Sam Altman didn’t want another case

OpenAI has spent the better part of the year getting hit with lawsuit after lawsuit, including one from the world’s richest man. But last Friday, the company was hit by one of the most high-profile orders – from Apple. OpenAI’s hardware bets are on the line.

Apple’s lawsuit against OpenAI, which was filed in a Northern California court, accused former Apple employees of “stealing Apple’s confidential information to benefit OpenAI.” The 41 page complaint it says that Apple keeps “product development, manufacturing, marketing, technology research, and other innovations confidential” and that “the trade secrets that make Apple work together are one of the most important aspects of all American businesses.”

The lawsuit names three former Apple employees: Tang Tan, former VP of Apple Watch, who spent 24 years at Apple before becoming chief hardware officer of OpenAI (after OpenAI bought Jony Ive’s hardware company, io); Chang Liu, a former iPhone electronics engineer, who spent eight years at Apple before leaving for OpenAI; and Yu-Ting “Alyssa” Peng, another former Apple employee who also moved to OpenAI. (Little is known about Peng’s tenure at Apple.) The lawsuit they talk a lot of nonsensein addition, Tan reportedly asked prospective employees to bring Apple devices outside the office to “show and tell” at their OpenAI meetings and educate Apple employees on how to circumvent the company’s security measures. (It is unclear what, if any, Apple trade secrets related to the hardware may have made the OpenAI tool, as it has not been made public.)

Avery Williams, chair of the trade secrets practice at McKool Smith and author of the firm’s AI Litigation Tracker. Seaside that they think OpenAI’s legal problems are far from over. “They have been charged with many crimes.” (But) OpenAI won’t be out until we get a decision from the Supreme Court on the question of fair use in AI education.

The case is yet another obstacle for OpenAI, which has had six months full of drama with its opponents on the red lines of the US military, protests against the US government, a battle against the former co-founder of OpenAI Elon Musk, and a competition with Anthropic where the frontier lab could be the first to IPO – not to mention the laundry list. a few about what came from Musk himself. Another ongoing lawsuit was brought by the family of Adam Raine16-year-old who died by suicide after confessing his feelings on ChatGPT. And then there is long suit brought by The New York Times and other publishers against OpenAI, claiming that it violates the law.

The timing of Apple’s case is also far from OpenAI: The company plans to go public, to have sent privately Form S-1 last month with the SEC; it is looking pressure on the investor to make a profit; and they are cut off in a heap “side searches” to focus on key financial drivers such as business and documentation. Perhaps most importantly, however, it plans to release a more powerful weapon in 2027after payment about $6.5 billion to buy the basic equipment of Apple developer Jony Ive, io (and to deal with another crime from a company called Iyo). Apple may have a reputation lag in AIbut it always has a head in hardware, and OpenAI has a different history. In many industries it is argued that “hardware is hard”; For proof, just look at the graveyard of AI tools that have already existed, such as the Humane AI pin.

“The next frontier will be AI hardware, more than chips… Robotics and other forms of physical AI are the next areas that are ripe for disruption,” said Charlyn Ho, CEO and founder of Rikka Law Group, a law firm that focuses on technology, privacy, and cyber security law. “It’s great to see OpenAI … getting into the game, because maybe they’re realizing (that) just playing for nothing is not going to be profitable.” He added, “They’re a borderline facility. They’re spending more money than they’re getting right now.”

It makes sense that OpenAI would want to hire to fill hardware gaps and accelerate hardware progress. But now, it is headed for a potentially costly battle.

“It’s not fun to be challenged by Apple when you’re trying to IPO,” McKool Smith’s Williams said. “Apple is aggressive … they don’t like to back down.”

OpenAI did not respond to a request for comment.

At the end of the week, one user of X he wrote“Sam Altman was not afraid of Elon but he is afraid of Apple. Altman replied, “I’m not afraid of Apple, but I respect them a lot.

Apple and OpenAI have historically had good public relations; the two in 2024 signed an agreement to integrate ChatGPT to Apple devices. This case represents a major departure. “Apple and OpenAI have been on the same side… As companies get more and more involved, you’re starting to see alliances break down,” said Rikka Law Group’s Ho.

In today’s highly competitive AI industry, civil lawsuits or lawsuits over trade secrets, corporate espionage, and false information harvesting are all too common. Point to any AI leader and chances are they have one or more accusations to their name. As far as trade secrets, there are Scale AI is suing an employee who went to Mercor, xAI is suing employees who left OpenAIand Tesla is suing the employee who allegedly transferred most of the AI ​​mainframe data to his laptop (and another employee regarding trade secrets related to robotics). In terms of distillation and improper harvesting, there is Anthropic objections to Chinese AI companies and xAI says distillation OpenAI graphics.

And while Apple’s lawsuit against OpenAI made headlines, many experts Seaside spoke and said that there was nothing unusual about them – it was very interesting that everything happened in the same way and that they were two great players. Trade secret cases can also be difficult to prove in court, because unlike copyright or trademark cases, you are not comparing one thing to another. Haibing Lu, a professor of information systems and analytics at the Leavey School of Business at Santa Clara University, said Apple’s claims are “not unusual” and “common in Silicon Valley.” McKool Smith’s Williams said the lawsuit sounded like a “trade secret misappropriation.”

“This is not a case against AI because it is a case against an AI company,” Williams said. “The actors are great, but the story is unusual.”

For Michael Barnhart, a government threat researcher at the cybersecurity firm DTEX, the “innumerable ways” the allegations made Apple’s case interesting: firings, interview requests, internal connections. “It’s very difficult in terms of internal threats and this is how they do it,” he said. But at the same time, he said, “We can be there and I will create a company that did that.” one of these things badly… You will have one, you will have two, you will have three — this one has it all. This one has a lot. Also, at a very high level. “

It’s ironic that, in an industry made possible by an incalculable amount of input – whether high-tech or non-technical – AI labs are at a disadvantage when it comes to taking knowledge elsewhere. After all, the AI ​​industry is a small world, and it is very popular. Anthropic was founded by former OpenAI executives, xAI was founded by a former OpenAI co-founder, and countless startups have been acquired (or their top talent) by workplaces they were born into or major competitors. Many of the most influential people in all the leading AI companies have worked with their competitors elsewhere, and in the future, many of them will too.

But to mention this kind of thing in the AI ​​industry means you have to prove the same thing in the last few decades. Yes, Anthropic says it analyzed millions of copyrighted books to train its AI models, but the AI ​​technology industry has spent years embroiled in a similar conflict: Google’s analysis. millions of books to create a search engine database, for example, or the amount of fraud that YouTube enabled in the early 2000s.

Apple said in its official filings that there were more former employees who left OpenAI with more valuable information than were named in the lawsuit. The company said it “revealed the theft of Apple’s secrets by former OpenAI employees at Apple” and that “this is the tip of the iceberg… At every level, from its technical members to the Chief Hardware Officer, and in cooperation with businesses, OpenAI has been stealing Apple’s secrets and confidential information.”

Alex Terepka, a founding partner of Watstein Terepka LLP, said the case could be contentious and open, possibly for years. “Apple and OpenAI have been in this for a long time,” he said. “What Apple has put together here is more than enough to survive the push. Then you find out, what in these cases can be very sensitive.”

The software side of the AI ​​industry has produced fraud, competition, and controversy beyond measure, but hardware is the next area the AI ​​industry is interested in conquering. But since AI tools have yet to be tested on a large scale, it will take time to see what that success looks like — especially with a potentially years-long battle between Apple and OpenAI ahead.