Apple Sues OpenAI Over Alleged Theft of Hardware Trade Secrets

Apple has filed a federal lawsuit against OpenAI in Northern California, accusing the company of running a scheme to steal its intellectual property and use it to build its own consumer hardware.

In the complaint, Apple claims the theft went right up the chain. “This much is clear, however: at every level, from members of its Technical Staff to its Chief Hardware Officer, and in coordination with business partners, OpenAI has been stealing Apple’s trade secrets and confidential information,” the company said in the filing.

It’s a stunning turn for two companies that were partners not long ago. Apple and OpenAI struck a high-profile deal in 2024 to bake ChatGPT into the iPhone’s operating system, with Sam Altman showing up at Apple’s headquarters for the announcement. Things have cooled off a lot since. OpenAI moved into hardware last year by buying IO Products, the startup founded by former Apple designer Jony Ive, for around $6.4 billion. On top of that, Apple’s revamped Siri, due out this fall, is built on Google’s Gemini models instead of ChatGPT.

The people at the centre of it

Most of Apple’s case revolves around former staff who left for OpenAI. The lawsuit names OpenAI’s Chief Hardware Officer Tang Tan, a former Apple VP who spent 24 years at the company working on the iPhone and Apple Watch, as a defendant.

Apple alleges Tan told job candidates who still worked at Apple to smuggle physical parts into their interviews. “He has directed job candidates still working for Apple to bring ‘actual parts’ from Apple to their interviews for ‘show and tell’ sessions in which he and his team at OpenAI can elicit still more Apple confidential information,” the filing says. According to Apple, that meant bringing in things like batteries, logic boards and SIPs to show off.

The complaint goes further on what Tan allegedly did. Apple claims he used internal project codenames to pull more detail out of candidates, and that he held onto or obtained an internal Apple managers’ document marked “Need to Know” that lays out security procedures for departing employees.

Apple also alleges Tan and his OpenAI colleagues shared that document with new hires so they’d know how to dodge Apple’s exit checks. Tan also allegedly warned recruits not to tell Apple they’d taken jobs at OpenAI so they could stick around and keep gathering info.

The suit also names Chang Liu, a former senior electrical engineer who spent eight years at Apple. Apple says Liu kept his Apple-issued laptop after leaving and used it to download dozens of confidential documents while already working at OpenAI. In one message to a former Apple colleague, Liu allegedly wrote “LOL, I found out I can access the [network storage], so funny.”

According to the lawsuit, Apple says OpenAI has poached away 400 people, which is huge.

Apple’s partners pulled in too

Apple also accuses OpenAI of leaning on its manufacturing partners. The company claims OpenAI had one partner use a proprietary metal-finishing technique that Apple invented, “misleading the partner to believe they had Apple’s permission to do so.”

According to Apple’s lawsuit it calls the situation “the tip of the iceberg” and says OpenAI’s hardware business is “rotten to its core” because of what it calls an illegal reliance on stolen trade secrets. Apple also says it flagged its concerns to OpenAI in February and never heard back.

An Apple spokesperson told CNBC that new evidence pushed it to act. “Recently, significant evidence has emerged suggesting individuals employed by OpenAI wrongfully took Apple’s secret and confidential information regarding our unreleased technologies, processes, and products,” the spokesperson said.

Apple wouldn’t say whether the lawsuit changes anything about its existing Apple Intelligence partnership with OpenAI. The company is seeking damages, injunctions, and a court order to stop OpenAI from using its trade secrets, and it’s also suing Tan and Liu for breach of contract.

Now this Apple-OpenAI partnership has gotten really interesting. It was just months ago that OpenAI was complaining about how Apple had not integrated ChatGPT enough, and was contemplating suing the iPhone maker. Now we likely know why Apple has held back with this lawsuit, despite the filing mentioning it doesn’t have anything to do with it.