A tech blog that paid five grand to the finder of a prototype iPhone is under police investigation, as it seems buying found property is against the law.

Gizmodo paid $5,000 to the chap who found a next-generation iPhone in a bar, and the blog made merry with the device before returning it to Apple - after forcing Cupertino to admit that the prototype was genuine, in writing. But it seems that paying for found property is illegal in California, and now CNET reports that the police are taking an interest.

The prototype iPhone was left in a bar by an engineer who was field-testing it; with the launch scheduled for June it makes sense that Apple would do some field testing. An unknown person picked it up and played with it briefly before Apple remotely pulled the plug. That person apparently tried to return the handset to Apple, but the support desk staff (who don't have access to the goings on in the R&D department) told him it was just Chinese knock-off and not to bother them with it.

So he sold it to Gizmodo, who spent a week taking it apart and then posted the details, causing their servers to melt down as everyone scrambled to get sight of the device (sight only, the software was long gone).

The details are hardly in dispute - extracting every possible value from its purchase Gizmodo has waxed lyrical over every aspect of the iPhone, Apple's reaction, and the career of the poor engineer who left it in the pub, but whether the law was broken is another question entirely.

CNET quotes a California law that requires a person who finds something, and knows who the owner is, to return it or face a charge of theft. Of course, our man tried to return it, but Apple didn't want to know.

Freedom of the press is guaranteed in the US, and Gizmodo counts as "press" in this context, so trade secrets can be published - but this is a physical thing, an actual item for which money was paid, and that changes the situation considerably.

If the police do take action then lawyers on both sides will no doubt explore that in detail - though not Apple's lawyers as criminal offences aren't their remit.

What we want to know is if Gizmodo will be invited to the launch of the handset in June, or if the blog will joining El Reg with the rest of the Apple-offending personae non grata outside. ®