OpenAI Agrees Not to Use Apple Trade Secrets While Court Fight Plays Out

OpenAI agreed Wednesday not to use trade secrets that Apple says were taken by employees who defected from the iPhone maker to the AI startup, while a legal fight between the companies plays out.

The concession came at a court hearing in San Jose, California, where U.S. District Judge Edward Davila said he was “highly likely” to side with Apple and issue an injunction against OpenAI, according to Bloomberg. 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.

Apple sued in July, accusing OpenAI of scheming to steal intellectual property related to upcoming products and using that information to help its own competing devices. The two companies have been at odds for months, despite a two-year-old partnership that put ChatGPT into Apple software.

The agreement avoids an outright loss for OpenAI in its first substantive court showdown with Apple, but it gives Apple most of what it sought: a guarantee that its proprietary information stays off-limits for OpenAI’s technology development.

A courtroom fight over future hardware

Davila signaled he would not give Apple everything it wanted, saying 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, said the company would limit inspections to a small number of employees who left Apple for OpenAI. “They don’t have 400 bad apples, your Honor, they have a few bad apples and know who they are,” he said.

Hours before the hearing, OpenAI flipped the allegations. In a court filing, the company said a former employee who left Apple for OpenAI and later returned to Apple 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, and the employee presented OpenAI product plans to senior Apple executives. OpenAI asked Davila for time to investigate whether Apple has or used the information and, if so, to allow counterclaims.

Apple said it has policies 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 trying to distract from what Apple called “significant evidence” that its employees took Apple product information.

OpenAI has denied Apple’s allegations, calling the lawsuit an effort to restrain employees from leaving for a competitor and to cast “ordinary job interviews as acts of trade secret misappropriation.” In an October court filing, the company said it is “developing a new family of devices designed for the AI era” and that it 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 $300.

The dispute casts a cloud over OpenAI as the startup targets a $1.4 trillion valuation and prepares to go public. The case is Apple v. Liu, 5:26-cv-07078, in the U.S. District Court for the Northern District of California.

Reporting based on coverage by Bloomberg News.