Apple sues OpenAI, two former employees for trade secrets theft

Apple sues OpenAI, two former employees for trade secrets theft. Apple on Friday sued OpenAI and two former employees, alleging misappropriation of its trade secrets to benefit the ChatGPT-owner's foray into consumer hardware, a dramatic escalation of already simmering tension between the two companies. The complaint accuses OpenAI of orchestrating a broad effort to systematically acquire and exploit Apple's confidential information through former employees, recruiting practices and supplier relationships to accelerate its push into the consumer hardware business. "We have no interest in other companies' trade secrets," OpenAI said in a statement. "We remain focused on building innovative technology that empowers people everywhere." "Apple sees OpenAI moving from partner to potential rival, while OpenAI is trying to reduce its dependence on the iPhone and build a direct relationship with consumers," said PP Foresight analyst Paolo Pescatore. "Even if the allegations are not proven, the lawsuit could delay OpenAI's hardware ambitions and further weaken what is already becoming an increasingly fragile partnership." The two former Apple employees named in the suit are Chang Liu, a former senior system electrical engineer, and former vice president of product design for iPhone and Apple Watch, Tang Yew Tan. Apple alleged that Liu failed to return a company-issued work laptop and later used an authentication bug to access Apple's internal network, downloading "dozens of Apple's confidential hardware-related files." OpenAI Foundation, OpenAI Group PBC, the company's commercial arm, and io Products, which OpenAI acquired, were also named as defendants. More than 400 former Apple employees now work for OpenAI, it said in its filing, adding that "it is not surprising" that some of them have knowledge of its confidential information. "That OpenAI now employs people who were once entrusted with Apple's trade secrets does not entitle OpenAI to use that information to jumpstart its hardware efforts," the iPhone maker wrote in its complaint. Mark Lemley, a professor at Stanford Law School, said that Apple's complaint "has the potential to be a very big case" but that some of what Apple alleges, such as OpenAI's hiring of hundreds of Apple employees, is not illegal in California, where Silicon Valley sprang up in part thanks to state laws that allow employees leave for a competitor. "But if Apple's claims that the employees took confidential documents with them — and that OpenAI is using those documents — are true, that is a problem for OpenAI," Lemley said. OpenAI bought hardware startup io Products, founded by former Apple designer Jony Ive, last year in a $6.5 billion deal, in a push to move beyond software into consumer hardware. Ive is not named in the lawsuit.