Apple Suing OpenAI, 2 Ex-Employees, for Allegedly Stealing Trade Secrets

Apple sued two of its former employees and ChatGPT owner OpenAI on July 10 for allegedly stealing its trade secrets.The new legal complaint was filed in the U.S. District Court in San Jose, California.The plaintiff, Cupertino, California-based Apple Inc., is suing defendants Chang Liu and Tang Yew Tan, who used to be Apple employees, along with OpenAI Foundation and its controlled subsidiary, OpenAI Group PBC, and io Products LLC, a hardware startup that OpenAI acquired.OpenAI is a U.S.-based AI company headquartered in San Francisco. OpenAI created and owns ChatGPT, a popular chatbot, along with its underlying models. Tan, who is now OpenAI’s chief hardware officer, co-founded io Products. Liu is now a member of OpenAI’s technical staff.The complaint alleges OpenAI engaged in an effort to acquire and exploit Apple’s confidential information through former employees and used other business practices to speed up its entry into the business of consumer hardware.“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 said in its legal complaint that it “has uncovered a pattern of theft of Apple’s trade secrets by OpenAI employees who were formerly at Apple.”Apple has poured hundreds of billions of dollars and decades into developing “groundbreaking consumer hardware products like iPhone, Apple Watch, and MacBook,” and its trade secrets “collectively constitute one of the most valuable intellectual assets in all of American business,” according to the complaint.The complaint alleged that as an OpenAI employee, Liu downloaded “dozens of Apple’s confidential hardware-related files,” and that Tan, whom Apple “entrusted … with its most sensitive projects … has been methodically using Apple’s confidential information to benefit OpenAI.”Tan allegedly encouraged Apple employees to bring “actual parts” from Apple for “show and tell” sessions “in which he and his team at OpenAI [could] elicit still more Apple confidential information,” the complaint said.Although Apple went to great lengths to protect its trade secrets, they “have been compromised through the deliberate misconduct by those previously entrusted with them,” the complaint alleged.Given that more than 400 former Apple employees now work at OpenAI, it is “not surprising that certain OpenAI personnel have knowledge of Apple’s confidential and proprietary information,” which they must keep confidential, but OpenAI has been “exploiting” this information while concealing its activities, the complaint said.“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 lawsuit is being brought under the federal Defend Trade Secrets Act and the California Uniform Trade Secrets Act. Apple seeks damages for breach of contract, loss of competitive advantage, unjust enrichment, and misappropriation under the two statutes.Unjust enrichment means a defendant received a benefit at the plaintiff’s expense, and it would be unfair for the defendant to keep the benefit without paying for it.Apple is also seeking injunctions to prevent misappropriation of its trade secrets.The company is requesting that its lawsuit be tried by a jury.The Epoch Times reached out for comment to both Apple and OpenAI. No replies were received by publication time.The two companies have a business partnership, but it has been strained recently as both rush to develop artificial intelligence (AI) products.Last month, OpenAI prevailed in a lawsuit that Elon Musk’s xAI brought over allegedly stolen chatbot-related trade secrets.Reuters contributed to this report.