A judge is 'highly likely' to stop OpenAI using Apple's hardware secrets

Silicon Valley has a polite fiction about hiring. When an engineer walks across the street to a rival, everyone agrees that the skills go with them and the secrets stay behind. Apple is now in federal court arguing that the fiction broke down at OpenAI, and on Wednesday the judge sounded like he agreed.

At a hearing in San Jose, U.S. District Judge Edward Davila said he was "highly likely" to grant Apple an injunction barring former Apple employees now at OpenAI from using Apple's proprietary information, Bloomberg reported. It would be his first substantive ruling in the case, and it would require OpenAI to stop using the allegedly stolen trade secrets right away.

The case is Apple v. Liu. Apple filed it in July against OpenAI, its hardware chief Tang Tan, and Chang Liu, a former iPhone hardware engineer. Apple's claim is that they conspired to pull confidential information out of former Apple employees: product design, manufacturing, component technology, testing methods and the supply chain. Apple says OpenAI is using that knowledge to build its own consumer hardware.

Show and tell

The details Apple has alleged are vivid. Tan was a design vice president at Apple before he ran hardware at OpenAI. According to Asharq Al-Awsat's account of the filings over the summer, Apple accuses him of using his knowledge of unreleased Apple products to extract information from job candidates, and says OpenAI asked candidates to bring "prototypes" and design files to "show and tell" sessions. Apple called the conduct "repeated instances of deliberate theft." OpenAI says it follows standard industry practice and that Tan told recruits not to bring confidential material from former employers.

The headcount is part of the argument. More than 400 former Apple employees work at OpenAI, according to Apple's complaint. Apple's lawyer, John Desmarais, used that number in court to make his request sound modest, after the judge called a proposed forensic inspection of every device and repository holding Apple secrets a "huge ask." Apple would limit the searches to a handful of people, Desmarais said: "They don't have 400 bad apples, your honor, they have a few bad apples and know who they are."

The day before the hearing, Davila had already given Apple a lot of what it wanted on discovery. Bloomberg Law reports his order requires OpenAI to hand over forensic images of devices, summaries of certain interviews with Apple employees, documents about the former Apple staff's jobs at OpenAI, and messages on the LINE app between Liu and another former Apple employee, Alyssa Peng. He also ordered early depositions of Liu, Peng and Tan.

His reasoning is the most damaging part. Davila wrote that there is "a valid risk that critical forensic evidence" on the former engineers' devices could be destroyed, and pointed to a conversation between Liu and Peng about wiping their Apple-owned electronics. He also worried the secrets could become "so deeply entangled with OpenAI's hardware products" that the harm couldn't be undone.

He didn't give Apple everything. He refused to rush discovery into OpenAI's research on metal finishes, power management and battery functionality, saying that could follow the normal schedule. He also put off requests built around Apple's term "Apple Originated Information," which he called "amorphous as currently defined."

OpenAI's counterpunch

OpenAI denies everything and has asked Davila to throw out the case. Its position, laid out in filings since the summer, is that Apple is treating ordinary job interviews as theft because it can't stop its people from leaving. OpenAI has called the allegations "baseless," said Apple "hasn't named any specific products" that were copied, and insisted it "is building something entirely new and different." One filing turns the blame around, saying Apple "encouraged employees to use personal iCloud accounts for work" and didn't manage access properly when they left.

Hours before Wednesday's hearing, OpenAI added something sharper. It told the court that a former employee who left Apple for OpenAI and later went back to Apple sent more than a hundred highly confidential files about at least one unreleased OpenAI device to personal accounts. According to OpenAI, the files included hardware images, engineering and manufacturing data and supplier information, and the employee presented OpenAI product plans to senior Apple executives. OpenAI wants time to find out whether Apple has or used that material, and to file counterclaims if it did.

Apple says it has policies against using a former employer's confidential information, found no evidence for OpenAI's claims, and that OpenAI is trying to distract from evidence that its own employees walked off with Apple product information.

The stakes are bigger than one speaker. OpenAI is reportedly preparing to go public at a valuation of around $1.4 trillion, and its first consumer hardware product, according to Bloomberg, will be a doughnut-shaped smart speaker priced above $300. An injunction that ties up the people who know how to build hardware would land right where OpenAI is trying to prove it can be more than a chatbot.

The two companies are still business partners, by the way. ChatGPT has been built into Apple's software since 2024. Davila is still weighing OpenAI's motion to dismiss. If it fails, the next phase will be depositions, forensic images and a group chat about wiping laptops.

Sources: Bloomberg (via Claims Journal), Bloomberg Law, Asharq Al-Awsat.