The complaint accuses OpenAI of orchestrating efforts to obtain and use Apple’s confidential information through former employees, recruitment practices and supplier relationships to accelerate its push into the consumer device business.
Apple on Friday, July 10, sued OpenAI and two former employees, alleging misuse of its trade secrets to profit from the ChatGPT owner’s foray into consumer hardware, a major escalation of the ongoing tension between the two companies.
The complaint accuses OpenAI of orchestrating a massive effort to systematically obtain and use Apple’s confidential information through former employees, hiring practices and supplier relationships to accelerate its push into the consumer hardware business.
“We are not interested in the trade secrets of other companies,” OpenAI said in a statement. “We remain focused on building innovative technology that empowers people everywhere.”
The case sets up a battle over who will control future AI devices that cannot run traditional software or operating systems — devices that, if successful, will divert consumer attention away from Apple’s best-selling iPhone. Analysts believe OpenAI is working on a phone or other device.
Tensions between the two tech companies have strained their relationship, as the race to develop AI products has intensified competition for talent and proprietary technology.
“Apple sees OpenAI moving from a partner to a potential rival, as OpenAI tries to reduce its reliance on the iPhone and build a direct relationship with users,” PP Foresight analyst Paolo Pescatore said. “Even if the allegations are not proven, the lawsuit could delay the prospects for OpenAI hardware and further weaken what is already a fragile partnership.”
Apple’s lawsuit, which was filed in the US District Court for the Northern District of California, comes just after OpenAI settled a legal challenge from Elon Musk’s xAI.
The two former Apple employees named in the suit are Chang Liu, a former senior electrical system engineer, and Tang Yew Tan, the former vice president of product design for the iPhone and Apple Watch. Neither immediately responded to a request for comment.
Apple alleged that Liu failed to return a company-issued work laptop and later used an authentication flaw to access Apple’s internal network, downloading “numerous confidential files related to Apple hardware.”
The iPhone maker also claimed that OpenAI’s head of hardware, Tan, had “been using Apple’s confidential information to benefit OpenAI” before his departure by emailing himself information about Apple suppliers and local industry briefings. Tan worked on the iPhone for most of his 24 years at Apple, according to his LinkedIn page.
Apple alleged that Tan encouraged Apple employees to bring parts from Apple to job interviews at OpenAI for “show and tell” sessions, citing an incident in his presentation where one OpenAI candidate allegedly said that he “didn’t even know we could take those 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.
Confidential information
In its complaint, Apple claimed it wrote to OpenAI in February concerned that its confidential information was going to OpenAI and asked to discuss the matter, but received no response.
More than 400 former Apple employees now work for OpenAI, it said in its filing, adding that it is “not surprising” that some of them have knowledge of its confidential information.
“That OpenAI now employs people who were previously entrusted with Apple’s trade secrets does not give OpenAI the right to use that information to accelerate its hardware efforts,” the iPhone maker wrote in its complaint.
Apple also alleged that OpenAI employees sought confidential information from Apple’s suppliers, at one point allegedly one of those suppliers implemented what Apple called a secret metal-finishing technique in the belief that OpenAI had Apple’s permission to use the technique.
Mark Lemley, a professor at Stanford Law School, said that Apple’s complaint “has the potential to be a very big case” but that some of what Apple claims, such as OpenAI’s hiring of hundreds of Apple employees, is not illegal in California, where Silicon Valley emerged in part due to state laws that allow employees to leave for a competitor.
“But if Apple’s claims that employees took confidential documents — and that OpenAI is using those documents — are true, that’s a problem for OpenAI,” Lemley said.
Camilla Hrdy, a law professor at Rutgers Law School, said the case could be difficult because many previous cases around AI and trade secrets have involved software rather than hardware.
“These trade secret cases are often brought in the technology space, and we usually learn much, much more as the case progresses. OpenAI is not a defenseless defendant,” Hrdy said.
Simmering tension
A person familiar with the matter told Reuters in May that OpenAI was exploring legal options against Apple, including notifying the tech giant of breach of contract but possibly not filing a full lawsuit.
In 2024, Apple announced the integration of Apple Intelligence technology into all its apps including Siri and brought OpenAI’s chatbot ChatGPT to its devices.
Their partnership allows users to access ChatGPT results through Siri, while iPhone users can also sign up for ChatGPT membership directly from the iOS settings menu.
Apple rolled out a long-delayed overhaul of Siri last month. The update comes two years after Apple first promised a major upgrade that was repeatedly delayed.
OpenAI bought hardware startup io Products, founded by former Apple architect Jony Ive, last year in a $6.5 billion deal, in a push to move software to consumer hardware. Ive has not been named in the lawsuit. – Rappler.com
