Inside Apple's secret confidentiality agreements: Code names, security requirements, fines & more

Posted:
in General Discussion edited November 2014
Apple's legendary efforts to keep upcoming products a secret are widely known, but the terms of the agreements that bind suppliers and workers were revealed in part on Friday, thanks to newly unsealed court filings.




The terms of Apple's extensive non-disclosure agreements were disclosed thanks to the ongoing bankruptcy court proceedings of former sapphire supplier GT Advanced Technologies. On Friday, a New Hampshire judge made public a number of documents from the case, and among them was the confidentiality agreement that Apple and GTAT agreed to, and was previously kept a secret.
Projects with Apple and its suppliers are given secret code names to prevent leaks. The sapphire manufacturing operation run by GT Advanced was known as "Project Onyx."
The supplier contracts require that suppliers not even mention Apple by name during the course of their daily operations. Instead, employees are given a code-name by which they are told to refer to Apple in conversation.

The project itself is also given a secret code-name, as required by Apple. In the case of GT Advanced's partnership with Apple, their sapphire production operations were referred to as "Project Onyx."

Apple suppliers are also required to lock down their operations with a qualified security team, 24/7 security cameras, sensors, a personnel identification credential screening, and vehicle markings. These physical security measures are required at both facilities and production lines.

Suppliers are also required to track all confidential materials closely, and to have methods in place to destroy scrap materials so that they do not escape into the hands of the public.

The terms of Apple's non-disclosure agreements (click to enlarge).


In the event that secrets must be transported, Apple has its own "SecureShip" service used to mail confidential materials or prototypes back to Apple's own facilities.

To ensure that all of these guidelines are met, suppliers must also agree to be audited by Apple at any time. These extensive audits grant Apple access to the supplier's information systems, facilities, and personnel that work for the company.

If Apple's investigation reveals that the supplier is not in compliance, the company must pay a $135,000 "security fee" as a reimbursement for the cost of the audit and any changes needed to bring security up to requirements. The contract is known internally as the "Apple Restricted Project Agreement."

GTAT's bankruptcy proceedings previously revealed that Apple's supplier contracts include a $50 million penalty for leaking future product info. The hefty penalty is said to be imposed for each individual leak, providing a rather costly incentive for suppliers to crack down on security.
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Comments

  • Reply 1 of 33
    eightzeroeightzero Posts: 3,094member
    I'd be curious about how often a court awards those $50M liquidated damages. If ever.
  • Reply 2 of 33
    H
  • Reply 3 of 33
    snovasnova Posts: 1,281member

    code names are standard practice for many technology companies.  

  • Reply 4 of 33
    malaxmalax Posts: 1,598member
    Quote:

    Originally Posted by eightzero View Post



    I'd be curious about how often a court awards those $50M liquidated damages. If ever.



    A court wouldn't get involved unless the company failed to comply and Apple brought a beach of contract suit.  I suspect we'd have heard about it if the latter had occurred.

  • Reply 5 of 33
    rob53rob53 Posts: 3,263member
    These sound normal for any company dealing with specialized products. IBM, Lockheed, NASA, even Microsoft would have similar requirements.
  • Reply 6 of 33

    Even call centers do this, not revealing the name of which company they provide service for.

  • Reply 7 of 33
    What is sad about this is Apple's Asian suppliers appear to be willing AND able to honor their contact agreements whereas this US company chooses to dishonor its contract agreement. Even as Samsung chose to steal, copy and lie about Apple's technology, Samsung continued to honor its supplier contracts with Apple (that is an amazing sentence!). GTAT seems to be lying about what went wrong and why it went wrong. And, is trying to use the US court system to get away with it. There appears to be no honor in this company.
  • Reply 8 of 33
  • Reply 9 of 33
    inklinginkling Posts: 773member
    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.

    I once had a job that was so secret, when I wrote down radar parameters, I was required to tear the paper I wrote them on off the notepad, lest my pen leave an impression on the paper underneath. That was despite the fact that the notepad would never leave an area that was strictly off-limits to anyone without both a Secret clearance and a Need to Know.

    While working there, I made a deposit at a bank and I came within an instant of telling the teller who was making my receipt not to do do the same thing. Weird, I thought, really weird. This job is getting to me.

    That illustrates how secrecy in one area breeds secrecy in others. That may be one reason why GT Advanced didn't keep Apple properly informed about production problems.
  • Reply 10 of 33
    gatorguygatorguy Posts: 24,354member
    BuffyzDead wrote: »

    Lenovo is not a part of LG, nor vice-versa.
  • Reply 11 of 33
    geekmeegeekmee Posts: 633member
    eightzero wrote: »
    I'd be curious about how often a court awards those $50M liquidated damages. If ever.

    It's not an award...it's a penalty. The supplier has already "agreed" to pay the penalty for the incident or lack of performance.
  • Reply 12 of 33



     

  • Reply 13 of 33
    sirlance99sirlance99 Posts: 1,295member
    BuffyzDead wrote: »

    Except it's not LG
  • Reply 14 of 33
    Quote:
    Originally Posted by Gatorguy View Post





    Lenovo is not a part of LG, nor vice-versa.



    Oops     Thanks for that.

     

    I meant Lenovo    …Comment above now fixed

  • Reply 15 of 33
    slurpyslurpy Posts: 5,385member

    So this definitely puts to bed all the "Apple has become soft under Cook" hand-wringing horse-shit. 

     

    Clearly Apple is still shrewd as **** and insanely demanding when it comes to supplier deals, which is a good thing and exactly how it needs to be. There may be some negative PR here, but anyone who isn't involved in this stuff cannot possibly understand the context of how these deals are done. Apple has no choice but to play hardball to achieve its goals, and it has the leverage and the position to do so. These details are not meant for public consumption. Apple didn't get to where it is today by having soft contracts, soft demands, and low expectations of suppliers and partners. 

  • Reply 16 of 33
    slurpyslurpy Posts: 5,385member
  • Reply 17 of 33
    Quote:

    Originally Posted by Slurpy View Post

     

     

    Holy ****. I mean..I don't even..wow. 




    China doesn't respect property rights of any kind, so this is completely in character for products sold in the Chinese market.

  • Reply 18 of 33
    eightzeroeightzero Posts: 3,094member
    Quote:

    Originally Posted by Geekmee View Post





    It's not an award...it's a penalty. The supplier has already "agreed" to pay the penalty for the incident or lack of performance.

    Well...that's not how it works. The $50M is essentially a tort like punitive remedy, generally not allowed as a damage award in a contract action. These are paper tigers. Effective paper tigers for sure, but with out much practical effect at law.

  • Reply 19 of 33
    moreckmoreck Posts: 187member
    This all seems resaonable to me.
  • Reply 20 of 33
    It would be in the interests of GTAT management to keep things sealed. The more that comes to light the more it seems GTAT management was as sleazy as you can get.
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