To their credit, Engadget and Wired declined the offer, though Engadget still ran photos of the device, sent to them along with that email, in an attempt to scoop archrival Gizmodo -- so don't give them too much credit. Gizmodo took the bait, wrote a check for $5,000, posted the story, basked in millions of page views, and then returned the phone to Apple.
Apple could have dropped the matter right there. According to that report in Wired, the company already knew the location of John Phoe -- probably via the model's Find my iPhone feature -- and had sent people to his house, though they didn't actually speak to him. There was no need to call in the cops to unmask the leaker, if that's what Apple wanted.
But Apple didn't drop the matter. According to the San Jose Business Journal, Apple officials called the local DA and requested an investigation. Why? Because Apple wants to send a message. It's not looking to quietly punish transgressors; it's looking for a public execution.
This is totally in line with Apple's attempts to squash leak-happy blogs AppleInsider, PowerPage, and Think Secret back in 2004 and 2005; only this time, actual felonies may be involved, so it don't have to file a civil suit. Everybody in this one looks bad.
Gizmodo doesn't come off smelling like roses. First, checkbook journalism is considered one of the slimier forms of the art. Second, there was no reason for the site to out the identity of the poor guy who lost the phone. It was both gratuitous and amateurish -- in other words, absolutely in keeping with how Nick Denton has run his Gawker blogging empire.
Third: Gizmodo claims it's protected by California laws that shield journalists from being forced to reveal their sources. Unfortunately for them, such laws tend to be moot when it comes to criminal cases -- and purchasing an item from a person whom you know is not the rightful owner is a felony.
According to Electronic Frontier Foundation attorney Jennifer Granick, the cops blew it by obtaining a warrant to search Chen's apartment instead of a subpoena. The latter is required under federal and state laws when questioning journalists, so media organizations can challenge the order in front of a judge before the source materials are confiscated. Do these laws still apply in a criminal case? That's unclear.