Apple sues OpenAI and ex-employees, alleges trade secret theft in hardware race

Apple has filed a lawsuit against OpenAI and two former employees, accusing them of stealing trade secrets to boost OpenAI's push into consumer hardware. The case, submitted to the US District Court for the Northern District of California, marks a sharp escalation in tensions between the two technology companies.

The complaint alleges that OpenAI orchestrated a systematic effort to obtain Apple's confidential information through former employees, recruitment practices and supplier relationships. Apple claims this was done to accelerate OpenAI's entry into the consumer hardware business, potentially challenging Apple's dominance.

OpenAI denied the allegations. “We have no interest in other companies’ trade secrets,” the company said in a statement. “We remain focused on building innovative technology that empowers people everywhere.”

The lawsuit names two former Apple employees: Chang Liu, a former senior system electrical engineer, and Tang Yew Tan, former vice president of product design for iPhone and Apple Watch. Neither could be reached for comment.

Apple alleges that Liu failed to return a company-issued work laptop and later used an authentication bug to access Apple's internal network. He is accused of downloading “dozens of Apple’s confidential hardware-related files.” The company also claims that Tan, before leaving Apple, methodically emailed himself information about Apple suppliers and internal industry summaries. Tan had worked on the iPhone for most of his 24-year tenure at Apple, according to his LinkedIn profile.

In its filing, Apple also alleges that Tan encouraged Apple employees to bring parts from Apple to job interviews at OpenAI for “show and tell” sessions. The complaint cites an incident where an OpenAI job candidate reportedly said, “I didn’t even know we could take those from the office.”

The lawsuit also names OpenAI Foundation, OpenAI Group PBC (the company’s commercial arm), and io Products, which OpenAI acquired, as defendants.

Apple says it wrote to OpenAI in February with concerns that its confidential information was reaching the company, but received no reply. The filing notes that more than 400 former Apple employees now work for OpenAI. “That OpenAI now employs people who were once entrusted with Apple’s trade secrets does not entitle OpenAI to use that information to jumpstart its hardware efforts,” Apple wrote.

Analysts say the case could delay OpenAI's hardware ambitions. “Apple sees OpenAI moving from partner to potential rival, while OpenAI is trying to reduce its dependence on the iPhone and build a direct relationship with consumers,” said PP Foresight analyst Paolo Pescatore. “Even if the allegations are not proven, the lawsuit could delay OpenAI’s hardware ambitions and further weaken what is already becoming an increasingly fragile partnership.”

The lawsuit comes just after OpenAI successfully fended off a legal challenge from Elon Musk’s xAI. It highlights the growing competition for talent and proprietary technology in the race to develop AI-powered devices.