This is correct. Courts generally allow lump sum "fines" like this (actually called liquidated damages) when it will be difficult or impossible to calculate actual damages caused by the breach and the amount has to reasonably approximate the expected breach. Moreover it has to replace the damages award it can't be on top of a damages award. The $50 million number would likely not be enforced by a U.S. court
It's not surprising the Apple would require this type of security. They do it on their own sites so why not at supplier or manufacturing sites.
The size of the funding for this project was huge and I think the GT management got greedy. They were hoping to make ton of money out of it and probably knew by the April that things weren't going well. At that point, the only way to come out with cash would be to sell stock.
Whilst the trading itself was scheduled the timing was set to ensure the returns were as high as possible. Most likely the bankruptcy was held off until the last possible moment and was forced once it was clear the iPhone 6 did not use sapphire from GT.
So the question is did the management plan the bankruptcy timing to maximize their profit from stock sales and did they hide facts from their shareholders to keep the stock price high whilst their stocks were sold off?
The code names. keeping new equipment in a locked room and limiting access is nothing new - Apple's been doing it for decades. I was leading software development at a company back in the early Apple ][ days and we had to to sign the same type of agreements with Apple.
What they didn't have back then were huge fines or audit charges if you violated the agreement. Somehow I don't think the corporate lawyers would have been willing to let us sign that.
Apple's security including the concomitant dribbles of leaks and information about upcoming products are very much a part of the whole marketing frenzy that is very much a part of the mystique of Apple. Bottom line: it's worth a lot of money. When you think about the 13Billion that Samsung spent and compare that with the carefully controlled hype that Apple orchestrates, partly with its policy of secrecy as the main tool, then it is clear that they get about 100 billion (name your own value) worth of free advertising already built in to their releases.
Keeping their stuff secret from competitors is of secondary importance. Take 64 bit iOS, Samsung just didn't have the resources to suddenly copy it like they can a shape. Or the SoC chips Apple uses, they go back to at least the investment made in 2008. And it gets more difficult. Even if it were completely impossible for anyone to copy anything Apple does, the secrecy apparent or otherwise fosters continuous curiosity. It's basic human nature, no one wants to be ignorant. Tell your partner before you go to sleep tonight that you have something very important to tell them... in the morning.
Now everybody wants to know how secret are their secrets and have the documents revealed real secrets about their secrecy, or only tantalising glimpses about possibly more weirdly secret practices. Maybe Apple use specially trained carrier pigeons, now that would be a story. If I were in charge of Apple marketing, I'd give that one some legs, or wings.
This is hilarious. What were those efforts intended to hide? Everyone and his brother knew that GT Advanced was making screens for iPhones. They might has well put up a sign at the entrance of the employee parking lot: "Proudly Making Screens for the Next iPhone." These code names weren't going to fool anyone and had nothing to do with the secret manufacturing processes involved.
Really? Everyone and their brother KNEW that GTAT was doing something that they were not in fact doing? Sapphire screens is not something that was ever announced. It has been widely speculated that it was a future possibility - and almost as widely speculated that it was for another product or use and that it would NEVER be used on an actual iPhone screen.
I didn't bother reading the rest of your post since it started off with such a blatantly incorrect statement that was presented as if it was completely factual. You lost all credibility with your third sentence.
I'm sorry, after reading the documents, I am not suprised at all that GTAT found Apple's terms onerous.
There are many cases outlined by GTAT in which the terms were grossly one-sided in favour of Apple, ensuring any losses were at GTAT's expense, and indeed, we can see GTAT had a rather large $0.9billion loss on it's books already.
Apple constantly (according to the documents) "interfered" with the production process, from choosing furnaces and tools against advisement based on little-to-no knowledge and experience, to changing design specifications at GTAT's cost.
Quotes from Apple representatives to the company aside, I can see no reason that these non-negotiable terms would ever have worked out in favour of the now-unemployed 1300 workers, or indeed Apple customers wanting better devices with these components.
Irrespective of whether anyone thinks Apple was unethical in the treatment of GTAT, the above people have lost out.
It is not due to GTAT's technology, Apple's lack of sapphire production knowledge or the fact it was an American (as opposed to Chinese) company. It is clearly the terms of the agreement, and how Apple felt it could behave within those terms.
It definitely could be argued that these, and similar terms, have now been shown to fail, and should be rethought in future.
As far as the senior executives of GTAT are concerned, they were clearly ignorant of, wilfully ignorant of, or dishonest about the project. In any case, they do not appear to have been doing their jobs sufficiently. There are lessons to be learnt, but if I were a shareholder I would much rather turn to the team that experienced the project than the apparently-ignorant executives currently in control of the company.
I wouldn't want to condemn Apple for the situation that has transpired, but it is clear that some Apple employees were mistaken in thinking the deal was tenable from the outset, and responsibility for the situation clearly rests with them. As employees, however, the responsibility for letting so many people down ultimately rests with the corporation.
Nothing stopped Apple from buying a building, 2000 furnaces and employing a similar workforce for their own R&D and production. In fact, the costs would have probably been very similar if the project had succeeded. GTAT would be in the same position it was before the deal, and (at worst) so would the share price.
Apple has only itself to blame, as does the executive team at GTAT. Personally, I'm more worried about Apple.
I remember back in the 1990's when Apple was heading towards insolvency, leaks about Apple products were a common occurrence with competing groups inside Apple trying to sabotage each others' projects. Steve Jobs cleaned that up when he became CEO and tightened security to keep competitors from stealing ideas and getting a head start. That extra security paid off with the introduction of the iPhone in 2007, shocking the rest of the industry with the new smartphone interface and features.
The Penalty wouldn't be subject to court review unless a a suit was brought and that wouldn't be a given. Depending on the language of the contract it might just be up to apple. Hypothetically if the 64 bit chip had been leaked and it was clearly a leak from the supplier, Apple may just be able to penalize them the 50 mil and withhold it from payment. Producing some 50 million + chips at $20 or so is a billion +. They would certainly try to negotiate on the damages but might not go as far as a suit in fear Apple may not use them again and they'd lose out on the next billion
Sounds all reasonable. Much like any other NDA when you work with big companies as a smaller one, and very similar the the ones I had to sign over the years. Nothing special inside the documents.
- Code Names - CHECK
Normal just keep it private and make sure that a 3rd party cannot easily understand what a phone call is about when you get a call on a certain topic in the public or any other not authorized person can listen in on. Project always have some code names anyway as names and stuff are mostly decide by marketing anyway or you do not know for which product in the end it will be used and how. Also help to prevent making assumptions for what something might be used and name stuff by accident.
- Not mentioning for whom you work for a project - CHECK
Similar even in nearly any employment NDA if you have access to business details. You are always told not to tell exactly for whom and on what you are working in detail to unknown persons. Standard confidentially agreement. Also so that you do not try to use one of your customers for marketing reasons as a supplier or contractor, which is very tempting for a lot of smaller businesses. This prevents this right from the start. Again, perfectly normal as soon as you work for a big players where these details can have a huge impact like being a publicly traded start-up.
- Security measures at a working place and surveillance to make stuff traceable - CHECK
If you have leaks you want to know from where it comes and prevent leaks to a certain degree in the first place. Especially with physical stuff this is normal practice. Even as a normal employee back when I worked for a big investment bank I had to lock my laptop with stuff I work on in a safe at home to get the permission to work remotely now and then and my employer even reserved the rights to check it at home (a lot more stuff was involved). Again, regardless where I worked over the years there were usually surveillance cameras on every office floor except for certain meeting rooms and for managers with their own office of course. No nothing special here again.
- Track who was given access to which documents/information - CHECK
Well, in any decent larger company who has access to what is already controlled by some RBAC system and ppl. have to sign off to give someone access and every access to such stuff is logged. Absolute standard and any company with a decent infrastructure has something like this in place. Such things are also requirements from different angles including certain company certifications. Traceability is a must.
- Only transport prototypes by selected courier - CHECK
Again, normal. Do not send confidently stuff, especially not prototypes by FedEx. Nice that Apple has an own service here as it seems or specific couriers you can call up any time. Spares a lot of hassle. I like that one.
- Rights reserved to audit security - CHECK
Trust is good, but we reserve the right to check what you claimed. Absolute normal standard procedure.
- Violating security causes you to pay a fine - CHECK
Small fine perfectly ok, so you get the stuff done you agreed to as such payments or later subtraction don't look good on paper for any manager. Given the size of Apple's investment/loan the sum is perfectly fine. Without such a "fine" ppl. may not care to implement certain measures if they are not already in place. It should not be a punishment but still something you want to avoid. And if money is involved no chance to sweep it under the rug. So again, reasonable.
- Leaking detailed information about future projects with a fine - CHECK
10%-15% or a total investment/loan/project sum seems reasonable along the lines of NDAs I came across. Varies depending on projects of course. For contractors with big companies this is usually way worse and set to a fixed 1M even if you are just in for a 50K project for a couple of months. The sum usually comes from because you can be cheaply insured for such cases with exactly this sum. It's just professional behavior not to leak stuff, so everyone signs such clauses easily. It also give incentive to make sure you have tied down your security to the usual measures and make sure you give one required employees access to the the details. This is intended to hurt you and make sure you have done everything you can do to prevent theft/leaks of IP in general.
So perfectly normal stuff here, I expected Apple to have way more requirements. Obviously they have not and everything is pretty much standard. I am really disappointed, as boring as everywhere - at least in these documents. Seems like the famous Apple security is just urban legend.
Comments
Looks like samsung has more competition... WOW just wow
When the android sites roll their eyes at copying Apple, you know it's bad.
Reasonable and they required a signature to agree.
GT wasn't forced to agree.
The size of the funding for this project was huge and I think the GT management got greedy. They were hoping to make ton of money out of it and probably knew by the April that things weren't going well. At that point, the only way to come out with cash would be to sell stock.
Whilst the trading itself was scheduled the timing was set to ensure the returns were as high as possible. Most likely the bankruptcy was held off until the last possible moment and was forced once it was clear the iPhone 6 did not use sapphire from GT.
So the question is did the management plan the bankruptcy timing to maximize their profit from stock sales and did they hide facts from their shareholders to keep the stock price high whilst their stocks were sold off?
The code names. keeping new equipment in a locked room and limiting access is nothing new - Apple's been doing it for decades. I was leading software development at a company back in the early Apple ][ days and we had to to sign the same type of agreements with Apple.
What they didn't have back then were huge fines or audit charges if you violated the agreement. Somehow I don't think the corporate lawyers would have been willing to let us sign that.
Apple's security including the concomitant dribbles of leaks and information about upcoming products are very much a part of the whole marketing frenzy that is very much a part of the mystique of Apple. Bottom line: it's worth a lot of money. When you think about the 13Billion that Samsung spent and compare that with the carefully controlled hype that Apple orchestrates, partly with its policy of secrecy as the main tool, then it is clear that they get about 100 billion (name your own value) worth of free advertising already built in to their releases.
Keeping their stuff secret from competitors is of secondary importance. Take 64 bit iOS, Samsung just didn't have the resources to suddenly copy it like they can a shape. Or the SoC chips Apple uses, they go back to at least the investment made in 2008. And it gets more difficult. Even if it were completely impossible for anyone to copy anything Apple does, the secrecy apparent or otherwise fosters continuous curiosity. It's basic human nature, no one wants to be ignorant. Tell your partner before you go to sleep tonight that you have something very important to tell them... in the morning.
Now everybody wants to know how secret are their secrets and have the documents revealed real secrets about their secrecy, or only tantalising glimpses about possibly more weirdly secret practices. Maybe Apple use specially trained carrier pigeons, now that would be a story. If I were in charge of Apple marketing, I'd give that one some legs, or wings.
Really? Everyone and their brother KNEW that GTAT was doing something that they were not in fact doing? Sapphire screens is not something that was ever announced. It has been widely speculated that it was a future possibility - and almost as widely speculated that it was for another product or use and that it would NEVER be used on an actual iPhone screen.
I didn't bother reading the rest of your post since it started off with such a blatantly incorrect statement that was presented as if it was completely factual. You lost all credibility with your third sentence.
There are many cases outlined by GTAT in which the terms were grossly one-sided in favour of Apple, ensuring any losses were at GTAT's expense, and indeed, we can see GTAT had a rather large $0.9billion loss on it's books already.
Apple constantly (according to the documents) "interfered" with the production process, from choosing furnaces and tools against advisement based on little-to-no knowledge and experience, to changing design specifications at GTAT's cost.
Quotes from Apple representatives to the company aside, I can see no reason that these non-negotiable terms would ever have worked out in favour of the now-unemployed 1300 workers, or indeed Apple customers wanting better devices with these components.
Irrespective of whether anyone thinks Apple was unethical in the treatment of GTAT, the above people have lost out.
It is not due to GTAT's technology, Apple's lack of sapphire production knowledge or the fact it was an American (as opposed to Chinese) company. It is clearly the terms of the agreement, and how Apple felt it could behave within those terms.
It definitely could be argued that these, and similar terms, have now been shown to fail, and should be rethought in future.
As far as the senior executives of GTAT are concerned, they were clearly ignorant of, wilfully ignorant of, or dishonest about the project. In any case, they do not appear to have been doing their jobs sufficiently. There are lessons to be learnt, but if I were a shareholder I would much rather turn to the team that experienced the project than the apparently-ignorant executives currently in control of the company.
I wouldn't want to condemn Apple for the situation that has transpired, but it is clear that some Apple employees were mistaken in thinking the deal was tenable from the outset, and responsibility for the situation clearly rests with them. As employees, however, the responsibility for letting so many people down ultimately rests with the corporation.
Nothing stopped Apple from buying a building, 2000 furnaces and employing a similar workforce for their own R&D and production. In fact, the costs would have probably been very similar if the project had succeeded. GTAT would be in the same position it was before the deal, and (at worst) so would the share price.
Apple has only itself to blame, as does the executive team at GTAT. Personally, I'm more worried about Apple.
I dunno, every other supplier managed not to go bankrupt.
Sounds all reasonable. Much like any other NDA when you work with big companies as a smaller one, and very similar the the ones I had to sign over the years. Nothing special inside the documents.
- Code Names - CHECK
Normal just keep it private and make sure that a 3rd party cannot easily understand what a phone call is about when you get a call on a certain topic in the public or any other not authorized person can listen in on. Project always have some code names anyway as names and stuff are mostly decide by marketing anyway or you do not know for which product in the end it will be used and how. Also help to prevent making assumptions for what something might be used and name stuff by accident.
- Not mentioning for whom you work for a project - CHECK
Similar even in nearly any employment NDA if you have access to business details. You are always told not to tell exactly for whom and on what you are working in detail to unknown persons. Standard confidentially agreement. Also so that you do not try to use one of your customers for marketing reasons as a supplier or contractor, which is very tempting for a lot of smaller businesses. This prevents this right from the start. Again, perfectly normal as soon as you work for a big players where these details can have a huge impact like being a publicly traded start-up.
- Security measures at a working place and surveillance to make stuff traceable - CHECK
If you have leaks you want to know from where it comes and prevent leaks to a certain degree in the first place. Especially with physical stuff this is normal practice. Even as a normal employee back when I worked for a big investment bank I had to lock my laptop with stuff I work on in a safe at home to get the permission to work remotely now and then and my employer even reserved the rights to check it at home (a lot more stuff was involved). Again, regardless where I worked over the years there were usually surveillance cameras on every office floor except for certain meeting rooms and for managers with their own office of course. No nothing special here again.
- Track who was given access to which documents/information - CHECK
Well, in any decent larger company who has access to what is already controlled by some RBAC system and ppl. have to sign off to give someone access and every access to such stuff is logged. Absolute standard and any company with a decent infrastructure has something like this in place. Such things are also requirements from different angles including certain company certifications. Traceability is a must.
- Only transport prototypes by selected courier - CHECK
Again, normal. Do not send confidently stuff, especially not prototypes by FedEx. Nice that Apple has an own service here as it seems or specific couriers you can call up any time. Spares a lot of hassle. I like that one.
- Rights reserved to audit security - CHECK
Trust is good, but we reserve the right to check what you claimed. Absolute normal standard procedure.
- Violating security causes you to pay a fine - CHECK
Small fine perfectly ok, so you get the stuff done you agreed to as such payments or later subtraction don't look good on paper for any manager. Given the size of Apple's investment/loan the sum is perfectly fine. Without such a "fine" ppl. may not care to implement certain measures if they are not already in place. It should not be a punishment but still something you want to avoid. And if money is involved no chance to sweep it under the rug. So again, reasonable.
- Leaking detailed information about future projects with a fine - CHECK
10%-15% or a total investment/loan/project sum seems reasonable along the lines of NDAs I came across. Varies depending on projects of course. For contractors with big companies this is usually way worse and set to a fixed 1M even if you are just in for a 50K project for a couple of months. The sum usually comes from because you can be cheaply insured for such cases with exactly this sum. It's just professional behavior not to leak stuff, so everyone signs such clauses easily. It also give incentive to make sure you have tied down your security to the usual measures and make sure you give one required employees access to the the details. This is intended to hurt you and make sure you have done everything you can do to prevent theft/leaks of IP in general.
So perfectly normal stuff here, I expected Apple to have way more requirements. Obviously they have not and everything is pretty much standard. I am really disappointed, as boring as everywhere - at least in these documents. Seems like the famous Apple security is just urban legend.