Thursday September 29, 2022

Apple claims that employees were hired by the startup to steal chip secrets

Apple has sued a startup allegedly for stealing trade secrets in order to build a rival chip lineup. Late last week, the company filed a lawsuit in California against two former Apple employees, Ricky Wen and Bhasi Kaithamana, alleging that they stole trade secrets to build a rival chip lineup. It claims that the company organized a coordinated campaign to attract Apple employees and encourage them copy confidential documents before they leave.
Rivos was established in May 2021. It has been operating in stealth mode for months, employing employees from many major tech companies. Apple claims that this included more than 40 engineers, many of which were familiar with Apple’s SoC designs. Rivos is accused of encouraging employees to copy troves work-related documents before they left, 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 unfair advantage. Rivos did not respond to a request for comment.
Kaithamana (the individual employees in the suit) were both long-time Apple engineers. Kaithamana worked for the company for almost eight years, and Wen for nearly fourteen. Both had signed an intellectual propriety agreement (or IPA) which prohibited them from disclosing any proprietary information. According to the complaint, Kaithamana copied spreadsheets, presentations and text files onto an external USB stick with the name “APPLE_WORK_DOCS” before he left in August 2021. Wen allegedly also accessed files related Apple trade secrets, including files related to Apple’s unreleased SoC design. He then copied the hard drive of his company-issued computer just before he left.
The suit states that Apple is left with few options because of the sheer volume of information that was taken, the sensitive nature of the information, and that the employees are now performing the same duties as a competitor who has ongoing access to some Apple’s most valuable trade secret, among other things. Apple seeks monetary damages and an order requiring Rivos to return any proprietary data.
In recent years, tech companies have made intense efforts to punish trade secret theft. Congress addressed the issue with the 2016 Defend Trade Secrets Act. This law moved many cases from states to federal courts. Anthony Levandowski (ex-Google and Waymo executive) was sentenced to 18 month imprisonment for leaking proprietary secrets at a startup that was later purchased by Uber. Uber was represented by Morrison & Foerster, the law office that represents Apple.
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 law was passed, pointing out provisions that would make it easier to seize assets. This rule was reportedly softened in the final version of the DTSA and has rarely been used.
Sandeen says that there have been few cases that have brought about a civil seizure remedy. And those that have been haven’t been very effective. Sandeen says that federal courts can be more strict in their legal interpretations than state courts, which leads to trade secrets cases being significantly narrowed.
Trade secret cases can involve highly ambiguous claims. For example, a lawsuit claiming that Meta CEO Mark Zuckerberg stole the idea of Facebook from Cameron Winklevoss and Tyler Winklevoss is now settled. Apple can refer to what it calls large-scale document copying and apparent attempts to erase evidence after the fact. However, trade secret theft is not necessarily theft of company documents. It may be a violation to 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 specific value Apple’s Arm-based Chip Architecture — which Apple alleges to be secret and similar in nature to Rivos’ architecture. This makes it stronger than claiming that Apple’s chips are a protected secret. Sandeen states that they do a great job of identifying at a high-level what they claim trade secrets to be.
Sandeen is concerned that big companies like Apple or Google could use trade secrets cases to weaken their competitors. They might wait until there’s a threat from a rival before filing suit. She says that she was surprised by the time lag between the time the employees left and the actual filing of the lawsuit in Waymo v. Uber. Apple and other “Big Tech”, companies have been under increased antitrust scrutiny in recent years. However, Apple’s disputes have not primarily involved its hardware components but its app ecosystem.
Apple’s suit claims that it had previously written Rivos about its theft and was never contacted again. It claims that Apple could lose its trade secret status if it does not protect its most sensitive secrets immediately. “This outcome is unsustainable.”

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