Apple's Trade Secret Suit Against OpenAI Pries Open a Black Box

Apple doesn't know what's happening behind OpenAI's closed doors, and its new lawsuit could change that.

Apple sued OpenAI in federal court on Friday, with a fiery complaint accusing the company of stealing trade secrets to build up its nascent hardware business. The suit pits an incumbent against a disruptor – OpenAI is working on devices that could threaten Apple's bottom line.

Apple says OpenAI stole information in a "coordinated pattern of misconduct" and poached more than 400 employees from its ranks. Patricia Lantzy, an attorney who leads Outside General Counsel's employment practice, told Business Insider that Apple likely brought this complaint in part because it had no other way to determine what information OpenAI might have taken.

The complaint makes it clear there's a lot that Apple does not know about what OpenAI might have taken or what it might be doing with any potential trade secrets, she said.

"We have no interest in other companies' trade secrets," an OpenAI spokesperson said in a statement. "While we take these allegations seriously, we're not aware of any evidence that this complaint has merit. We believe in fair competition and allowing people the freedom to work wherever they choose, and we're focused on building innovative technology that empowers people everywhere."

Apple did not respond to a request for comment from Business Insider.

Lantzy laid out the case's most important questions for Apple and OpenAI to answer.

Apple alleges that its former engineer, Chang Liu, used his old company laptop to access Apple systems during his new job at OpenAI, downloading confidential files containing technical specifications, manufacturing processes, and more. Apple is also accusing OpenAI of pumping potential recruits for confidential information about the iPhone giant's work.

Apple's suit calls these allegations the "tip of the iceberg," saying it "lacks visibility into what's been happening behind closed doors at OpenAI."

Lantzy said a lawsuit's discovery process can help Apple find out exactly what's happening. It's an alternative to something drastic and illegal like corporate espionage, she said. Apple's point of view seems to be, "We need the court's help to hash out these facts and discover exactly what has gone on here," she said.

The thrust of the lawsuit hinges on the 2016 Defend Trade Secrets Act, which allows companies to sue for trade secret theft. Apple will need to prove that any information in question was actually secret, that Apple took precautions to safeguard it, and that the defendants intentionally obtained it through improper means, Lantzy said.

Another important question, she said, is whether OpenAI actually used any stolen trade secrets in practice. That could have major ramifications in the case, where Apple has asked for monetary recovery and damages, or in lieu of those, a "reasonable royalty."

While it has hired hundreds of former Apple workers, OpenAI's hardware efforts are still early. Bloomberg reported on Tuesday that OpenAI's first device could be a screen-free smart speaker. In the complaint, Apple alleges that OpenAI has deployed stolen secrets in its hardware development.

"That's kind of hard to prove at this stage," Lantzy said.

The attorney said California law generally protects OpenAI's recruitment of Apple employees, though if the company instructed decamping Apple workers to bring secrets with them, that would be "problematic."

"We're only reading Apple's side of it," Lantzy said. "We haven't gotten OpenAI's answer yet. That will also be illuminating, no doubt."