Apple has filed a lawsuit against OpenAI and its hardware chief on Friday, accusing them of stealing trade secrets including unreleased parts, prototypes, and confidential designs.
The allegations
The complaint names OpenAI chief hardware officer Tang Tan, who spent 24 years at Apple overseeing iPhone product design. The suit alleges that Tan and his colleagues encouraged staff leaving the iPhone-maker to take proprietary technology with them. Apple claims Tan coached recruits on how to bypass data security protocols and directed them to bring confidential components to job interviews.
“OpenAI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets,” Apple states in the filing with the US district court in San Jose. The company argues OpenAI is taking unlawful shortcuts while under pressure to deliver its first commercial hardware product.
OpenAI and Tan did not immediately respond to requests for comment.
Hannah Smith, a spokesperson for Apple, said the company “will always defend our teams’ hard work and innovations, and we are taking all appropriate steps to do so.”
A pattern of theft
This case may become the highest-stakes intellectual property theft battle in Silicon Valley since 2017, when Waymo accused Uber of stealing hardware designs after hiring a former engineer who took thousands of confidential files. Uber settled that dispute for $245 million during a trial.
Apple and OpenAI have been partners since 2024, when they announced a deal to distribute ChatGPT on iPhones, Macbooks, and iPads. Relations have since frayed, with Apple relying more on Google’s Gemini AI for its in-house models. The two companies are expected to compete fiercely in the emerging market for AI-powered consumer devices.
OpenAI has hired more than 400 former Apple employees. This group includes veterans leading the development of AI-powered devices. Last year, OpenAI paid $6.5 billion to acquire io Products, a startup cofounded by longtime Apple executives including Tang Tan, Scott Cannon, Evans Hankey, and Jony Ive.
io Products and Chang Liu, an electrical engineer at OpenAI who worked at Apple until January, are also named as defendants. Liu did not immediately respond to a request for comment.
How the theft happened
Apple’s investigation relies on data and messages gathered from employee devices. The company discovered the alleged theft early this year after Liu never returned his company-issued laptop. He also wrote to a former colleague about still having access to Apple’s internal file-sharing system. Apple states that Liu’s access was enabled by a bug that has since been fixed.
Liu downloaded dozens of confidential hardware-related files, including a presentation on manufacturing and testing complex circuit boards. He also coached an Apple employee he was recruiting to join OpenAI on how to “avoid trouble with the security team” when copying confidential files.
Apple wrote to OpenAI in February raising initial concerns but received no response. This led to further investigation and the filing of the lawsuit.
Before leaving, Tan emailed himself information about Apple’s suppliers. Other employees moving to OpenAI did the same. The lawsuit alleges Tan directed job candidates still working at Apple to bring “Actual parts” to interviews for “show and tell” sessions. The parts included batteries, logic boards, and shields.
In another instance, Apple identified a then-Apple employee “screenshotting and downloading files relating to a highly confidential Apple project” in the hours before an interview with Tan at OpenAI.
Tan is further accused of taking an internal document for managers that explains security procedures for departing workers. He and OpenAI recruiters allegedly used the file to counsel employees to avoid disclosing their new employer, prolong access to company systems, and avoid signing exit documents.
“Unsurprisingly, Apple has uncovered a concerning recent pattern among employees who depart and then go work for OpenAI,” the lawsuit states. “Departing employees have been taking actions to evade security measures, such as failing to provide two-weeks’ notice, and ignoring outreach by security personnel to schedule exit processes and security reviews.”
Supply chain involvement
Apple’s accusations against OpenAI’s io unit include approaching at least two of the iPhone maker’s suppliers to replicate work. One company carried out “a specific trade secret metal-finishing technique for OpenAI” after being misled into thinking Apple had signed off on the project. OpenAI approached a battery supplier with “targeted questions” to learn more about Apple components.
What OpenAI is building
OpenAI has said little about its hardware efforts, except that it is developing a “family” of AI-powered devices. While the company previously planned to use the io branding, court filings indicate it will choose a new name. It will not ship devices to customers until at least April 2027. Reports suggest OpenAI is working on an AI-powered puck that sits on a tabletop and users control with their voice.
What it means
Apple is seeking an injunction to stop OpenAI from continuing the alleged theft. It also seeks monetary damages and the return of any pilfered property and data. For engineers and designers moving between tech giants, this case sets a strict warning: taking physical parts or internal documents to a new job is not a shortcut. It is a legal breach that can end a career.
