OpenAI agreed not to use trade secrets that Apple claims were stolen by employees who defected from the iPhone maker to the artificial intelligence start-up while a legal fight between the companies plays out.
The ChatGPT maker made the voluntary concession during a court hearing on Oct 14 in which a federal judge said he was “highly likely” to side with Apple and issue an injunction against OpenAI.
US District Judge Edward Davila will have the power to enforce the agreement, which also requires OpenAI to collect forensic images of 14 employees’ devices that may contain Apple’s confidential information.
For OpenAI, the agreement avoids the stain of an outright loss in its first substantive court showdown with Apple.
The start-up headed by Sam Altman was accused by Apple in a July lawsuit of scheming to steal intellectual property related to upcoming products and use that information to bolster its work on competing future devices.
Practically speaking, the accord gives Apple most of what it was seeking from Davila – a guarantee that its proprietary information remains off-limits for OpenAI’s own technology development.
During the hearing in San Jose, California, the judge indicated he would not give Apple everything it wanted, saying that a proposed forensic inspection of all devices and repositories that contain Apple trade secrets sounded like a “huge ask”.
Apple’s lawyer, John M. Desmarais, responded that the company would limit its inspections to a small number of employees who defected to OpenAI.
“They don’t have 400 bad apples, your Honour, they have a few bad apples and know who they are,” he said.
The companies have been at odds for months, despite a two-year-old partnership that wove ChatGPT into Apple software.
The dispute arose while hundreds of Apple employees defected to OpenAI and has put a cloud over the start-up as it targets a US$1.4 trillion valuation and prepares to go public.
In its lawsuit, Apple accused OpenAI, its hardware chief and a former iPhone hardware engineer of conspiring to extract confidential information from former Apple employees related to product design, manufacturing, component technologies, testing methodologies and the company’s supply chain.
Apple claimed OpenAI is exploiting that information to “advance OpenAI’s efforts to enter the consumer hardware market”.
OpenAI has vehemently denied the allegations.
The start-up argues that Apple’s lawsuit is an effort to restrain employees from leaving for a competitor, and that the company seeks to cast “ordinary job interviews as acts of trade secret misappropriation”.
“OpenAI is developing a new family of devices designed for the AI era,” the company said in an October court filing. “OpenAI has no need or desire for Apple’s trade secrets.”
Bloomberg News has reported that OpenAI’s first consumer hardware product will be a doughnut-shaped smart speaker priced at more than US$300. People within the company see it as a novel AI-centric device that is different from anything Apple is set to release.
OpenAI’s flips allegations against Apple
Hours before the Oct 14 hearing, OpenAI flipped the allegations against the iPhone maker.
In a court filing, OpenAI said a former employee – who had left Apple for OpenAI but later returned to Apple – had sent “over a hundred highly confidential files” about at least one unreleased OpenAI device to personal accounts.
The files included images of unreleased hardware, engineering and manufacturing data and supplier information, OpenAI said.
The former employee also presented OpenAI product plans to senior Apple executives, according to the filing.
OpenAI asked the judge in the case for time to investigate whether Apple possesses or used the information, and if so, allow the company to file counterclaims.
In response, Apple said it has policies in place to prevent the use of confidential information from former employers, that it found no evidence to substantiate OpenAI’s claims and that the AI company is simply trying to distract from the “significant evidence” that its employees took Apple product information. BLOOMBERG