. Some speculated that he was an Apple employee. Others believed he worked at a company close to Apple. Still others assumed he was a professional journalist operating Think Secret on the side.
Even Apple purported not to know his name when it filed suit Jan. 4 against Think Secret and its unnamed tipsters, claiming that the postings contain trade secrets. "Apple is informed and believes that Defendant Nick dePlume is an individual who uses the pseudonym 'Nick dePlume' but whose true name and identity cannot be confirmed at this time," reads the complaint, filed in state Superior Court in Santa Clara, Calif.
But Apple clearly suspected Mr. Ciarelli, since it had sent him a cease-and-desist letter in November.
On Wednesday, the Crimson, Harvard's student newspaper, offered a confirmation: In a story about the lawsuit, the paper reported that "Nick dePlume" was in fact Mr. Ciarelli, "a Wigglesworth [Hall] resident who hails from New York." Mr. Ciarelli is also an editor at the newspaper.
Mr. Ciarelli still lived with his parents in Cazenovia, N.Y., when he launched the site that became Think Secret six years ago. "I didn't start the site having any contacts in the industry or anything like that, so it grew very slowly," he says. By the time he was a student at Cazenovia High School, he no longer had that problem. In October 2001, Think Secret ran a story saying Apple planned to release a new music player. A week later, Apple unveiled the iPod.
Mr. Ciarelli kept the site running throughout high school, between competing in cross-country and track-and-field contests and building sets for school plays.
These days, Think Secret is considered one of the top Mac rumor sites on the Web. A Dec. 28, 2004, headline shouted, "EXCLUSIVE: Apple to drop sub-$500 Mac bomb at Expo." A Jan. 6 story was titled, "Road to Expo: Flash-based iPod days away." Both articles proved to be true -- Apple's second big product launch Tuesday was a $99 iPod that uses flash memory to store songs -- though a few details were off.
Mr. Ciarelli has made some gaffes. In his story on the latest iPod, he predicted one- and two-gigabyte versions with a small screen, that would be sold for $149 and up. In fact, the flash-based iPod Shuffle comes in 512-megabyte and 1-gigabyte models that have no screens and start at $99.
Apple is widely known as one of the most secretive high-tech companies when it comes to its product plans. Even within Apple, development groups often have no idea what other teams at the company are working on. Retailers, including employees of Apple's own stores, frequently don't find out about new products until the day they become available -- a sharp contrast to companies like Microsoft Corp., which often spend months or even years trumpeting coming products. Apple's secrecy policy has the side-benefit of stimulating publicity in the media and online about the company's next moves.
New employees at Apple are reminded by corporate-security officials of the consequences of leaking company information to the public or media -- it can result in termination, according to former employees. In some cases, the consequences are more severe: Four years ago Apple sued a former worker, Juan Gutierrez, for posting pictures on several Web sites of coming Apple products, including the iBook laptop. Apple later reached a settlement with Mr. Gutierrez.
Apple says it believes that Think Secret obtains its information by illegally soliciting information about unreleased Apple products from individuals who violate confidentiality agreements with the company. "Apple's DNA is innovation, and the protection of our trade secrets is crucial to our success," the computer giant said in a statement last week. An Apple spokeswoman yesterday declined to comment further on the lawsuit or Mr. Ciarelli's site or why it didn't cite him by name in the suit.
"I didn't do anything wrong," says Mr. Ciarelli. "My reporting practices are the same that any journalists use. I talk to sources, I confirm details, I follow up on tips and leads that I get."
Mr. Ciarelli's site accepts ads, including from Apple rivals such as Microsoft. He says the site is profitable enough to help him pay for his Harvard tuition, but declines to discuss details. He adds that he hasn't yet hired a lawyer to defend himself in the Apple suit.
It will be difficult for Apple to prove that Think Secret's coverage violated its trade secrets, says Robert E. Camors, an intellectual property lawyer at Thelen Reid & Priest LLP in San Jose, Calif. Trade secrets usually deal with the formula behind products -- not simply the details about the products' release, he says. Secondly, it would be difficult for an Apple rival to benefit from the news the site has reported. "No competitor can design and market a product in two weeks," he says.
Meanwhile, Mr. Ciarelli says he remains a fan of Apple's products. "Macs are all I buy," he says. He owns a Power Mac G5 desktop computer, a PowerBook G4 laptop and two iPods, among other Apple products.
--Nick Wingfield contributed to this article.
Write to Vauhini Vara at vauhini.vara@wsj.com |
|
