Apple recently sued OpenAI and several former employees in the U.S. District Court for the Northern District of California. The complaint alleges that former Apple employees took confidential information related to hardware development, AI, and product strategy and used it to benefit OpenAI’s competing ambitions. The allegations are unproven at this stage, and the defendants will have the opportunity to respond.
What makes this case worth paying attention to isn’t just the names involved. It’s the fact pattern. Key employees leave for a competitor, and the former employer claims its confidential information went with them. I see this scenario play out constantly at tech companies, law firms, financial services firms, manufacturers, and professional practices of every kind. The stakes in the Apple case are enormous, but the legal questions are the exact same ones we litigate in disputes involving far smaller companies right here in Los Angeles.
Why Employee Departures Create Trade Secret Risk
A lot of trade secret cases start the exact same way. A key executive, engineer, or top salesperson leaves one company and joins a competitor. That transition is not unlawful by itself. Employees can change jobs, compete fairly, and use their general skills and experience.
The legal risk starts when the departing employee allegedly takes or uses confidential business information that belongs to the former employer. In competitive industries, that information might be product plans, source code, engineering files, or proprietary processes. It could also be customer lists, pricing data, vendor information, and sales strategy. Business plans, internal forecasts, market analyses, or launch timelines. Recruiting, compensation, or operational data. Confidential presentations, emails, downloads, or cloud-stored documents. Information learned through restricted-access meetings, internal systems, or proprietary databases.
Customer lists deserve particular attention. They are among the most commonly alleged trade secrets in California litigation, and they are also among the most contested. A customer list qualifies for trade secret protection only if the company took reasonable steps to keep it confidential and the information is not readily ascertainable from public sources. A list of clients that any salesperson could reconstruct from LinkedIn or industry directories is unlikely to qualify. A curated database of client preferences, pricing history, purchasing patterns, and relationship notes built over years of confidential business dealings is a different matter entirely.
The Apple/OpenAI lawsuit appears to involve precisely this kind of high-stakes fact pattern. Employees moved from one technology company to another, with allegations that confidential information followed them. In trade secret litigation, those facts often lead to urgent disputes over forensic evidence, injunctions, document preservation, employee devices, and cloud accounts.
The California Tension: When Trade Secret Claims Become De Facto Non-Competes
California has one of the strongest public policies in the country favoring employee mobility and fair competition. Business and Professions Code section 16600 generally bars non-compete agreements. The state wants employees to be free to leave, start new ventures, join competitors, and compete in the marketplace.
That policy creates a recurring problem in trade secret litigation. A company that cannot enforce a non-compete may try to accomplish the same result by filing a trade secret lawsuit. Sometimes the alleged trade secret theft is less about actual misappropriation and more about punishing a key employee for leaving. It might be about deterring other employees from departing, disrupting a new employer, or making the cost of competition so high that the lawsuit functions as a non-compete in practice.
California courts have recognized this boundary. In The Retirement Group v. Galante, 176 Cal.App.4th 1226 (2009), the Court of Appeal held that section 16600 bars courts from enforcing a contractual restriction that prevents a former employee from soliciting customers, while still allowing courts to enjoin genuinely wrongful conduct like the use of trade secret information. The key point was that the employee’s conduct is not enjoinable merely because it violates a non-solicitation restraint. It is enjoinable only if it is independently wrongful, such as through actual trade secret misuse.
Likewise, in AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., 28 Cal.App.5th 923 (2018), the court affirmed summary judgment against an employer that asserted trade secret and related claims against former employees and a competitor. The court held that the employer could not restrain lawful recruiting activity through overbroad non-solicitation and confidential information theories where the information was not protectable trade secret information.
This is especially concerning in California, where the law is designed to prevent employers from locking employees into place. A weak or overbroad trade secret claim can become a powerful weapon even before the merits are tested. The threat of emergency injunctions, forensic inspections, litigation costs, reputational harm, and intrusive discovery can place immediate pressure on the former employee and the new company. Even if the claim is ultimately shown to be exaggerated or pretextual, the lawsuit itself may have already achieved its business purpose. It slowed the employee down, chilled competition, and sent a warning to others who might leave.
The burden is not theoretical. Trade secret litigation can impose crushing legal costs on the departing employee, the new employer, or a startup venture that may not have the resources to fight a prolonged lawsuit. The litigation itself can jeopardize the employee’s new job, scare away investors or customers, and destabilize the new employer before any court has determined that a trade secret was actually misused. In that sense, the legal system can sometimes permit a de facto non-compete through the filing of marginal trade secret claims based primarily on alleged access to ostensibly confidential information, rather than proof of actual misuse.
Another recurring problem is the jump from retention to misuse. A departing employee may have had access to company systems, may have received files in the ordinary course of employment, or may even have inadvertently retained data after departure. Those facts may justify investigation, preservation, and in some cases court intervention. But access or possession alone should not automatically become a presumption that the employee used trade secrets to compete. The critical questions are whether the information was actually a protectable trade secret, whether it was retained or acquired through improper means, whether it was disclosed or used, and whether any competitive conduct was caused by that misuse rather than by the employee’s lawful skill, experience, relationships, or market knowledge.
That is why courts and litigants must carefully separate legitimate trade secret protection from attempts to repackage an unenforceable non-compete as a misappropriation claim. A former employee’s general knowledge, skill, experience, professional judgment, industry relationships, and memory do not become the former employer’s property simply because the employee learned or developed them on the job. Nor should a company be able to label ordinary competitive knowledge as confidential and use that label to restrain lawful employment.
But the counterpoint remains important. California’s protection of employee mobility is not a license to steal. Employees may leave and compete, but they cannot take customer lists, confidential pricing data, product plans, source code, technical files, business strategies, proprietary processes, or other protected business information and use it to benefit a new employer or startup. Likewise, a new employer cannot lawfully encourage, solicit, or exploit another company’s trade secrets merely because California disfavors non-competes.
The real question is where lawful competition ends and misappropriation begins. A trade secret case should not be built on the mere fact that someone joined a competitor or became successful after leaving. It should be built on evidence that specific protected information existed, that reasonable measures were taken to keep it secret, and that the information was improperly acquired, disclosed, used, or threatened to be used. In California, that distinction is not just technical. It is central to preserving both trade secret rights and the state’s strong policy against restraints on employee mobility.
What Courts Look For in Trade Secret Misappropriation Cases
Trade secret misappropriation cases are intensely fact-driven. A company bringing a claim typically must show that the information at issue qualifies as a trade secret and that the defendant acquired, disclosed, or used it through improper means or in breach of a duty. Courts often focus on questions such as:
- Was the information actually secret? Information generally available to the public, widely known in the industry, or readily ascertainable may not qualify for protection.
- Did the company take reasonable measures to protect it? Courts may examine confidentiality agreements, access restrictions, password controls, internal policies, employee training, document labels, and exit procedures.
- Was the information economically valuable because it was secret? Trade secret protection is strongest where the information gives the company a competitive advantage.
- What did the departing employee access, download, email, copy, or retain? Digital forensics can become central to the case.
- Did the new employer know, encourage, solicit, or benefit from the alleged misuse? A competitor’s role can be highly significant, especially where the lawsuit alleges coordinated conduct.
- Was there actual use, threatened use, or merely possession? Injunction requests often turn on whether misuse has occurred or is likely to occur.
These cases are rarely about one document or one email. They involve patterns. The timing of downloads before a resignation, communications with the new employer, the overlap between what was taken and what the competitor later did, and the steps each company took to prevent misuse. That pattern of conduct is usually where the case is won or lost.
Tajima LLP’s Experience on Both Sides of These Disputes
Tajima LLP litigates trade secret misappropriation cases involving employee departures, competitor transitions, confidential business information, and allegations that protected company information was improperly taken or used.
Critically, our firm has significant experience defending departing employees and their new employers against overreaching trade secret claims. We have opposed attempts by former employers to use weak or overbroad misappropriation allegations as a de facto non-compete. This is particularly true where the alleged trade secret amounts to nothing more than a customer list that any industry participant could reconstruct, or general business knowledge that an employee carries in their head after years of experience. In California, those claims are not just legally vulnerable. They are the kind of overreach that courts have consistently rejected.
Whether defending an executive accused of taking a customer list, representing a startup targeted by a former employer’s emergency injunction, or prosecuting a genuine misappropriation case on behalf of a company whose proprietary source code or product designs were stolen, we understand how these cases are built and how they are defended.
We have handled these cases from both sides. The facts matter enormously, and the early moves — what evidence is preserved, what positions are taken, what relief is sought — often determine how the case ends.
Lessons for Companies Protecting Confidential Information
The Apple/OpenAI lawsuit is a reminder that trade secret protection cannot begin after an employee leaves. Companies are in a stronger position when they build protection into their daily operations before a dispute arises. That means:
- Written confidentiality, invention assignment, and proprietary information agreements for all employees with access to sensitive information
- Clear policies governing company devices, cloud storage, messaging apps, personal email, and removable media
- Role-based access controls — not everyone needs access to everything
- Exit interviews and offboarding procedures requiring return and certification of company materials
- Prompt disabling of credentials when employees give notice
- Monitoring protocols for unusual downloads or transfers in the period before a resignation
- A trade secret inventory identifying the company’s most important confidential assets
- Procedures for onboarding employees from competitors without inadvertently receiving their former employer’s confidential information
- A litigation hold and forensic response plan ready to activate when suspicious conduct is discovered
For companies hiring from competitors, the issue is equally important. A new employer should avoid receiving another company’s confidential files, should instruct incoming employees not to bring proprietary materials, and should document steps taken to prevent misuse. Those precautions can become important evidence if litigation later arises.
When to Contact Trade Secret Litigation Counsel
Trade secret disputes move fast. If a company suspects that confidential information has been taken, delayed action makes it harder to preserve evidence, prevent disclosure, or obtain emergency relief. On the defense side, early strategy matters just as much — missteps in the first days of a dispute can close off defenses or create problems that are difficult to undo.
Depending on the situation, counsel may need to move quickly on any of the following:
- Preserving emails, devices, cloud accounts, access logs, and metadata before they are lost or overwritten
- Evaluating whether the information at issue actually qualifies as a protectable trade secret
- Assessing whether emergency injunctive relief is warranted — or how to oppose it
- Analyzing claims under the federal Defend Trade Secrets Act and California’s Uniform Trade Secrets Act
- Coordinating forensic review of devices and accounts
- Responding to cease-and-desist letters before they escalate
- Defending employees or companies accused of misappropriation
- Developing a litigation strategy that protects business operations while the dispute is resolved
The Apple/OpenAI case will play out over years. Most trade secret disputes don’t. They get resolved, or they get worse, in the first few months. The companies and individuals who handle that window well tend to end up in a better position, regardless of which side they’re on.
If you are dealing with a trade secret dispute, the most important thing you can do is get experienced counsel involved early. The stakes are too high to handle it any other way. Tajima LLP represents clients in trade secret misappropriation and business litigation matters, including disputes involving employee departures, competitor misconduct, confidential information, and emergency litigation strategy. Contact us to discuss your situation.