Apple sued startups for stealing chip design secrets, claiming that it used employees to copy large amounts of classified data from the company

Recently, Apple sued a startup called Rivos in California, accusing it of stealing chip technology trade secrets.

"Rivos launched a 'Coordinated Campaign' to give Apple employees access to confidential information about chip designs like the M1 and A15." Apple mentioned it in the lawsuit.

(Source: Apple)

It is understood that Rivos was founded in May 2021 and is headquartered in Mountain View, Santa Clara County, California (near The City of Cupertino, where Apple is headquartered).

The company has been in "Stealth Mode" since its inception, trying to avoid public attention, and has hired a number of employees from several tech companies, including more than 40 engineers from Apple. It is reported that many of these former Apple employees are familiar with Apple's SoC (System on a Chip) design. The SoC includes several components, such as the CPU and GPU.

Apple claims that Rivos specifically targets engineers who have access to apple's vast amounts of classified data and asks them to take copies of the data with them. This information can significantly improve the development of Rivos' own SoCs.

Apple also named two of its former employees, Bhasi Kaithamana and Ricky Wen.

It is understood that Kesmana and Wen have worked at Apple for nearly 8 and 14 years, respectively. Both have signed an intellectual property agreement (IPA) with Apple prohibiting the disclosure of proprietary information.

Before leaving Apple in August 2021, Kesmana copied a series of spreadsheets, presentations and text files onto an external USB memory called APPLE_WORK_DOCS, the indictment says.

Wen also accessed "Apple's unreleased SoC design files," and copied the company's issued computer hard drives before leaving.

The lawsuit also alleges that other former Apple engineers did similar behavior before jumping ship to Rivos, some of them using apps with encrypted communication capabilities to transmit SoC design information and trying to erase data from Apple devices to cover up their traces.

Apple says it has no choice but to file a lawsuit. Rivos encourages employees to copy large amounts of work-related files before leaving, and the stolen information is very large and highly sensitive, and these employees are now performing the same duties for competitors, which is also a violation of their contract with Apple.

According to Apple, it has spent more than a decade and billions of dollars researching SoC designs for devices like phones and computers that "revolutionized the world of personal and mobile computing."

Figure | Apple M series chips (Source: Apple's official website)

This is not the first time that a legal dispute over Apple's chip design has sued its former chip executive, Gerard Williams III, in December 2019. While working at Apple, Williams III founded Nuvia, a company that develops processors for data center applications.

Nuvia was sold to Qualcomm in 2021. Qualcomm plans to use Nuvia's CPU to design an SoC for laptops. It is understood that the case will be heard in October 2023.

It is worth noting that in recent years, technology companies are stepping up their efforts to deal with trade secret theft. In response to this issue, Congress passed the Defend Trade Secrets Act (DTSA) in 2016, which transferred many cases from state courts to federal courts.

One of the more notable of these cases involved Anthony Levandowski, a former executive at Waymo, a self-driving car company owned by Alphabet (Google's parent company), who was sentenced to 18 months in prison for leaking proprietary secrets at a startup (which was later sold to Uber).

It is worth mentioning that Morrison & Foerster, the law firm that represented Apple in this Apple case, represented Uber in the Lewandowski case.

"With or without DTSA, the Apple case could unfold in a similar way to the Uber case," said Sharon Sandeen, director of the Intellectual Property Institute at mitchell Hamline School of Law. ”

Trade secret cases sometimes involve highly vague allegations. Keeping private company documents is also not necessarily trade secret theft, although it may constitute a breach of an employee's contract. In this case, Apple needs to point out its apparent attempt to replicate so-called large-scale documentation and to remove evidence of that reproduction afterwards. It must demonstrate that the information is confidential, of economic value and that reasonable efforts have been made to prevent it from being made public.

(Source: Pixabay)

Apple claims that its Arm-based chips are confidential and involve information about unpublished chips, and that Rivos is using a similar architecture. Apple also said in the lawsuit that it had previously informed Rivos in a letter that former Apple employees were required to comply with confidential information obligations, but Rivos never responded. "Apple has done a good job of proving at a high level what its claimed trade secrets are," Sandin said, "and if Apple doesn't act now, it could lose the trade secrets they protect entirely." ”

Still, Sandin also expressed concern that big companies like Apple and Google could use trade secret cases to weaken competitors. These large companies typically file lawsuits after there is a clear threat from potential competitors. Meanwhile, big tech companies have faced increasing antitrust scrutiny over the past few years.

"In the Waymo and Uber cases, for example, there was a noticeable time lag between the employee's departure and the actual filing of the lawsuit." Sandin said.

The specific outcome of this case has yet to be confirmed by follow-up. But one thing is to be sure, after Apple successfully launched the high-performance, low-power M series chips based on the Arm architecture, its talent in the chip field is becoming a high-quality recruitment target in the eyes of other companies. It is understood that in early 2022, companies such as Microsoft and Intel have "poached" Apple chip engineers.

Finally, Apple said in the lawsuit, "Apple welcomes and values open competition and the innovations that may arise, but this competition cannot be based on trade secret theft." ”

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reference:

https://www.theverge.com/2022/5/4/23053925/apple-rivos-chip-lawsuit-trade-secret-theft-dtsa

https://www.tomshardware.com/news/apple-sues-rivos-for-alleged-theft-of-secrets

https://appleinsider.com/articles/22/05/02/apple-sues-rivos-former-engineers-over-alleged-trade-secret-theft