Special Story: Apple reaction to leaking of private info

Apple sued a startup over allegedly using trade secrets to create a rival chip line. Late last week, the company filed a lawsuit in California.

It is named after the Santa Clara-based Rivos and two former Apple employees, Ricky Wen and Bhasi Kaithamana.

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The company claims it organized a coordinated campaign to recruit Apple employees and encourage them to copy confidential documents before they leave, in violation of their Apple contract.

This case pits one of the largest tech companies against another, and Apple claims it has an unfair advantage because it poached dozens of its employees in order to gain access to its internal files.

Rivos was established in May 2021. It has been operating in stealth mode for several months, employing employees from many major tech companies. Apple claims that this included 40 engineers who were well-versed in Apple's system on a chip (SoC) designs.

Rivos is accused of encouraging employees to take troves of work-related documents with them before they leave, in addition to having a general knowledge of SoCs such as the M1 or A15.

It claims that Rivos launched a coordinated campaign targeting Apple employees, giving them access to trade secrets and proprietary information about Apple's SoC design. This was in an attempt to gain an unfair advantage. Rivos did not respond to a request for comment.

Both Kaithamana (the individual employees in the suit) were Apple engineers. Kaithamana worked for the company for almost eight years, and Wen for just over 14. Both were bound by an intellectual property agreement (or IPA), which prohibited them from sharing proprietary information.

According to the complaint, Kaithamana copied several spreadsheets, presentations, and text files to an external USB drive with the name "APPLE_WORK_DOCS" before departing in August 2021. Wen then allegedly made a copy from his company's hard drive before departing.

The suit states that Apple is left with no other options due to the "horrible amount of information" and the sensitive nature of the information. Apple seeks monetary damages as well as an order requiring Rivos to return any proprietary data.

In recent years, tech companies have made intense efforts to punish insider trading. The 2016 Defend Trade Secrets Act (DTSA) was passed by Congress to address the issue. Many cases were moved from state courts to federal courts.

Anthony Levandowski (ex-Google and Waymo executive) was sentenced to 18 months imprisonment for leaking proprietary secrets to a new startup, which was later sold by Uber. Uber was represented by Morrison & Foerster, the current law firm.

Sharon Sandeen, the Mitchell Hamline School of Law’s Intellectual Property Institute director, believes that the Apple case would have been handled in a similar fashion without or with the DTSA. Sandeen was a critic before the passage of the law, pointing out provisions that would make it easier to seize companies' assets.

This rule, she claims, was softened by the DTSA's final edition and is rarely used.

Sandeen says that there have been few cases in which a civil seizure remedy has been applied. And those that have been haven't always been very successful.

Sandeen says that federal courts can be more strict in their legal interpretations than state courts, which leads to trade secret cases is greatly narrowed.

Sometimes trade secret cases involve very nebulous claims. For example, a now-settled suit alleges that Meta CEO Mark Zuckerberg stole the Facebook idea from Cameron and Tyler Winklevoss. Apple can refer to large-scale document copying and apparent attempts to erase the evidence after the fact. However, trade secret theft is not necessarily theft of company documents.

It may be a violation of employees' contracts. Apple must prove that the information was kept secret, that it has economic value, and that Apple took reasonable steps to prevent it from being made public.

This could mean focusing on the claims about unreleased chips or the exact value of Apple’s Arm-based chip architecture. Apple claims it is secretive and similar to Rivos' architecture. This makes it stronger than claiming that Apple's chips are a secret. Sandeen states that they do a great job at pinpointing the trade secrets at a high level.

Sandeen is concerned that big companies such as Apple and Google may be using trade secret cases against their competitors to weaken them, waiting for a threat from a rival before filing suit.

She says that she was surprised by the time lapse between the employees' leaving and the filing of the lawsuit. Apple and other "Big Tech" companies have been subject to increased antitrust scrutiny in the last few years, although disputes involving Apple's app ecosystem have not involved its hardware components.

Apple claims that it had previously written to Rivos about its theft and was never contacted again. It claims that Apple may lose its trade secret status if it does not protect its most sensitive secrets immediately. This outcome is unacceptable.