Apple Sues OpenAI Over Alleged Trade Secret Theft by Ex-Apple Engineers

Apple filed a trade secret lawsuit in US district court in San Jose against OpenAI, its chief hardware officer Tang Tan, and engineer Chang Liu, alleging a coordinated effort to strip confidential designs, unreleased parts, and internal documents from Apple on the way out the door. Tan, a 24-year Apple veteran who led iPhone product design, is accused of directing job candidates still at Apple to bring physical components to OpenAI interviews. The suit also names io Products, the startup OpenAI acquired for $6.5 billion, as a defendant.

What happened

Detail	Fact
Court	US District Court, San Jose
Defendants	OpenAI, Tang Tan, Chang Liu, io Products
Tan’s tenure at Apple	24 years, led iPhone product design
Former Apple staff at OpenAI	More than 400, per the lawsuit
io Products acquisition price	$6.5 billion (2024)
Apple’s first letter to OpenAI	February 2025, no response received
Comparable case	Waymo v. Uber (2017), settled for $245 million

Apple’s core allegation is that OpenAI, under pressure to ship its first commercial hardware product, ran what the lawsuit describes as a systematic poaching operation. Tang Tan, now OpenAI’s chief hardware officer, allegedly coached employees who were leaving or considering leaving Apple on how to sidestep the company’s data security protocols before walking out.

Chang Liu, an electrical engineer who left Apple in January, is accused of downloading dozens of confidential hardware files, including a presentation on manufacturing and testing complex circuit boards. Apple caught on after Liu never returned his company-issued laptop and was discovered to still have access to Apple’s internal file-sharing system via a bug that Apple says has since been patched.

In one specific incident the lawsuit details, an Apple employee was caught taking screenshots and downloading files tied to a highly confidential project in the hours before an interview with Tan at OpenAI. Tan is also accused of emailing himself supplier information before his own departure, a pattern Apple says it found repeated among other employees heading to OpenAI.

How deep does it go?

The lawsuit goes beyond individual employees. Apple alleges that OpenAI’s io unit approached at least two Apple suppliers. One was allegedly misled into thinking Apple had approved a project, and then performed a specific metal-finishing technique for OpenAI. A second battery supplier was targeted with pointed questions about Apple components, according to the filing.

Tan is further accused of obtaining an internal Apple document that outlines security procedures for departing staff. He and OpenAI recruiters allegedly used it to advise people to hide their new employer, drag out system access, and avoid signing exit paperwork. Apple says the pattern shows up as employees failing to give two weeks’ notice and ignoring outreach from the security team to complete exit reviews.

Why it matters

This dispute sits at the intersection of two trends pulling in opposite directions. Apple and OpenAI announced a partnership in 2024 to bring ChatGPT to iPhones, Macbooks, and iPads. Since then, that relationship has deteriorated, and Apple has reportedly leaned more on Google’s Gemini technology for its in-house AI work. The two companies are now expected to compete directly in the market for AI-powered consumer devices.

OpenAI paid $6.5 billion to acquire io Products, a startup cofounded by Tan alongside Scott Cannon, Evans Hankey, and designer Jony Ive. That acquisition is central to OpenAI’s hardware ambitions. If Apple’s allegations hold up, the legal exposure could complicate or delay that entire product line.

Legal observers will immediately reach for the Waymo v. Uber comparison. That case, also involving hardware designs and a key engineer who left with thousands of confidential files, settled for $245 million mid-trial in 2018. The Apple case involves more defendants, more alleged instances, and two companies with far larger market positions.

For businesses watching the AI hardware race, this lawsuit is a reminder that the competition for talent between tech giants carries serious legal and reputational risk. If you are integrating AI tools into your own product stack, understanding where the IP lines are drawn is increasingly relevant.

Our take

Apple’s filing is detailed in a way that suggests this is not a warning shot. The company names specific files, specific dates, specific incidents, and even a bug in its own systems. That level of granularity usually means the legal team has already done significant forensic work and is confident in what it found.

OpenAI’s response, that it has “no interest in other companies’ trade secrets,” is the expected denial. But the public record of what io Products is and who founded it makes the underlying tension obvious. OpenAI hired the people who built Apple’s hardware, then paid billions to bring their startup in-house. Whether that crosses into trade secret theft is for a court to decide, but the optics are not great.

The broader lesson for anyone building a team in a competitive industry: standard non-disclosure agreements and exit processes are not enough on their own. The alleged use of an internal Apple security document to game the exit process suggests that motivated actors will find the gaps in any procedure. Robust access revocation and device return protocols matter more than most companies assume.

We covered a related tension earlier when OpenAI’s head of safety departed as teams were being reorganised internally. The throughline is that OpenAI is under significant pressure to build fast, and that pressure has consequences.

What to do about it

1. Audit your offboarding process now. Confirm that system access is revoked on the final day, not after a delay, and that device return is tracked to completion.
2. Review what files departing employees can access in their final weeks. Limit downloads from internal repositories to role-critical documents only.
3. Check that your supplier relationships include confidentiality provisions that explicitly prohibit sharing your process details with competitors.
4. If you are hiring from a competitor, speak with legal counsel before any “show and tell” of materials a candidate brings to interview.

When the two biggest names in consumer AI end up in court over trade secrets, it signals that hardware IP is now as contested as software IP has always been.

Source: WIRED · AI