Apple sues OpenAI, two former employees for trade secrets theft
The complaint accuses OpenAI of engaging in a broad effort to systematically obtain and use Apple’s confidential information through former employees, hiring practices and supplier relationships, accelerating its entry into the consumer hardware business.
Also read: Apple supplier Tata Electronics tightens internal controls after data breach
“We are not interested in the trade secrets of other companies,” OpenAI said in a statement. “We continue to focus on developing innovative technologies that empower people everywhere.”
The case sets up a battle over who will control future AI devices that don’t use traditional apps or operating systems; If successful, these devices will distract consumers from Apple’s best-selling iPhone. Analysts believe OpenAI is working on a phone or other device of its own.
Tensions between the two tech companies have strained their relationship as the race to develop artificial intelligence products intensifies competition for talent and proprietary technology.
“As Apple sees OpenAI transition from partner to potential competitor, OpenAI is trying to reduce its dependence on the iPhone and establish a direct relationship with consumers,” said PP Foresight analyst Paolo Pescatore. “Even if the allegations are unproven, the lawsuit could delay OpenAI’s hardware ambitions and further weaken an already increasingly fragile partnership.”
Apple’s lawsuit, filed in the US District Court for the Northern District of California, comes just after OpenAI successfully fended off a legal challenge from Elon Musk’s xAI.Also read: Apple iPhone 18 Pro supplier list, parts and photos revealed in Tata data leak The two former Apple employees named in the lawsuit are former senior systems electrical engineer Chang Liu and former vice president of iPhone and Apple Watch product design Tang Yew Tan. Neither immediately responded to a request for comment.
Apple alleged that Liu failed to return his company-issued work laptop and then used an authentication bug to access Apple’s internal network, downloading “dozens of Apple’s confidential hardware-related files.”
The iPhone maker also alleged that OpenAI’s hardware chief Tan “regularly used Apple’s confidential information to benefit OpenAI” by emailing him information about Apple suppliers and internal industry briefs before his departure. According to his LinkedIn page, Tan worked on iPhone for most of his 24-year tenure at Apple.
Apple alleged that Tan encouraged Apple employees to bring parts from Apple to job interviews at OpenAI for “show and tell” sessions, citing an alleged incident in which an OpenAI job candidate said he “didn’t even know we could get them from the office.”
The OpenAI Foundation, OpenAI Group PBC, the company’s commercial arm, and io Products, which OpenAI acquired, were also named as defendants.
CLASSIFIED INFORMATION
In its complaint, Apple claimed that it wrote to OpenAI in February with concerns that its confidential information had reached OpenAI and wanted to discuss the matter, but did not receive a response.
The company stated in its file that more than 400 former Apple employees now work for OpenAI, adding that it was “not surprising” that some of them had confidential information.
“The fact that OpenAI now employs individuals to whom Apple once entrusted its trade secrets does not allow OpenAI to use this knowledge to jump-start its hardware efforts,” the iPhone maker wrote in its complaint.
Apple also alleged that OpenAI employees sought confidential information from Apple suppliers; At one point, one of these suppliers allegedly conducted what Apple called a stealth metal plating technique in the belief that OpenAI had Apple’s permission to use the technique.
Mark Lemley, a professor at Stanford Law School, said Apple’s complaint “has the potential to be a huge lawsuit,” but that some of the things Apple alleges, such as OpenAI hiring hundreds of Apple employees, are not illegal in California, where Silicon Valley originated, thanks in part to state laws that allow employees to leave for a competitor.
“But if Apple’s claims that employees took confidential documents with them and OpenAI used those documents are true, that is a problem for OpenAI,” Lemley said.
Camilla Hrdy, a law professor at Rutgers Law School, said the case could be complicated because most previous cases involving artificial intelligence and trade secrets have involved software rather than hardware.
“These trade secret cases often come into the technology arena, and we often learn a lot more as the case develops. OpenAI is not a defendant that can’t afford to defend itself,” Hrdy said.
RESULTING VOLTAGE
A person familiar with the matter told Reuters in May that OpenAI was exploring legal options against Apple, including notifying the tech giant of a breach of contract but potentially not filing a full lawsuit.
In 2024, Apple announced the integration of Apple Intelligence technology into its apps, including Siri, and brought OpenAI’s chatbot ChatGPT to its devices.
Their partnership allows users to access ChatGPT results via Siri, while iPhone users can also sign up for ChatGPT memberships directly from the iOS settings menu.
Apple launched its long-delayed overhaul of Siri last month. The update comes two years after Apple first promised major updates that have been repeatedly delayed.
OpenAI acquired io Products, the hardware startup founded by former Apple designer Jony Ive, in a $6.5 billion deal last year, with the aim of moving beyond software to consumer hardware. Ive is not named in the lawsuit.
