(July 11): Apple Inc sued OpenAI for trade secret theft, accusing the artificial intelligence (AI) startup and its hardware chief of engaging in a coordinated campaign to steal information about upcoming products.
The iPhone maker said in a suit Friday that OpenAI encouraged Apple employees to share information, components, drawings and other materials related to upcoming products — part of efforts by the AI company to develop its own suite of devices.
As part of the litigation, filed in the Northern District of California, Apple also named Tang Tan, the chief hardware officer at OpenAI. He was previously Apple’s vice president of product design, leading development of the iPhone, smartwatch, AirPods and several other offerings in the company’s hardware engineering division.
In a statement, OpenAI said it has “no interest in other companies’ trade secrets”.
“We remain focused on building innovative technology that empowers people everywhere,” a spokesperson for the San Francisco-based company said.
The legal fight represents a dramatic turn for two companies that worked as close partners in recent years. OpenAI, maker of the ChatGPT chatbot, has supplied vital technology to the Apple Intelligence platform and Siri digital assistant. But tensions have been growing for the past year — worsened by OpenAI enlisting former Apple design visionary Jony Ive to help develop devices.
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OpenAI, which is poised for an initial public offering in the coming months, has lured away a vast number of Apple employees. According to the lawsuit, more than 400 former Apple workers are now at OpenAI.
“At every level, from members of its technical staff to its chief hardware officer, and in coordination with business partners, OpenAI has been stealing Apple’s trade secrets and confidential information,” the Cupertino, California-based tech giant said in the suit. “As a natural result, OpenAI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets.”
Apple is demanding that OpenAI cease its practices and destroy any proprietary materials. Apple, which is seeking a jury trial in the case, also wants OpenAI to redesign upcoming products so they don’t include any of its technology.
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Apple said that Tan encouraged employees to provide information about upcoming products in job interviews. The suit also named a former iPhone hardware engineer, Chang Liu, saying he provided materials. Liu joined OpenAI in January.
“Over several weeks, while developing hardware for OpenAI, Mr Liu surreptitiously accessed and downloaded dozens of Apple’s confidential hardware-related files, including voluminous, detailed information about unreleased products, engineering presentations, technical specifications and proprietary project data,” according to the lawsuit.
Apple said that its employees were “actively coached” by OpenAI on how to handle their exits from the company.
“OpenAI has counselled departing employees not to disclose their next employer and given advice on how to avoid the ‘dreaded walk out’ that would promptly remove them from the company rather than giving them a standard two weeks in which they could continue to access Apple’s confidential information and trade secrets,” according to the suit.
The case highlights the importance of next-generation AI devices to Silicon Valley. Apple, OpenAI, Meta Platforms Inc and others are all racing to develop new gadgets that put AI at the center, aiming to prepare for a post-smartphone future.
Apple is working on devices as varied as smart glasses, pendants and camera-equipped AirPods — all part of its bid to adapt to the AI era.
Tan originally left the iPhone maker in 2024 to co-found an AI devices startup called io Products Inc alongside Ive and Apple design veteran Evans Hankey. OpenAI acquired the startup last year for US$6.5 billion ($8.4 billion). Ive and Hankey aren’t named in the lawsuit.
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Apple said it attempted to resolve the OpenAI dispute out of court months ago, asking it to cease the efforts and eliminate any proprietary materials. It said that it didn’t receive a response, leading Apple to file the lawsuit.
“Significant evidence has emerged suggesting individuals employed by OpenAI wrongfully took Apple’s secret and confidential information regarding our unreleased technologies, processes and products,” the company said in a statement.
As part of the defections to OpenAI, the top executive in charge of Apple’s smart glasses effort left last month.
Though the two companies never had a partnership to develop hardware devices, they’ve worked together on AI features used by the iPhone and other products. That relationship was announced at Apple’s Worldwide Developers Conference two years ago, with OpenAI chief executive officer Sam Altman sitting in the audience. At the time, Apple software head Craig Federighi referred to the startup as the “pioneer and market leader” in AI and the companies seemed poised for a broad strategic partnership.
The arrangement let users access ChatGPT results within Siri and tap the AI technology to generate text and analyse surrounding objects via the iPhone’s Visual Intelligence feature. The partnership later expanded, with Apple adding ChatGPT as an option for creating images in its Image Playground app and analysing on-screen content.
But the relationship around ChatGPT in Siri also has soured. Bloomberg News reported earlier this year that OpenAI was considering its own legal options against Apple. The AI startup failed to see the expected benefits from the partnership and considered sending a breach of contract notice, people familiar with the matter said.
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