By Philip Elmer-DeWitt
June 4, 2010

The court orders a search of a journalist’s hard drives in the case of the lost iPhone

Gawker Media has backed down — to a degree — and agreed to allow the search of computers belonging to one of its editors, Gizmodo’s Jason Chen.

Gawker, which owns Gizmodo, paid $5,000 for a secret prototype iPhone lost in a bar last March by an Apple (AAPL) engineer. Initially it insisted that Chen, who had handed over the cash, broke open the device and published photographs of its components, was protected by California’s press shield laws.

According to a report Thursday by CNET’s Greg Sandoval and Declan McCullagh, Gawker’s lawyer has agreed to let a special master — a third party appointed by the court — examine the computers and determine what contents, if any, are relevant to the case. The special master’s findings will be sent to Chen and his lawyers so they can make any objections. The judge will ultimately decide what evidence will get sent to the district attorney.

Meanwhile, Apple CEO Steve Jobs, speaking about the case Tuesday evening at the Wall Street Journal‘s D8 conference, made it clear that he had no intention of backing down.

Indeed, he seems to have leveled even more charges against Gawker — at least in his mind.

“This is a story that’s amazing,” he said. “It’s got theft, it’s got buying stolen property, it’s got extortion. I’m sure there’s some sex in there.”

Without offering any evidence, Jobs questioned whether the prototype was really left accidentally in a bar, as Gizmodo reported, or stolen out of its owner’s bag. The reference to “extortion” may refer to Gizmodo’s insistence that Apple acknowledge in writing that the prototype was the real thing before getting it back.

“I got a lot of advice from people that said, ‘You’ve got to just let it slide,” Jobs said. “You shouldn’t go after a journalist because they bought stolen property and tried to extort you.”

“I can’t do that,” he said later. “I’d rather quit.”

Gawker CEO Nick Denton, who had cast the case as an attack on freedom of the press, took a lighter tone in his response to Jobs’ remarks: “It’s good to see Steve Jobs so animated,” he said.

Excerpts of Jobs’ D8 interview are available here and pasted below:

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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