Apple sues startup Rivos for allegedly stealing a trade secret

Apple sued a startup for allegedly stealing trade secrets to build a competitive chip lineup. The company filed a lawsuit late last week in California, listing Santa Clara’s Rivos as well as two former Apple employees Bhasi Kaithaman and Ricky Wen. He claims the company has conducted a “coordinated campaign” to attract Apple employees and encourage them to copy confidential documents before leaving, in violation of their agreement with Apple.

The case pits one of the biggest tech companies against a much newer rival that Apple says has gained an unfair advantage by tricking dozens of its employees into accessing internal files.

Rivos was founded in May 2021 and has been operating in stealth mode for months, hiring employees from several large tech companies. Apple says it had more than 40 engineers attending, many of whom were familiar with Apple’s chip-based system (SoC) designs. But in addition to the usual general knowledge of SoCs like the M1 and A15, the lawsuit claims that Rivos encouraged workers to copy a treasure of work-related documents before leaving.

“Rivos has launched a coordinated campaign targeting Apple employees with access to Apple’s proprietary information and trade secrets about Apple’s SoC projects,” it says, hoping to gain an unfair advantage. Rivos did not respond to a request for comment on the lawsuit.

Kaithamana and Wen, the individual employees listed in the suit, were both longtime Apple engineers. Kaithamana worked for the company for nearly eight years and Wen for nearly 14. The two signed an intellectual property (or IPA) agreement that prohibited them from disclosing proprietary information. The complaint claims that Kaithamana had copied a series of spreadsheets, presentations and text files to an external USB drive labeled ‘APPLE_WORK_DOCS’ prior to departure in August 2021. Wen also allegedly gained access to files related to Apple’s trade secrets – including “files related to Apple’s unreleased SoC projects” – and then made a copy of the computer’s hard drive released by the company just before leaving.

“The sheer volume of information gathered, the highly sensitive nature of that information, and the fact that these employees are now carrying out the same duties to a competitor who has constant access to some of Apple’s most valuable trade secrets leaves Apple with few alternatives,” says the suit. Apple is seeking monetary compensation and an order that would require Rivos to return any proprietary information.

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 (DTSA), which transferred many cases from state to federal courts. One of the most famous cases involved former Google and Waymo CEO Anthony Levandowski, who was sentenced to 18 months in prison for revealing ownership secrets in a new startup that was later sold to Uber. (Morrison & Foerster, the law firm now representing Apple, represented Uber on the case.)

Sharon Sandeen, director of the Mitchell Hamline School of Law Institute for Intellectual Property, says the Apple case would likely have developed in a similar fashion with or without DTSA. Sandeen criticized the law prior to its enactment, highlighting provisions such as a section that would facilitate the seizure of business assets – the principle, she says, was watered down in the final DTSA and was rarely applied.

“There have not been many cases where a remedy has been brought in and one that has not been very effective,” says Sandeen. On the other hand, he says, federal courts are sometimes stricter in their legal interpretations than state courts – leading to a significant narrowing of trade secret cases.

Trade secret cases sometimes involve very vague claims, such as a resolved lawsuit alleging that Meta CEO Mark Zuckerberg stole the Facebook idea from Cameron and Tyler Winklevossom. In this case, Apple can point out what characterizes large-scale copying of documents, as well as apparent attempts to wipe out evidence of this copying after the fact. However, keeping private company documents also does not have to be a trade secret theft, although it may be in violation of employment contracts. Apple must determine that the information was secret, had economic value, and that Apple made reasonable efforts to prevent it from being made public.

This could include focusing on allegations about unreleased chips and the specific value of Apple’s Arm-based chip architecture – which Apple says is secret and similar to the architecture used by Rivos. This is a stronger argument than the claim that anything related to Apple chips is a protected secret. “They do a good job of pinpointing what they think the trade secrets are,” says Sandeen.

But Sandeen also worries that big companies like Apple and Google may be using trade secrets to undermine competition, waiting for a visible threat from a potential rival to emerge, then filing a lawsuit. “What surprises me in both? Waymo against Uber and in this case there was a significant delay between the employees leaving and the actual filing of the lawsuit, ”he says. Apple and other “Big Tech” companies have faced increased antitrust scrutiny over the past few years – although Apple’s litigation has largely been about the app ecosystem, not hardware components.

Meanwhile, Apple’s lawsuit claims it had previously informed Rivos of the theft in the letter and never received a response. “If Apple fails to act now to protect its most sensitive secrets, Apple could lose its trade secret status altogether,” he says. “This result is unsustainable.”

Leave a Reply