Apple sues OpenAI and former employees over trade secret theft

Apple sues OpenAI and former employees over trade secret theft

Apple has filed a federal lawsuit against OpenAI and two of its former employees, alleging a coordinated effort to misappropriate trade secrets to accelerate the AI company's entry into the consumer hardware market. The complaint, filed Friday in the U.S. District Court for the Northern District of California, accuses OpenAI of engaging in a pattern of theft regarding confidential product development and engineering knowledge.

The lawsuit names former Apple employees Chang Liu and Tang Yew Tan as defendants. Tang, who spent 24 years at Apple as a Vice President of Product Design for iPhone and Apple Watch, now serves as OpenAI's chief hardware officer. Liu, a senior system electrical engineer who worked at Apple for eight years, is also named in the suit.

Apple alleges that Tang methodically used confidential information to benefit OpenAI by emailing himself internal industry summaries and data about Apple suppliers before his departure. The company further claims that Liu downloaded dozens of Apple's confidential hardware-related files by using an authentication bug to access the internal network after he had already accepted a position at OpenAI. According to the filing, Liu also failed to return a company-issued work laptop.

The allegations extend to OpenAI's recruitment and supplier practices. Apple claims that OpenAI encouraged job candidates to bring actual parts from Apple as props for show and tell sessions during interviews. In one cited incident, a candidate allegedly remarked that he had not known such items could be taken from the office.

Apple also alleges that OpenAI sought insider knowledge from suppliers. The lawsuit claims OpenAI persuaded a manufacturing partner to apply a proprietary Apple metal-finishing technique to OpenAI's own hardware development. Apple argues this work violated contractual restrictions, and that the supplier acted on the belief that OpenAI had permission to use the technique.

Corporate Rivalry and Integration

The legal battle occurs despite a functional partnership between the two firms. In 2024, Apple integrated its "Apple Intelligence" technology and brought ChatGPT to its devices, allowing users to access the chatbot via Siri or sign up for memberships through iOS settings. However, Apple has since shifted more of its AI features to run on Google's Gemini model and tools.

The conflict follows OpenAI's recent expansion into hardware, which included the acquisition of io Products — a design startup founded by former Apple executive Jony Ive — in a $6.5 billion (NZ$11.3b) deal last year. Io Products is also named as a defendant in the lawsuit, though Jony Ive is not.

Apple stated in the filing that more than 400 former Apple employees now work for OpenAI. While Apple acknowledges that these individuals may possess confidential knowledge, it argues this does not entitle OpenAI to use such information to jumpstart its hardware efforts.

According to the complaint, Apple wrote to OpenAI in February expressing concerns that confidential information was being leaked and requested a discussion, but the company received no reply. A person familiar with the matter told Reuters in May that OpenAI had been exploring legal options against Apple, including a possible notice of breach of contract.

Industry Implications

OpenAI spokesman Drew Pusateri told the BBC that the company is reviewing the complaint and has no interest in other companies' trade secrets, stating the firm is focused on building innovative technology that empowers people everywhere. An Apple spokesman told the BBC that the lawsuit is based on significant evidence.

Apple argues that because this misconduct is normalized and exemplified by leadership, OpenAI's hardware business is rotten to its core by its illegal reliance on misappropriated trade secrets. The company is seeking unspecified monetary damages and has asked the court to immediately prohibit OpenAI from using the disputed confidential information.

The dispute arrives as OpenAI is expected to release its first hardware product, a keyboard designed for use with its AI tools, this month.