Apple Inc. v. OpenAI — Apple Sues OpenAI and io Products Over Hardware Trade Secret Theft by Former Employees

Background

Apple filed one of the most closely watched trade secret lawsuits in tech history on July 10, 2026, naming OpenAI, its hardware spinoff io Products, and two named former Apple employees as defendants. The complaint, 41 pages long and filed in the Northern District of California, alleges a systematic effort by OpenAI to extract Apple’s most sensitive hardware engineering, manufacturing, and supply chain secrets through the coordinated departure of former Apple executives and engineers.

The two individual defendants sit at the center of the case. Tang Yew Tan was a senior vice president at Apple who left in 2024 to co-found io Products—a dedicated AI hardware startup—alongside other former Apple executives. OpenAI acquired io for approximately $6.5 billion in May 2025, and Mr. Tan became OpenAI’s Chief Hardware Officer, overseeing a hardware division that subsequently hired scores of former Apple engineers. Apple alleges Mr. Tan directed job candidates for OpenAI hardware positions to bring actual Apple hardware components to “show-and-tell” interviews, effectively using Apple’s own confidential materials in the recruiting process.

Chang Liu spent eight years at Apple as a Senior System Electrical Engineer on sensitive product development programs. He left Apple in January 2026 to join OpenAI. When Apple contacted him for standard exit procedures, he allegedly failed to return his Apple laptop and did not comply with requests to confirm the return of confidential materials. Apple’s subsequent investigation revealed he had downloaded hundreds of confidential files from Apple’s internal systems before departing. Apple also alleges that OpenAI coached departing Apple employees to evade Apple’s security processes, and that OpenAI obtained proprietary metal finishing techniques Apple had invented and misled Apple’s hardware suppliers about its authorization to use those techniques.

The Claims

Apple brings claims under the federal Defend Trade Secrets Act (DTSA) and the California Uniform Trade Secrets Act (CUTSA), along with breach of contract claims arising from the Individual Defendants’ confidentiality and employment agreements. The complaint categorizes the allegedly misappropriated trade secrets across several domains:

• Hardware engineering and product design: Circuit and system designs, internal architecture specifications, and hardware development roadmaps for iPhone, Apple Watch, MacBook, and next-generation Apple devices.
• Manufacturing and supply chain: Proprietary manufacturing processes, supplier relationships, and negotiating strategies developed through decades of global supply chain optimization—including the metal finishing techniques allegedly obtained through Apple’s hardware supplier network.
• Business operations and institutional knowledge: Strategic planning, vendor management, and the accumulated institutional expertise that enables Apple to bring products to market at speed and scale.

Apple alleges OpenAI’s misappropriation was willful and malicious and seeks exemplary damages under 18 U.S.C. § 1836(b)(3)(C), along with a preliminary and permanent injunction preventing OpenAI from using or disclosing the trade secrets. OpenAI is headquartered in San Francisco and organized in Delaware, and Apple contends the DTSA applies because OpenAI intends to use the misappropriated information in the United States to develop and commercialize products sold to American consumers.

Key Takeaways

• This is a complaint, not a final judgment—OpenAI has not yet responded, and the allegations remain unproven. Apple faces significant hurdles in identifying and proving trade secret status for specific categories of information, particularly in the AI/hardware convergence space where many techniques may be known in the industry.
• The show-and-tell interview allegation—requiring candidates to bring actual Apple hardware to interviews—is one of the most striking in the complaint and, if proven, would likely establish both misappropriation and OpenAI’s knowledge of the wrongdoing.
• The io Products acquisition structure creates a complex fact pattern: io was a separate entity for roughly a year before OpenAI’s $6.5B acquisition. Apple will need to establish that misappropriation occurring within io is attributable to OpenAI both before and after the merger.
• The case highlights the growing challenge of enforcing trade secrets when senior executives depart for competitors and bring extensive institutional knowledge—even without downloading files. The complaint relies heavily on actual downloads by Liu but the Tan allegations rely more on conduct at OpenAI after his departure.

Why It Matters

Apple v. OpenAI may be the defining AI trade secret lawsuit of the decade. OpenAI’s ambition to ship consumer AI hardware—built on a team heavily recruited from Apple—has put it on a collision course with one of the world’s most aggressive IP enforcement programs. The case will test how courts apply the DTSA to the movement of senior technical talent at the intersection of consumer hardware and AI, a space where the line between general expertise and specific trade secrets is frequently contested.

For the broader tech industry, the case is a signal that the aggressive AI hardware hiring wave of 2024–2025—which drew heavily from Apple, Google, and other incumbents—carries significant legal risk. If Apple’s injunction motion succeeds, it could materially delay OpenAI’s hardware launch timeline. The case will also put a spotlight on supplier relationships: the allegation that OpenAI misled Apple suppliers about authorization to use proprietary manufacturing techniques, if true, raises potential liability for those suppliers as well as OpenAI.