December 20, 2007 | Computerworld

By Gregg Keizer

A popular Apple-centric rumor Web site has shut down as part of an out-of-court settlement with Apple Inc., but the lawyer representing the blog said today that it was a win for his client and a loss for the company.

“The First Amendment has prevailed,” said Terry Gross of Gross & Belsky LLP, “and every Internet journalist should feel some strength from what’s happened.”

The settlement, which was announced today by Nick Ciarelli, publisher and editor in chief of the popular ThinkSecret site, came nearly three years after Apple filed a lawsuit that accused him and his site of illegally soliciting leaks from Apple employees.

For its part, ThinkSecret will close, Ciarelli said yesterday in a statement, but Apple will not obtain the names of his sources, as the company had demanded. “I’m pleased to have reached this amicable settlement, and will now be able to move forward with my college studies and broader journalistic pursuits,” said Ciarelli.

Ciarelli is an undergraduate at Harvard University and an executive editor on the staff of the university’s newspaper, The Harvard Crimson. He had been running the ThinkSecret site since he was 13.

In January 2005, Apple sued Ciarelli, then 19 and a Harvard freshman. “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 charged then. Apple specified seven articles posted by ThinkSecret from May 2003 to December 2004, including ones about upcoming new products such as KeyNote 2.0, iSync and a sub-$500 Mac. All correctly pegged the releases from the company; the $499 Mac Ciarelli cited in late 2004 did, in fact, launch at the next month’s MacWorld Expo as the Mac Mini, for example.

Throughout the case, Ciarelli was represented by Gross, a prominent attorney in the Internet law field and the first counsel to the Electronic Frontier Foundation (EFF), a civil liberties advocacy group.

Today, unlike blogosphere commentators, Gross claimed the settlement was a loss for Apple, not Ciarelli or other bloggers. “It’s clear that Apple filed the lawsuit with such fanfare, but then stopped the entire litigation because they thought they were going to lose, and that they’d end up paying [Nick] a lot of money for it,” Gross said.

Immediately after a countermotion filing in March 2005, said Gross, Apple lost interest in the case.

“Apple stopped pressing their lawsuit, and essentially nothing happened. Nick kept writing his articles, and Apple kept sending cease and desist letters.”

Everyone, readers and Internet journalists, professional and amateur alike, should see this as a positive move, Gross continued. “This shows that lawsuits like Apple’s can be stopped dead,” he said. “Other companies are going to realize that if they try something like this, there will be an uproar, and groups like EFF will do what it takes [to represent defendants].”

Ciarelli is “very satisfied” with the deal, Gross said. As to why they settled: “Nick was thinking it was time to do something else. He’s been doing ThinkSecret since he was 13. One of the most amazing things about Nick is that he had such a focus and passion for this when he was barely a teenager.”

Ciarelli did not reply to a request for comment, and while Apple spokesman Steve Dowling said Thursday afternoon that the settlement prevented the company from talking details, noted: “We are pleased to reach an amicable settlement.”

“I would have loved for Apple to go forward on this,” said Gross. “Apple would have caved, which they should have in the beginning.”

Apple filed an associated lawsuit in December 2004 against ThinkSecret and two other blogs, O’Grady’s PowerPage and AppleInsider, alleging trade secret violations. Three months later, Apple subpoenaed PowerPage’s e-mail service provider in an attempt to uncover the source of leaks inside Apple. Gross called that move an “end around by Apple.”

In May 2006, a California state appeals court ruled that online journalists enjoy the same rights as traditional media reporters to protect the confidentiality of their sources. Two months later, Apple declined to appeal that decision further.