The home of Gizmodo editor Jason Chen has been raided by police, as the iPhone 4 battle turns ugly.

Last week Gizmodo broke the news that it had paid $5,000 for a prototype iPhone 4 found in a bar. Gizmodo claims the iPhone had been left there by an Apple engineer who was field testing the experimental device.

Apple requested the iPhone be returned and Gizmodo complied, but not before taking the device apart and posting full details on the site. However, it appears Apple is not taking the matter lying down.

On Friday night, police raided the home of Chen while he was out with his wife and seized six of his computers by order of a search warrant. The warrant was issued on the basis that Chen's apartment "was used as a means of committing a felony".

Stephen Wagstaffe, spokesman for the San Mateo County District Attorney's office, confirmed that the action followed a report by Apple that a crime had been committed. "The allegation was that there was a reasonable cause that a felony theft had occurred," he told Reuters. "This is the beginning of the investigation."

Lawyers acting on behalf of Gizmodo have written to the San Mateo police department demanding the return of the computers, claiming that their confiscation breaks the "shield law" that protects journalists from being forced to disclose their sources.

Apple was unavailable for comment at the time of writing.