Apple sues OpenAI alleging theft of trade secrets by 2 ex-staff

Apple's lawsuit against OpenAI and two former employees alleges a coordinated campaign to steal confidential product designs, threatening the AI startup's hardware ambitions before they can reach the market.

Apple Inc. sued OpenAI for trade secret theft Friday, accusing the ChatGPT-maker and its chief hardware officer of orchestrating a scheme to pilfer information about unreleased products. The complaint, filed in the U.S. District Court for the Northern District of California, alleges OpenAI encouraged Apple employees to share components, drawings and supplier communications during job interviews to build its own device lineup.

"Apple does not bring this action lightly," the company's legal team said in the filing. "Apple operates in the most competitive markets in the world and focuses on creating and shipping the very best products and services that embody its innovations. But it cannot tolerate the theft of its trade secrets."

The lawsuit names Tang Yew Tan, a 24-year Apple veteran who served as vice president of product design for the iPhone, Apple Watch and AirPods before joining OpenAI as its chief hardware officer. It also names Chang Liu, who spent eight years as a senior system electrical engineer at Apple before moving to OpenAI. According to the complaint, Tan emailed himself information about Apple's suppliers before leaving and has since asked Apple job candidates to bring "actual parts" for "show and tell" sessions during interviews at OpenAI.

The Allegations

Liu allegedly failed to return his Apple-issued work laptop upon departure in January and continued accessing it after joining OpenAI, downloading dozens of confidential hardware files. He also coached a former Apple colleague on how to avoid scrutiny when leaving the company, the suit claims. Apple said its investigation found other former employees emailed themselves confidential information to personal accounts before joining OpenAI.

The iPhone maker said it raised concerns to OpenAI in February, early in its investigation, and received no response. The lawsuit argues OpenAI's hardware business "now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets."

A Fractured Partnership

The legal battle marks a sharp escalation between two companies that partnered in 2024 to integrate ChatGPT into Apple devices. Reports emerged in May that the relationship had frayed, with OpenAI considering legal action over failing to receive expected benefits from the deal. The lawsuit transforms what was a commercial dispute into a high-stakes legal confrontation that could reshape competitive dynamics in AI hardware.

For Apple, the suit reinforces its aggressive intellectual property stance at a time when it is deepening its own AI investments. The company unveiled its next-generation AI platform at WWDC in June, including a new Siri, signaling it views AI as central to its product roadmap. For OpenAI, the case threatens to derail hardware development efforts led by Tan, who oversaw some of Apple's most successful product lines.

Microsoft Corp., OpenAI's primary investor and strategic partner, could face indirect exposure if the case constrains OpenAI's ability to recruit hardware talent or develop devices. Apple shares have gained roughly 18% this year, while Microsoft trades at about 31 times forward earnings. The case may set a legal precedent for how trade secret protections apply to executive mobility in the AI sector, where talent poaching is rampant and the line between expertise and confidential information is often blurred.

This article is for informational purposes only and does not constitute investment advice.