iyO Inc. v. IO Products (OpenAI) — Court Grants Preliminary Injunction Barring OpenAI and Jony Ive From Using ‘IO’ Trademark for AI Hardware

Background

iyO, Inc. is an AI audio computer startup spun out of Google X in 2018 that develops a voice-activated ear-worn computer called the iyO One. The company holds U.S. Trademark Registration No. 7,409,119 for the mark “IYO” covering AI-based audio computer devices.

In May 2024, OpenAI announced a $6.5 billion acquisition of io Products Inc., a hardware company founded by legendary Apple designer Sir Jony Ive and former Apple VP of Product Design Tang Yew Tan. The “io” brand was intended for a new line of AI-powered hardware devices — products that compete directly with iyO’s registered mark and product category.

iyO sued in June 2025, and Judge Thompson immediately granted a temporary restraining order (TRO). The Ninth Circuit affirmed the TRO in December 2025 (No. 25-4028, Judges Thomas, Bress, and Mendoza). In March 2026, iyO amended its complaint to add trade secret theft claims, alleging that Tang Yew Tan arranged a dinner with an iyO employee who had secretly downloaded and obfuscated 17 CAD files of proprietary hardware designs just days before the meeting.

The Court’s Holding

Judge Thompson granted iyO’s motion for a preliminary injunction, finding that iyO demonstrated all four Winter factors. On likelihood of success, the court applied the Ninth Circuit’s Sleekcraft multi-factor test and found strong evidence of trademark infringement. The marks “IO” and “IYO” differ by only one letter and are pronounced identically (“Eye-Oh”), creating a textbook case of confusing similarity for related AI hardware goods.

The court also identified a “reverse confusion” risk: given OpenAI’s massive market presence, consumers could mistakenly believe iyO is affiliated with or a subsidiary of OpenAI’s “IO” brand, rather than the other way around. Consumer survey evidence submitted by iyO supported this finding.

On irreparable harm, the court found iyO faces existential threats including inability to attract investors, depletion of funding, and usurpation of brand equity — harms that cannot be remedied by money damages alone. The court noted the statutory presumption of irreparable harm under 15 U.S.C. § 1116(a) for registered mark owners who show likelihood of success.

Notably, Judge Thompson expressed skepticism about OpenAI’s February 2026 announcement that it had “voluntarily abandoned” the IO branding, calling it a “red flag” in light of the company’s stated plans to potentially launch hardware by January 2027. The court found the abandonment argument did not moot the need for injunctive relief.

Key Takeaways

• One-letter differences can create infringement: Marks that are pronounced identically but spelled slightly differently (IYO vs. IO) are strong infringement candidates, especially for competing products in the same class.
• Reverse confusion is a real threat: When a well-resourced newcomer (OpenAI) adopts a mark similar to a smaller established company, the confusion runs “backwards” — consumers think the senior user is connected to the junior user, not vice versa. This can be equally harmful to the senior mark holder.
• Voluntary abandonment may not moot an injunction: Courts may be skeptical when alleged infringers claim to have abandoned a mark while retaining the infrastructure and stated intention to re-enter the market.
• Trade secret allegations add fuel: The parallel allegations that OpenAI’s hardware chief orchestrated theft of iyO’s CAD files through a recruited insider dramatically escalate the dispute beyond mere trademark similarity.

Why It Matters

This case is a landmark example of how established AI startups can use trademark law to protect their brand identity against tech giants with vastly greater resources. The $6.5 billion acquisition of io Products by OpenAI did not immunize the brand from prior trademark rights — even where the acquirer is one of the world’s most valuable private companies. For AI hardware companies, the decision underscores the importance of conducting thorough trademark clearance before launching or acquiring brands in the crowded AI space.

The trade secret dimension — involving alleged theft of hardware design files through a recruited insider — could have broader implications for how AI companies recruit talent and acquire startups. If iyO’s allegations are proven at trial, it could result in damages tied to a portion of the $6.5 billion acquisition value.