Apple Sues OpenAI Over Alleged Hardware Trade Secrets Stolen by Former Employees

Key points

• Apple filed a 41-page federal lawsuit against OpenAI in Northern California court, accusing three former Apple employees of stealing trade secrets.
• The three named individuals are Tang Tan (former Apple Watch vice president), Chang Liu (former iPhone electrical engineer), and Yu-Ting "Alyssa" Peng.
• OpenAI paid nearly $6.5 billion in 2024 to acquire io, the hardware startup founded by legendary Apple designer Jony Ive.
• OpenAI confidentially filed paperwork with the SEC last month to begin the process of going public.
• Legal experts described the underlying allegations as common in Silicon Valley, noting it is the scale of the players that makes the case unusual.

Apple has sued OpenAI, accusing three former Apple engineers of taking confidential hardware knowledge with them when they left to join the artificial intelligence company. The lawsuit, filed last Friday in federal court in Northern California, calls Apple's hardware secrets "one of the most valuable intellectual assets in all of American business."

The complaint names Tang Tan, who spent 24 years at Apple and served as vice president of Apple Watch before becoming OpenAI's chief hardware officer. It also names Chang Liu, a former systems electrical engineer on the iPhone team who spent eight years at Apple. A third former employee, Yu-Ting "Alyssa" Peng, is named as well, though fewer details about her Apple tenure appeared in the filing.

The allegations are pointed. Apple claims Tan asked job candidates to bring Apple hardware out of the office for informal "show and tell" sessions during their OpenAI interviews. The complaint also accuses him of coaching Apple staff on how to sidestep the company's security checks during the offboarding process, when departing employees are supposed to return equipment and data.

No OpenAI hardware product has been shown publicly yet, so it is not clear which Apple secrets, if any, made it into the device OpenAI is building.

Why does this matter to ordinary people?

If you use an iPhone or any Apple device, this case is a fight over the confidential engineering know-how baked into those products. More directly, if you use ChatGPT, OpenAI's popular AI chatbot, you should know the company behind it is heading toward a public stock offering while fighting a growing list of legal battles that could affect its finances and focus.

OpenAI is preparing to release an AI hardware device in 2027. That project is the reason the company spent nearly $6.5 billion to buy io, the startup founded by Jony Ive, the designer famous for shaping the look and feel of the iPhone. Hardware is an entirely different business from software, and Apple has spent decades building expertise OpenAI does not yet have.

Legal experts quoted by The Verge AI were measured in their assessment. Avery Williams, a trade secrets lawyer at McKool Smith, called the case "a run-of-the-mill trade secrets misappropriations claim" in terms of its legal structure. What makes it unusual, he said, is the size of the two companies involved and the timing. "It's never fantastic to get sued by Apple when you're trying to IPO," he said. "Apple is a tenacious litigant. They do not tend to back down."

Trade secrets cases are also harder to win than copyright disputes. There is no side-by-side comparison of stolen documents; prosecutors must show that confidential information was taken and used.

For now, OpenAI has not commented. The two companies had a working relationship as recently as 2024, when Apple agreed to build ChatGPT access into its devices. That arrangement now looks fragile.