Apple Is Suing OpenAI for Allegedly Stealing Hardware Secrets

Apple filed a lawsuit against OpenAI and its hardware chief on Friday for allegedly stealing the iPhone-maker’s trade secrets, including unreleased parts and prototypes, confidential designs, and documents about stealth projects.

The lawsuit accuses OpenAI chief hardware officer Tang Tan, who spent 24 years at Apple and oversaw iPhone product design, and his colleagues at the AI company of encouraging people departing or considering leaving Apple to bring with them proprietary and unreleased technology. Tan allegedly helped coach recruits on how to evade Apple’s data security protocols and directed them to bring confidential Apple parts to job interviews at OpenAI.

“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 says in the lawsuit, which was filed in US district court in San Jose. The company describes OpenAI as resorting “to taking unlawful shortcuts” while under “mounting pressure to deliver its first commercial hardware product.”

OpenAI and Tan did not immediately respond to requests for comment. Apple spokesperson Hannah Smith says the company “will always defend our teams' hard work and innovations, and we are taking all appropriate steps to do so."

Background and Context

The lawsuit opens what may become the highest-stakes and most dramatic battle over intellectual property theft in Silicon Valley since autonomous ride-hailing company Waymo in 2017 accused Uber of stealing hardware designs when it brought on a former Waymo engineer who had left with thousands of confidential files. Uber agreed to pay $245 million to settle the lawsuit during the middle of a trial the following year.

Apple and OpenAI have been partners since 2024, when the companies announced a landmark deal to distribute ChatGPT on iPhones, Macbooks, and iPads. But the relationship has frayed in recent years, prompting Apple to rely more on Google’s Gemini AI technology as the foundation for the company’s in-house AI models. OpenAI and Apple are expected to more fiercely compete in the coming years in the emerging market for AI-powered consumer devices.

Hiring and Acquisitions

OpenAI has hired more than 400 former Apple employees, according to the lawsuit. That includes several former Apple veterans who are leading OpenAI’s development of AI-powered consumer devices.

Last year, OpenAI paid $6.5 billion to acquire a startup called io Products that was cofounded by longtime Apple executives including Tan, Scott Cannon, Evans Hankey, and famed designer Jony Ive. io Products and Chang Liu, an electrical engineer at OpenAI who was at Apple until January, are also named as defendants in the lawsuit. (Liu didn't immediately respond to a request for comment.)

Investigation and Evidence

Apple’s investigation into the alleged theft relies on data and messages gathered from its employees’ devices. The company caught onto the alleged theft early this year after Liu never returned his company-issued laptop and wrote to a former colleague about still having access to Apple’s internal file-sharing system, according to the lawsuit. (Apple says in the filing that Liu’s access was enabled by a bug that’s now been fixed.)

Liu “downloaded dozens of Apple’s confidential hardware-related files,” including a presentation on manufacturing and testing complex circuit boards used in Apple’s hardware, the lawsuit states. It adds that Liu also coached an Apple employee he was recruiting to join OpenAI on how to “‘avoid trouble with the security team’ when copying confidential Apple files.”

Apple wrote to OpenAI in February raising initial concerns about alleged theft but did not receive any response. That led to further investigation and the filing of the lawsuit.

Specific Allegations Against Tan

Apple learned that before leaving, Tan emailed himself information about the company’s suppliers. Other employees leaving for OpenAI have done the same, Apple alleges.

In addition, Tan “has directed job candidates still working for Apple to bring ‘Actual parts’ from Apple to their interviews for ‘show and tell’ sessions in which he and his team at OpenAI can elicit still more Apple confidential information,” the lawsuit alleges, naming batteries, logic boards, and shields as sought-after components.

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 Apple document for managers that explains security procedures for departing workers. He and OpenAI recruiters have allegedly used the file to counsel departing Apple employees to:

• Avoid disclosing their new employer
• Prolong access to company systems
• Avoid signing any 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.”

Allegations Against io Products Unit

Apple’s accusations against OpenAI’s io unit include that it has approached at least two of the iPhone maker’s suppliers aiming to replicate work. One company carried out “a specific trade secret metal-finishing technique for OpenAI” after being misled into thinking that Apple had signed off on the project, according to the lawsuit. OpenAI approached the other supplier, which works on batteries, with “targeted questions” to learn more about Apple components and further its own interests, the lawsuit adds.

OpenAI’s Hardware Plans

OpenAI has said relatively little about its hardware efforts, except for the fact that it’s developing a “family” of AI-powered devices. While OpenAI previously planned to use the io branding for its hardware products, the company has since indicated in court filings that it will choose a new name, and won’t ship any devices to customers until at least April 2027. Reports indicate that OpenAI is working on an AI-powered puck that sits on a tabletop, and that users can control with their voice.

Legal Remedies Sought

Apple is seeking an injunction barring OpenAI from continuing to engage in the alleged theft. It also seeks monetary damages and a return of any pilfered property and data.