Apple-OpenAI Judge Says He’s ‘Likely’ to Side With iPhone Maker

The judge in Apple Inc.’s high-stakes trade-secret theft case against OpenAI said he’s “highly likely” to grant the iPhone maker an injunction barring use of its proprietary information by former employees now at the artificial intelligence startup.

U.S. District Judge Edward Davila’s comments at a hearing Wednesday mark a potential setback for the ChatGPT maker’s hardware development efforts. Siding with Apple would be his first substantive ruling in the dispute.

In its lawsuit, Apple accused OpenAI of scheming to steal intellectual property related to upcoming products and use that information to bolster its work on competing future devices. If granted, the injunction would require OpenAI to immediately stop using allegedly stolen trade secrets.

During the hearing, the judge stopped short of siding with Apple on all its requests, saying that a proposed forensic inspection of all devices and repositories that contain Apple trade secrets sounded like a “huge ask.”

Apple’s lawyer, John M. Desmarais, responded that the company would limit its inspections to a small number of employees who defected to OpenAI.

“They don’t have 400 bad apples, your honor, they have a few bad apples and know who they are,” he said.

The judge in San Jose, California, is also hearing a separate demand by OpenAI to dismiss Apple’s lawsuit entirely.

The companies have been at odds for months, despite a two-year-old partnership that wove ChatGPT into Apple software. The dispute arose while hundreds of Apple employees defected to OpenAI and has put a cloud over the startup as it targets a $1.4 trillion valuation and prepares to go public.

Apple sued OpenAI, its hardware chief and a former iPhone hardware engineer in July, accusing them of conspiring to extract confidential information from former Apple employees related to product design, manufacturing, component technologies, testing methodologies and the company’s supply chain.

In its suit, Apple said OpenAI is exploiting that information to “advance OpenAI’s efforts to enter the consumer hardware market.”

OpenAI has vehemently denied the allegations. The startup argues that Apple’s lawsuit is an effort to restrain employees from leaving for a competitor, and that the company seeks to cast “ordinary job interviews as acts of trade secret misappropriation.”

“OpenAI is developing a new family of devices designed for the AI era,” the company said in an October court filing. “OpenAI has no need or desire for Apple’s trade secrets.”

Bloomberg News has reported that OpenAI’s first consumer hardware product will be a doughnut-shaped smart speaker priced at more than $300. People within the company see it as a novel AI-centric device that’s different from anything Apple is set to release.

Hours before Wednesday’s hearing, OpenAI flipped the allegations against the iPhone maker. In a court filing, OpenAI said a former employee — who had left Apple for OpenAI but later returned to Apple — had sent “over a hundred highly confidential files” about at least one unreleased OpenAI device to personal accounts.

The files included images of unreleased hardware, engineering and manufacturing data and supplier information, OpenAI said. The former employee also presented OpenAI product plans to senior Apple executives, according to the filing. OpenAI asked the judge in the case for time to investigate whether Apple possesses or used the information, and if so, allow the company to file counterclaims.

Apple responded to the allegations, saying it has policies in place to prevent the use of confidential information from former employers, that it found no evidence to substantiate OpenAI’s claims and that the AI company is simply trying to distract from the “significant evidence” that its employees took Apple product information.

On Tuesday, Davila ordered OpenAI to expedite turning over documents concerning its alleged theft of trade secrets to advance forthcoming consumer hardware products.

The case is Apple v. Liu, 5:26-cv-07078, US District Court, Northern District of California (San Jose).