Apple Sues OpenAI: The AI Hardware Trade Secret War

Apple Files Trade Secret Complaint Against OpenAI on 10 July 2026

Apple filed a civil complaint against OpenAI in the U.S. District Court for the Northern District of California on 10 July 2026, alleging a coordinated scheme of trade secret theft spanning OpenAI's hardware leadership, its recruiting operations, and its business partners. The lawsuit names OpenAI, Tang Tan — OpenAI's chief hardware officer and former vice president at Apple — Chang Liu, a former Apple senior systems electrical engineer who spent eight years at the company, and IO Products, the hardware design start-up that Apple's former lead designer Jony Ive built and OpenAI acquired for approximately $6.4 billion in 2025. The complaint characterises the alleged scheme as operating "at every level" of OpenAI's hardware organisation.

The Core Allegations: Show and Tell and a Missing Laptop

The most direct allegation in Apple's complaint concerns Tang Tan's conduct in OpenAI's recruiting process. Apple alleges that Tan instructed Apple employees who were interviewing at OpenAI to bring "actual parts" from Apple to their interviews for "show and tell" sessions, in which Tan and his team could elicit confidential technical information from candidates still employed by Apple. Tan is also alleged to have emailed himself supplier intelligence and disclosed key Apple supplier meeting details to OpenAI before resigning his position.

The second individual defendant, Chang Liu, allegedly retained an Apple-issued laptop he was required to return when he joined OpenAI in 2026 and used the device to download confidential technical documents. Apple further alleges that OpenAI coached departing employees on evading Apple's security and off-boarding processes to conceal what data had been transferred.

The stolen information is described as spanning unannounced product designs, engineering specifications for hardware components, proprietary manufacturing process data, supply chain strategies, and confidential project presentations for unreleased technologies. Apple described OpenAI's hardware organisation as "rotten to its core" in the filing.

IO Products and the Jony Ive Connection

IO Products is the hardware start-up founded by Sir Jony Ive, who led Apple's industrial design team for over two decades and is credited with the iMac G3, iPod, iPhone, and Apple Watch. Ive left Apple in 2019 to found LoveFrom, a design consultancy, and subsequently created IO Products as a device design firm. OpenAI acquired IO Products in 2025 for approximately $6.4 billion, with the intention of building AI-native consumer hardware.

Apple's complaint names IO Products as a defendant alongside OpenAI, alleging that the design firm was part of the pipeline through which Apple trade secrets flowed into OpenAI's hardware programme. Ive himself is not named in the complaint. The inclusion of IO Products implies that Apple design intelligence — potentially including knowledge carried by former Apple employees who moved through IO before the OpenAI acquisition — is alleged to have been incorporated into OpenAI's device development effort.

How Apple and OpenAI Went from Partners to Adversaries

The lawsuit represents a sharp break in what was, until recently, a publicly celebrated commercial relationship. In 2024, Apple and OpenAI announced a partnership that integrated ChatGPT directly into Apple Intelligence on iOS 18.1, iPadOS 18.1, and macOS Sequoia. The integration made ChatGPT accessible through Siri, allowing Apple customers to invoke OpenAI's models without leaving the Apple operating system.

The relationship deteriorated after OpenAI made clear it intended to enter consumer hardware. The acquisition of IO Products in 2025 signalled that OpenAI was no longer purely an API company — it was positioning itself to ship its own AI-native devices that could compete with Apple hardware. With more than 400 former Apple employees now at OpenAI, Apple evidently concluded that the talent pipeline between the two companies represented an ongoing intelligence risk significant enough to litigate.

What the Lawsuit Means for AI Companies and Engineering Teams

For engineering teams and product organisations building AI software or hardware, the Apple-OpenAI complaint illustrates the legal risk that comes with aggressive talent acquisition in technically adjacent domains. Apple's filing describes conduct alleged to be coordinated at the corporate leadership level — not isolated individual acts — including structured interview processes designed to extract proprietary information and coaching to help employees evade off-boarding controls.

The case carries a directly relevant lesson for product and engineering organisations in India building AI or hardware products: trade secret risk flows in both directions. Companies recruiting from competitors need practices that do not solicit candidates to bring proprietary materials. Companies losing talent need enforced off-boarding procedures and data controls. The Apple complaint describes a situation where neither safeguard prevented the alleged transfer, and the resulting litigation threatens to disrupt OpenAI's entire hardware programme.

The Bottom Line

Apple filed a trade secret lawsuit against OpenAI on 10 July 2026 in the U.S. District Court for the Northern District of California, naming hardware chief Tang Tan, former engineer Chang Liu, and IO Products alongside OpenAI. Apple alleges that Tang Tan ran show-and-tell recruiting sessions in which Apple employees were instructed to bring physical parts and confidential data to OpenAI interviews, and that Chang Liu retained an Apple laptop and downloaded proprietary documents after joining OpenAI. IO Products — Jony Ive's hardware design firm acquired by OpenAI for approximately $6.4 billion in 2025 — is also named. The complaint describes a scheme operating at every level of OpenAI's hardware organisation, and marks a complete reversal of the Apple-OpenAI partnership announced in 2024 that integrated ChatGPT into iOS.