Apple’s accusations regarding the theft of trade secrets are poised to lead to a legal battle that could span several years.
OpenAI has navigated a year replete with numerous lawsuits, including one initiated by the world’s wealthiest individual. However, last Friday, the company was served with one of its most high-profile legal actions to date, filed by Apple, putting OpenAI’s significant investment in hardware at stake.
The lawsuit, lodged by Apple in Northern California federal court, alleges that former Apple employees illicitly obtained the company’s trade secrets for the benefit of OpenAI. The 41-page complaint underscores Apple’s stringent confidentiality policies surrounding its "product development, manufacturing, supply chain, technology research, and other innovations," asserting that "the trade secrets spanning Apple’s hardware operations collectively constitute one of the most valuable intellectual assets in all of American business."
The allegations specifically name three former Apple employees: Tang Tan, who served as VP of Apple Watch for 24 years before becoming OpenAI’s chief hardware officer (following OpenAI’s acquisition of Jony Ive’s hardware company, io); Chang Liu, a former systems electrical engineer for iPhone with eight years at Apple before his departure for OpenAI; and Yu-Ting “Alyssa” Peng, another ex-Apple employee who also joined OpenAI (details of Peng’s Apple tenure are less publicized). The lawsuit contains striking claims, including that Tan allegedly requested prospective OpenAI employees to bring Apple hardware outside the office for "show and tell" during interviews and coached Apple employees on how to circumvent the company’s offboarding security procedures. It remains unclear whether any of Apple’s hardware-related trade secrets have been incorporated into OpenAI’s device, as it has not yet publicly showcased a product.
Avery Williams, cochair of the trade secret practice area at McKool Smith and author of the firm’s AI Litigation Tracker, shared with The Verge his belief that OpenAI’s legal challenges are far from over. He remarked, “They’ve gotten sued a lot,” adding that OpenAI will not be "out of the woods until we get a ruling from a higher court on the fair use question for AI training. It’s a trillion-dollar question.”
This lawsuit presents yet another hurdle for OpenAI, which has experienced a turbulent six months marked by disputes with rivals over US military red lines, protests concerning a contract with the US government, a protracted legal battle with former co-founder Elon Musk, and a competitive race with Anthropic to be the first frontier lab to go public. This is in addition to a multitude of other lawsuits, some of which were initiated by Musk himself. Further ongoing legal actions include a suit brought by the family of Adam Raine, a 16-year-old who died by suicide after confiding in ChatGPT, and the long-standing case by The New York Times and other publishers alleging copyright infringement.
The timing of Apple’s lawsuit is particularly disadvantageous for OpenAI. The company is currently preparing for its initial public offering, having confidentially submitted a Form S-1 with the SEC last month; it faces significant investor pressure to achieve profitability; and it has eliminated numerous "side quests" to concentrate on core revenue drivers such as enterprise solutions and coding. Perhaps most critically, OpenAI is poised to release a highly anticipated hardware device in 2027, a venture that followed its nearly $6.5 billion acquisition of famed Apple designer Jony Ive’s hardware startup, io (which itself involved managing another lawsuit from a company named Iyo). While Apple may have a reputation for lagging in AI, it has consistently maintained a lead in hardware, a reputation directly opposite to OpenAI's. The common industry adage, "hardware is hard," is exemplified by the graveyard of once-hyped AI devices from previous years, such as the Humane AI pin.
Charlyn Ho, CEO and founder of Rikka Law Group, a firm specializing in tech, privacy, and cybersecurity law, noted, “The next frontier is going to be AI hardware, more than just chips … Robotics and other types of physical AI is the next area that is ripe for disruption.” She found OpenAI’s move into this domain intriguing, suggesting, “maybe they’re seeing [that] just the pure software play is not profitable.” Ho further commented on OpenAI's current financial standing, stating, “They’re a frontier lab. They’re spending more money than they’re making at the moment.”
It is understandable that OpenAI would seek to recruit talent to address hardware deficiencies and accelerate its progress in this area. However, this strategic hiring has now culminated in what is likely to be a costly legal dispute.
“It’s never fantastic to get sued by Apple when you’re trying to IPO,” remarked McKool Smith’s Williams, who characterized Apple as “a tenacious litigant … They do not tend to back down.”
OpenAI did not respond to a request for comment.
Over the weekend, an X user posted, “Sam Altman wasn’t afraid of Elon but he is terrified of Apple. You can tell by all his posting today.” Altman publicly replied, “i am not afraid of apple, but i have tremendous respect for them. s-tier company.”
Historically, Apple and OpenAI have maintained a relatively positive public relationship; in 2024, they even formalized an agreement to integrate ChatGPT into Apple devices. This lawsuit, however, marks a significant departure. Rikka Law Group’s Ho observed, “Apple and OpenAI have been on the same side … As the industry gets more and more competitive, you’re starting to see these alliances fracture.”
In today's hyper-competitive AI industry, public accusations or lawsuits concerning trade secrets, corporate espionage, and illicit information harvesting are remarkably common. It is rare to find an AI leader without at least one such legal claim or accusation. Regarding trade secrets, examples include Scale AI accusing an employee who left for Mercor, xAI accusing employees who joined OpenAI, and Tesla alleging an employee transferred data about an AI supercomputer to his personal laptop (along with another employee related to robotics-related trade secrets). In terms of distillation and improper information harvesting, there are Anthropic’s accusations against Chinese AI companies and xAI’s alleged distillation of OpenAI’s models.
While Apple’s lawsuit against OpenAI garnered significant media attention, most experts interviewed by The Verge indicated that the individual allegations were not particularly unusual in themselves. The notable aspect was their aggregation within a single case involving two major industry players. Trade secret lawsuits are also challenging to prove in court, as they typically do not involve directly comparing one item against another, unlike copyright or trademark cases. Haibing Lu, a professor of information systems and analytics at Santa Clara University’s Leavey School of Business, stated that Apple’s allegations are "not unique" and "quite common in Silicon Valley." McKool Smith’s Williams described the case as akin to a “run-of-the-mill trade secrets misappropriations claim.”
Williams further elaborated, “This isn’t really an AI case as it is a case against an AI company.” He concluded, “The players are huge, but the allegations are otherwise not unusual.”
For Michael Barnhart, a nation-state threat researcher at cybersecurity firm DTEX, the "layered approach" of the allegations—encompassing hiring-stage extraction, interview-based solicitation, and internal collusion—made Apple’s lawsuit particularly intriguing. He noted that such tactics are “very run-of-the-mill in terms of insider threats and this is how they act.” However, he differentiated this case, stating, “We can sit there and I’ll pull up a company that did one of these things badly … You’ll have one, you’ll have two, you’ll have three — this one’s got all of them. This one has so many. And also, too, at the highest level.”
It presents a notable irony that in an industry fundamentally enabled by the consumption of untold amounts of data—whether technically authorized or not—AI labs become especially litigious when others allegedly take that information elsewhere. After all, the AI industry is a small and famously cliquish world. Anthropic was founded by former OpenAI executives, xAI by a former OpenAI co-founder, and countless startups have seen their core talent "acqui-hired" by either their originating workplaces or those companies’ chief competitors. Many of the most influential individuals at every leading AI company once collaborated closely with those who are now their rivals, a pattern likely to repeat in the future.
However, acknowledging this irony about the AI industry necessitates extending the same observation across recent decades. While Anthropic is alleged to have scanned millions of copyrighted books to train its AI models, the pre-generative AI tech industry spent decades embroiled in similar controversies. Examples include Google’s scanning of millions of books to create a searchable database, or the extensive piracy indirectly facilitated by YouTube in the early 2000s.
Apple’s legal filing implies that a significantly greater number of former employees than those named in the lawsuit departed for OpenAI with critical information. The company stated it had “uncovered a pattern of theft of Apple’s trade secrets by OpenAI employees who were formerly at Apple,” adding that “this is
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