Jason Chen posted this photo of himself as part of his review of the iPhone prototype.

In a victory for California’s journalist shield law, San Mateo County District Attorney Steve Wagstaffe has decided he won’t prosecute Gizmodo.com editor Jason Chen for buying an iPhone prototype that had been lost at a Redwood City bar by an Apple employee.

Wagstaffe decided that Chen bought the phone for a legitimate journalistic purpose — in this case, reviewing a product months before it was to become public — and therefore was covered by the shield law that protects the confidentiality of journalists’ sources.

The shield law apparently wasn’t on the minds of law enforcement when cops raid Chen’s home in Fremont on April 28, 2010. The search warrant law enforcement presented to San Mateo County Superior Court Judge Clifford Cretan didn’t identify Chen as a journalist.

The night-time search was carried out by members of the Rapid Enforcement Allied Computer Team (REACT), an anti-high-tech crime strike force made up of cops from various departments in San Mateo and Santa Clara counties. In the raid, police took his computers, cellphones and documents.

The search appeared to violate both the state shield law (Section 1070 of the California Evidence Code) and the federal Privacy Protection Act of 1980 (42 U.S.C. 2000 aa et seq.) which is designed to stop police from seizing materials from newsrooms.

No members of law enforcement will be charged, however. But the two men who allegedly sold Chen the phone for $5,000 will face misdemeanor charges.

Wagstaffe’s decision, coming more than a year after the search, appears to be a slap in the face of Steve Jobs, who was angered when he discovered Chen had obtained the phone. Jobs called the head of Gizmodo’s parent company, Gawker Media, to demand that the phone be returned. And then he contacted the REACT task force. The task force’s board includes a representative of Apple.

Jobs indicated at a 2010 All Things Digital D8 conference that he didn’t feel Chen was a journalist. DA Wagstaffe felt he was and invoked the shield law.