Apple seeks to pause OpenAI physical device push after 'shocking evidence' in trade secret trial

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OpenAI and Apple’s (NASDAQ: AAPL) legal battle in federal court escalated to a new level after the iPhone maker presented forensic data that OpenAI hardware had already started to run on trade secrets that its former employees were never authorized to share.

The “shocking evidence” pulled from a former engineer’s work laptop comes ahead of an October 1 court showdown and throws a wrench in Sam Altman and OpenAI’s push to enter the physical devices business.

Does Apple have evidence that OpenAI stole trade secrets?

Apple lawyers have told the court that they found dozens of confidential files, including a circuit schematic for a power converter on the work-issued MacBook that belongs to Chang Liu, a senior system electrical engineer who moved on to OpenAI in January.

Apple said that Liu did not just access those files, but he actually used it in simulations at his OpenAI role, according to the supplemental brief its lawyers filed in the Northern District of California.

Beyond the schematics, Apple lawyers also said they found evidence that Liu used a tool with a name identical to one of his former employer’s internal engineering programs. The lawyers warned that any AI agent that “learn[s]” can use that material to potentially create harm that is hard to reverse and keeps spreading.

Liu’s lawyers voluntarily submitted the old laptop for inspection earlier in August. Apple lawyers, on the other hand, have called the court’s attention to an alleged June attempt to wipe evidence as rationale to fast-track evidence gathering.

Their claim is that once Liu caught wind of the internal Apple investigation, he reached out to fellow OpenAI alum, Yu-Ting Peng to discuss a plan to “restore” the devices their former employer gave them.

By Apple’s interpretation of the exchange, restoring in this context meant wiping the machines of any evidence that could implicate them if the laptops were forensically analyzed.

Apple claims that more than 400 people have left the firm for OpenAI as of last count.

OpenAI sticks to negligence defense

OpenAI has not shifted its position. Since an August 3 blog post titled “Apple is getting this wrong,” the company has pinned the access on Apple’s own sloppiness, describing what Liu had as “residual access” left over because Apple often fails to shut off accounts when staff depart.

In that post, OpenAI said former Apple colleagues were the ones who messaged Liu asking for help finding files, not the reverse.

Apple tells a different story about how the access survived. It claims Liu kept his way in by exploiting “a rare, previously unknown authentication bug,” per TechCrunch, rather than through any oversight on Apple’s end.

What will happen on October 1 in the Apple vs. OpenAI case?

Apple has big stakes riding on how Judge Edward Davila interprets rules on two requests it made of the court, with both decisions due on October 1.

• One is a preliminary injunction to make OpenAI pause any work on hardware using the iPhone maker’s technology while the case is still unsettled.
• The second request is to expedite discovery so that Apple lawyers can depose witnesses and pull documents on a faster timeline.

The timing of the documents Apple wants to see adds a third name to the proceedings, Tang Tan. The request for material dated August 1, 2023, or later lines up with the six months before Tan, a design executive who spent more than 24 years at Apple, left for OpenAI.

Another name in the blast radius of this lawsuit is Jony Ive’s io Products.

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