Apple Sues OpenAI for Trade Secret Theft — The Silicon Valley Partnership Is Over

Apple filed a federal lawsuit on Friday accusing OpenAI of orchestrating a “coordinated campaign” to steal trade secrets by poaching its employees and exploiting their insider knowledge of unreleased products, manufacturing processes, and proprietary techniques. The suit, filed in the U.S. District Court for the Northern District of California, names OpenAI, its hardware subsidiary io Products, and two former Apple engineers — and it marks the definitive collapse of what was once Silicon Valley’s most celebrated AI partnership.

🔍 THE BOTTOM LINE

This is not a patent dispute. Apple is alleging that OpenAI’s entire hardware division — led by Jony Ive and staffed by over 400 former Apple employees — was built on a foundation of systematically stolen confidential information. The lawsuit claims OpenAI’s hardware chief used Apple’s internal project codenames in job interviews, directed current Apple employees to bring physical prototypes to “show and tell” sessions, and exploited a security bug to download over a thousand pages of engineering documents. Apple says it raised concerns privately in February and was ignored. Now it is asking a federal court to shut the whole thing down.

What Apple Actually Alleged

The lawsuit filed in the Northern District of California names two individual defendants alongside OpenAI and io Products. Tang Yew Tan, who spent 24 years at Apple as VP of product design leading iPhone and Apple Watch development, is now OpenAI’s chief hardware officer. Chang Liu worked at Apple for eight years as a senior system electrical engineer before joining OpenAI in January 2026.

According to BBC News reporting, Apple alleges that Tan used confidential Apple project codenames during job interviews with current Apple employees, asking questions like “What’s the plan?” about unannounced products. He allegedly directed candidates to bring “actual parts” from Apple to interviews for “show and tell” sessions — a practice that surprised at least one candidate, who remarked they “didn’t even know we could take those from the office.”

Liu is accused of exploiting a security bug to download a “compilation of technical files with over a thousand pages” of detailed manufacturing documents after leaving Apple. Rather than report the vulnerability, Liu allegedly joked about it in messages — “LOL” and “so funny.” He also failed to return his Apple-issued laptop.

The Jony Ive Connection

OpenAI’s hardware efforts are led by Jony Ive, Apple’s former chief design officer, who left Apple in 2019. OpenAI acquired Ive’s startup io last year in a $6.5 billion deal that brought over 50 engineers into OpenAI’s fold. The acquisition included Tang Tan, Evans Hankey (who led Apple’s design team after Ive’s departure), and Scott Cannon — all former Apple designers.

Notably, Ive, Hankey, and Cannon are not personally named in the lawsuit. But io Products, the design startup Ive founded, is a named defendant. Apple’s complaint describes OpenAI’s hardware business as “rotten to its core” and built on “illegal reliance on misappropriated trade secrets.”

This builds on our earlier reporting on Apple’s Vision Pro chief defecting to OpenAI and Apple preparing legal action over the Siri partnership. Both stories were leading indicators of this escalation.

The Supplier Angle

The lawsuit goes beyond employee poaching. Apple alleges that OpenAI deceived a trusted Apple manufacturing partner into applying Apple’s proprietary metal-finishing technique by implying it had Apple’s permission. OpenAI also allegedly approached a second longtime Apple supplier that works on power and battery manufacturing, using insider terminology to ask “targeted questions” about specific Apple components.

This is the part that should worry OpenAI the most. If Apple can prove that OpenAI used stolen trade secrets to shortcut its hardware development by piggybacking on Apple’s supplier relationships and manufacturing processes, the damages could be enormous — and the injunctive relief could delay or kill OpenAI’s hardware roadmap entirely.

The Partnership That Was

The lawsuit comes as the final nail in what was once a landmark partnership. Apple integrated ChatGPT into Siri in 2024, a deal that put OpenAI’s technology in front of hundreds of millions of iPhone users. But this year Apple shifted its AI features to Google’s Gemini, and the relationship soured. Bloomberg previously reported that OpenAI was preparing its own legal action against Apple over how the Siri partnership played out.

Apple’s lawsuit explicitly states that the ChatGPT-Siri integration agreement “is not at issue here.” This is purely about hardware trade secrets — and it is a scorched-earth filing.

The timing is brutal for OpenAI. The company is preparing for an IPO, expected to release its first hardware product (described as an AI keyboard) this month, and already facing lawsuits from the New York Times, Florida, and others. Apple is now the most valuable company in the world directly accusing OpenAI of institutional theft.

NZ Angle

For New Zealand, the implications are indirect but real. Apple is a major employer of Kiwi tech talent, and the case sets a precedent for how trade secret law applies in the AI era. If Apple wins injunctive relief, OpenAI’s hardware roadmap — which could include consumer devices sold in NZ — faces potential delays. The case also signals that the talent war between AI labs and hardware companies has crossed from aggressive recruiting into alleged corporate espionage, a shift that will affect how NZ companies protect their IP when competing for global talent.

❓ FAQ

What exactly is Apple accusing OpenAI of? Apple alleges that OpenAI engaged in a “pattern of theft” — using former Apple employees to extract confidential information about unreleased products, proprietary manufacturing techniques, and supplier relationships, then using that knowledge to build OpenAI’s hardware division.

Who are the individual defendants? Tang Yew Tan, Apple’s former VP of product design (24 years, led iPhone and Apple Watch design), now OpenAI’s chief hardware officer. Chang Liu, a former senior system electrical engineer (8 years at Apple), who allegedly downloaded over 1,000 pages of confidential engineering documents using a security bug.

What does OpenAI say? OpenAI spokesman Drew Pusateri told the BBC: “We have no interest in other companies’ trade secrets.” The company says it is reviewing the complaint and is “focused on building innovative technology that empowers people everywhere.”

Could this delay OpenAI’s hardware products? Apple is seeking injunctive relief — a court order prohibiting OpenAI from using any allegedly stolen information. If granted, it could delay or block OpenAI’s first hardware product, expected this month. The legal process typically takes months to years, but preliminary injunctions can be granted within weeks.

How does this affect the ChatGPT-Siri partnership? Apple’s lawsuit explicitly states the Siri integration agreement is not at issue. But the relationship is already fraying — Apple shifted to Google’s Gemini for AI features this year, and Bloomberg reported OpenAI was preparing its own legal action over the partnership. The ChatGPT integration may continue, but the strategic alliance is dead.

🔍 THE BOTTOM LINE

Apple just fired the most consequential legal shot in the AI industry’s history. This is not a patent troll or a copyright claim — it is the world’s most valuable company alleging that the world’s most valuable AI startup built its hardware division on stolen trade secrets, with 400+ former Apple employees as the conduit. The lawsuit names OpenAI’s hardware chief, its $6.5 billion io acquisition, and details a pattern of conduct that reads like a corporate espionage thriller. OpenAI is simultaneously preparing for an IPO, launching its first hardware product, and now defending against a federal trade secret theft case from the company that wrote the book on hardware innovation. The Silicon Valley partnership is over. What replaces it is a legal war that could reshape who controls the AI hardware layer.