Apple claims startup hired employees to steal chip secrets

Photo by Amelia Holowaty Krales / The Verge

The startup is accused of stealing trade secrets to build a chip lineup. The company filed a lawsuit last week in California, naming Rivos and two former Apple employees. The company is accused of orchestrating a campaign to get Apple employees to copy confidential documents before they leave.

The case pits one of the biggest tech companies against a much newer rival, which Apple claims gained an unfair advantage by recruiting many of its employees.

Rivos has been in stealth mode for months, hiring employees from several major tech companies. More than 40 of its engineers were familiar with Apple's system-on-a-chip designs. Rivos encouraged employees to copy work related documents before they left, according to the suit.

It claims to be trying to gain an unfair advantage by targeting Apple employees with access to Apple's proprietary and trade secret information. Rivos didn't reply to the request for comment.

Two employees named in the suit were Apple engineers. Kaithamana had worked for the company for eight years, while Wen had worked for 14. Both signed an intellectual property agreement that banned them from releasing proprietary information. According to the complaint, before leaving in August 2021, Kaithamana copied a series of spreadsheets, presentations, and text files onto an external USB drive.

The sheer volume of information taken, the highly sensitive nature of that information, and the fact that these employees are now performing the same duties for a competitor with ongoing access to some of Apple's most valuable trade secrets leave Apple with few alternatives. Apple is asking for monetary damages and an order that would require Rivos to return proprietary information.

Tech companies have been cracking down on trade secret theft. The Defend Trade Secrets Act moved many cases from state to federal courts. Anthony Levandowski, a former executive with the company, was sentenced to 18 months in prison for spilling proprietary secrets at a new startup that was later sold to the company. The law firm now representing Apple was involved in the case.

Sharon Sandeen, director of the Intellectual Property Institute at the Mitchell Hamline School of Law, believes that the Apple case would have unfolded in a similar manner without the DTSA. Sandeen was a critic of the law before it was passed, and she says a rule that would make seizing companies assets easier was softened in the final version.

There have not been many cases that have brought a civil seizure remedy. She says that federal courts are more strict in their interpretations of the law than state courts.

The Meta CEO is accused of stealing the idea for Facebook from the Winklevoss twins in a now-settled trade secret case. Apple can point to what it characterizes as large-scale document copying as well as apparent attempts to erase evidence of that copying after the fact. Private company documents aren't necessarily trade secret theft or a violation of the employees' contracts. Apple has to prove that the information was secret, that it had economic value, and that it made reasonable efforts to stop it from becoming public.

Apple alleges that the architecture Rivos is using is similar to the Arm-based chip architecture it has. Sandeen says that they do a good job of pointing out what they claim to be trade secrets.

Sandeen is worried that large companies like Apple and Google could be using trade secrets cases to weaken their competitors, waiting until there is a threat from a potential rival and then filing suit. Apple and other Big Tech companies have faced increased antitrust scrutiny over the past few years, but their disputes have largely involved their app ecosystems.

If Apple does not act to protect its most sensitive secrets now, it could lose its trade secret status.