By court order a special master, whose identity is also shrouded by court order, is examining the computers and electronic gear that the cops seized from Gizmodo writer Jason Chen in chasing down the now-famous missing iPhone prototype.

It appears there's no absolutely definitive ruling on whether the seizure was legal or if the blogger was somehow protected by First Amendment shield laws, because according to CNET a deal was struck between Chen's lawyer and the authorities that ushered the special master in.

The cops seem to have been well within their rights considering they were investigating an alleged felony. Shield laws are no protection there.

Anyway, any evidence found pertaining to the phone is supposed to be turned over to the courts. Chen and his lawyer can object if they like and then the judge will decide what, if anything, to forward to the district attorney. The process could reportedly take a couple of months.

It was clear from Steve Jobs' appearance at the D8 conference this week that the Apple CEO doesn't really believe that the phone simply fell out of his engineer's bag during an apparent field trial or that Gizmodo didn't try its hand at extorting Apple.

Jobs said he was counseled to drop the affair and let the blog have its 15 minutes of fame with the phone that it paid at least $5,000 for. He said he was told, "You shouldn't go after a journalist just because they bought stolen property and tried to extort you." Jobs said he thought about it "and I concluded the worst thing that could happen is if we change our core values and let it slide. I can't do that. I'd rather quit."

He allowed that it makes a great story "It's got theft. It's got buying stolen property. It's got extortion. There's probably sex in there somewhere too. Somebody should make a movie out of this." And doubtless they will. Remember Steve's alter ego the Fake Steve Jobs is now writing script treatments for an upcoming TV serial about Silicon Valley.

Nobody's been charged in the case yet, but whether they are or not it sounds like Apple will sue.