What Is the Difference Between Lost and Stolen Property?

When an Apple employee loses a top-secret iPhone, is the guy who finds it guilty of "theft"?

Adam Freedman
July 6, 2012


Today’s topic: Raiders of the Lost iPhone! 

And now, your daily dose of legalese: This article does not create an attorney-client relationship with any listener. In other words, although I am a lawyer, I’m not your lawyer.  In fact, we barely know each other. If you need personalized legal advice, contact an attorney in your community.

Apple Versus Gizmodo

I’ve been getting a lot of questions about the recent incident in which a prototype fourth-generation iPhone was lost by an Apple engineer and made its way into the hands of Tech blog Gizmodo. So many questions, in fact, that I’m devoting two full articles to the various legal issues involved in the tale of the now-famous lost iPhone

In today’s article, I’m going to explore whether the phone was technically “stolen” under the law. In my next article I’ll look at whether Gizmodo can get into trouble for having published details about the iPhone, or whether the First Amendment protects them. 

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What Is the Difference Between “Stolen” and “Found”?

Readers Mervin, Mike H. and Mike C. all want to know whether there’s any truth to the accusation that the lost iPhone was “stolen” by the person who found it. After all, what about “finders keepers, losers weepers?”

It’s a great question. The quick answer is that both Gizmodo and the student who originally found the iPhone could face civil or criminal charges based on their conduct. But they also have some plausible defenses, which I’ll explain in a moment.

The iPhone Saga: The Story So Far

First, a quick recap of the iPhone saga. On March 18, 2010, Apple engineer Gray Powell went to a German-style “beer garden” in Redwood City, California and, after downing a few steins, exited the bar but without the next-generation iPhone he had been carrying. The phone was found by a college student named Brian Hogan who eventually sold it to Gizmodo, which proceeded to post a detailed review of the device, complete with photos and technical specifications. Next thing you know, Silicon Valley cops launch an investigation, including a search of the home of Gizmodo editor Jason Chen. 

Is “Finders Keepers” Legal?

No matter what they say in the schoolyard, “finders keepers” is not the law.

Before we get to Gizmodo’s conduct, we have to ask whether the college student Brian Hogan did anything wrong, to which the answer is: quite possibly, yes. It turns out that those kids who taunted you with cries of “finders keepers” had it all wrong. Under common law, a person doesn’t relinquish title to his personal property merely because he loses or mislays it. Generally, the person who finds the property is required to hand it over to the rightful owner, provided he makes himself known within a reasonable time. 

Given this legal background, one can understand why train stations have always had “lost and found” departments rather than “hey, would you like to buy some used luggage” departments.  That’s also why, when you rush back into a restaurant to collect the umbrella, or wallet--or, indeed, the cell phone--that you left behind, you expect the item to be returned to you.

California Law Puts Special Obligations on Finders

[[AdMiddle]In this case, Hogan may have violated a provision of California’s Civil Code, which states that if a person takes possession of lost property, he or she must either return it to the owner or turn it in to the police. It appears that Hogan took a third option: sell to the highest bidder. But Hogan’s actions do not necessarily amount to “theft” under California criminal law. That depends on whether he made “reasonable and just efforts” to find the property owner. According to reports, Hogan did try to notify Apple that he had found the phone, but Apple allegedly did not follow up.

Did Gizmodo Commit a Crime by Buying the iPhone?

If Hogan did commit a crime, then arguably Gizmodo also committed a crime. That’s because it is a separate offense for one person to buy purloined property from another--this is the crime commonly known as “receipt of stolen goods.” But in order to be guilty of this crime, Gizmodo must have known that the phone had been stolen. Gizmodo may argue that it had no idea how Hogan obtained the device--perhaps no questions were asked.   Also, given that the line between finding and stealing can depend on the subjective question of whether Hogan made “reasonable and just efforts,” Gizmodo may be able to claim that there was no way for it to be sure that the phone was, technically, stolen.  

But that’s not the end of the story. Gizmodo didn’t just buy the new-fangled iPhone, it published details about it over the Internet. And that raises a bunch of other legal claims and counterclaims that I’ll discuss in my next article, which I hope you’ll listen to or read on your own mobile device--and not anyone else’s. 

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