Apple has sued just a year-old startup: A warning message to all startups

Apple has sued a California based startup that is still in stealth mode. The lawsuit depicts that hiring from big tech giants could be tricky and disastrous, especially for startups.

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Poaching top talents is a general practice among companies, but when it involves employees having access to proprietary information, the practice could cause serious damage. And, when it is related to employees of a tech giant, such as Apple, it could turn into a disastrous situation, especially for startups!

After years of dominating the global smartphone market – in terms of revenue and profits – Apple is now emerging as a formidable chip designer, and soon it may reach the pinnacle of the industry. With its Application Processors (AP) delivering power and energy conservation, Apple’s chipsets have started setting a new benchmark. The Cupertino giant designs the A series chips for its iPhone and iPad, which allows the devices to clock unparalleled performance. Apple has started replicating the same with the M-series chips which replaced the Intel processors on the Mac. Similar to the extremely successful A-Series chipset, The M-series uses Arm’s architecture and TSMC’s 5nm process Node.

The M-series is well-known for its high number of transistors. The M1 Ultra, which is composed of two M1 Max chips connected together, has 114 billion transistors. Compare this to the 15 billion transistors in the A15 Bionic chip, which powers the iPhone 13 series. Apple currently uses its M1 chip (16 billion transistors) to power two of its tablets: the iPad Pro and the iPad Air.

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Apple’s emergence as a chip designer has attracted the eyeballs of many companies in the area of hardware design and manufacturing. In a bid to attract talent from Apple rival companies have left no stone unturned, including the offer of a better package and position. However, the purpose of hiring could have some hidden agenda as well.

Rivos, a California-based startup, is accused of poaching Apple employees who had access to proprietary information related to Apple’s chipset production. Apple has dragged Rivos to the court for stealing trade secrets related to SoC designs by poaching 40 of its employees.

Rivos is a startup founded just last year and is still in stealth mode.

Apple filed a lawsuit stating that Rivos started a coordinated campaign in June 2021 to target Apple employees and gained access to Apple’s trade secrets and proprietary information. Apple wrote to Rivos explaining the confidentiality agreement Apple’s former employees must follow but didn’t receive any response from the startup.

Apple describes in the complaint the different ways its former employees gave Rivos an enormous amount of information about Apple’s trade secrets and proprietary designs. Apple’s ex-employees transferred data to their mobile phones using multiple USB storage devices. Ex-Apple employees also employed another method to transfer Apple’s secret chips plans. This was using Apple’s popular AirDrop feature, which allows files to be sent between Apple devices. Former Apple employees allegedly used this technology to transfer files to iPhones owned by Rivos employees.

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Rivos was provided with presentations for unreleased and upcoming Apple chipsets from former Apple employees. These files were marked “Apple Proprietary, Confidential.” Apple also accuses Rivos that it told its employees which apps they should install on their devices in order to transfer Apple proprietary information to Rivos using encrypted data.

Rivos is accused of planning out a well-thought strategy to steal crucial proprietary information.

“Apple welcomes and values open competition and the innovation that can result. But that competition cannot be built on the back of trade secret theft. 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 said in the lawsuit.

Apple’s biggest worry is of losing its trade secret status if it doesn’t take immediate action to protect its most sensitive secrets. Apple claims to have invested a great deal of time, resources, and money in its SOC programs, and losing trade secrets related to the same would result in Apple losing all the advantages over its rivals in the market.

In the lawsuit filed by Apple Rivos is named as a prime defendant. Apple has also made two former employees, Wen Shih Chieh a/k/a Ricky Wen, and Bhasi Kaithamana, as a party. The complete objective behind the lawsuit is not just to penalize the culprits, but also to recover its trade secrets, safeguard them from further disclosure and understand the full extent of their use by Rivos in order to minimize the potential harm that has and will happen.

SourceReuters

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