Apple accuses OpenAI of systematic trade secret theft in sweeping federal lawsuit

Apple has hauled OpenAI into federal court in Northern California, alleging the artificial intelligence company orchestrated a broad campaign to steal proprietary hardware secrets, from directing current Apple employees to smuggle physical parts out of the building to coaching departing workers on how to dodge internal security systems on their way out the door.

The civil complaint, filed in the U.S. District Court for the Northern District of California, names OpenAI, the Jony Ive, founded startup IO Products, and two former Apple employees: Tang Tan, now OpenAI’s chief hardware officer and a former Apple vice president, and Chang Liu, a former Apple electrical engineer. Apple’s filing paints a picture not of opportunistic poaching but of institutional direction, trade secret theft allegedly organized from the top of OpenAI’s hardware operation and extending down through its recruiting pipeline.

The lawsuit lands barely two years after the two companies stood together at Apple’s headquarters to announce a high-profile partnership integrating ChatGPT into the iPhone’s operating system. That relationship has plainly curdled. As Breitbart News reported, Apple’s complaint alleges the theft touched “every level” of OpenAI’s organization.

What Apple says happened

The complaint’s language is unusually direct for a corporate filing. Apple stated in the suit:

“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 allegations center on two former employees and the systems they allegedly exploited. Tang Tan, who left an Apple vice presidency to become OpenAI’s top hardware executive, stands accused of turning OpenAI’s interview process into an intelligence-gathering operation. Apple’s filing states that Tan directed job candidates still employed at Apple to bring “actual parts” from Apple to their interviews for what the complaint calls “show and tell” sessions, opportunities for Tan and his team to extract still more confidential information from people who had not yet left Apple’s payroll.

Just The News reported that Tan also allegedly sent himself confidential supplier information and internal industry summaries before departing Apple for OpenAI. The picture Apple draws is of a man who did not simply walk away from his old employer, he allegedly packed the truck on his way out.

Chang Liu’s alleged conduct was more blunt. Apple claims Liu exploited an authentication bug to access Apple’s internal network and download dozens of confidential hardware-related files, as the New York Post detailed, this access reportedly occurred while Liu was already employed at OpenAI. Apple also alleges Liu stole a company laptop outright.

Coaching employees to evade scrutiny

Perhaps the most striking allegation is not about what individual employees took, but about what OpenAI allegedly told them to do. Apple’s complaint claims OpenAI “actively coached Apple employees on how to manage their exits from Apple in ways that avoid scrutiny,” the Washington Examiner reported. The filing describes guidance from OpenAI to departing Apple workers on circumventing security protocols, an allegation that, if proven, would suggest the theft was not the work of rogue individuals but an organized effort with institutional backing.

Federal courts have become increasingly active arenas for disputes involving major institutions. A recent federal ruling allowed a 29-state lawsuit over Meta’s alleged child addiction design to move forward, signaling that judges are willing to let large-scale corporate misconduct claims proceed to discovery.

Apple’s complaint also reaches beyond OpenAI’s offices. The company alleges OpenAI asked hardware manufacturing partners to implement a proprietary metal finishing technique that Apple developed, and that OpenAI misled those partners into believing they had Apple’s authorization to share the process. The filing calls this “part of OpenAI’s strategy to extract Apple’s confidential information.”

From partners to adversaries

The timeline tells its own story. In 2024, Sam Altman visited Apple’s headquarters for the ChatGPT-iPhone integration announcement. The partnership was a marquee moment for both companies, Apple got a flagship AI feature, and OpenAI got distribution to hundreds of millions of iPhone users.

Then OpenAI revealed plans to enter the hardware business. It acquired IO Products, the startup founded by former Apple design chief Jony Ive, for $6.4 billion. Sam Altman later indicated that OpenAI had completed its first hardware prototypes. The relationship between the two companies deteriorated.

Apple’s filing suggests the deterioration was driven by something more specific than competitive tension. An Apple representative told CNBC that “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 stolen material allegedly includes product designs, manufacturing processes, and supply chain strategies, the operational backbone of Apple’s hardware business.

The breadth of the allegations is notable. This is not a dispute over a single patent or a narrow piece of software code. Apple is alleging theft of the kind of institutional knowledge, supplier relationships, manufacturing techniques, product roadmaps, that takes decades and billions of dollars to develop. The company said in its filing that it “does not bring this action lightly” but “cannot tolerate the theft of its trade secrets.”

Courts across the country continue to grapple with high-stakes disputes involving powerful institutions. A federal judge recently blocked a $100,000 H-1B visa fee, illustrating how federal courts are increasingly the venue where the biggest policy and corporate battles get resolved.

OpenAI’s response

OpenAI has denied the allegations. Spokesman Drew Pusateri told CNBC, as AP News reported:

“OpenAI has no interest in other companies’ trade secrets. We remain focused on building innovative technology that empowers people everywhere.”

The denial is clean and categorical. But it does not address the specific allegations, the “show and tell” interview sessions, the coaching on exit procedures, the authentication bug, the stolen laptop, the manufacturing partners allegedly misled about Apple’s authorization. Those details will need answers as the case moves forward.

Apple said it reached out to OpenAI about the issue when it noticed its technologies appearing in OpenAI’s products. It never heard back.

What Apple wants

Apple is seeking a preliminary and permanent injunction to halt the use of its proprietary information and force OpenAI to return all confidential materials. The company is also seeking unspecified damages. No specific dollar figure has been disclosed in the available filings.

The case raises significant questions that remain unanswered. What specific unreleased Apple products or technologies are at issue? Which manufacturing partners were allegedly misled? What is the current status of the Apple-OpenAI ChatGPT integration partnership now that the lawsuit has been filed? Neither Tang Tan nor Chang Liu has publicly responded to the allegations.

The lawsuit also adds a layer of complexity to the broader question of how aggressively AI companies are competing for talent and intellectual property. OpenAI’s $6.4 billion acquisition of IO Products already signaled its ambitions in consumer hardware. Apple’s complaint suggests those ambitions came with a willingness to cut corners that, if the allegations hold up, crossed well beyond aggressive recruiting into outright theft.

Federal courts have become the primary arena for sorting out these disputes. A recent federal appeals court ruling on White House construction showed how quickly legal disputes involving powerful institutions can escalate through the judicial system.

For Apple, the stakes are existential in a specific way. The company’s competitive advantage has always rested on the tightness of its ecosystem, the proprietary integration of hardware design, manufacturing processes, and supply chain relationships that competitors cannot easily replicate. If a well-funded rival can simply hire away key employees and instruct them to bring the playbook with them, that advantage evaporates.

The bigger picture

Silicon Valley has always operated on a certain amount of talent migration. Engineers move between companies. Knowledge travels with them. The law draws a line between the general skills and experience an employee carries in their head and the specific trade secrets and confidential documents they are contractually and legally obligated to leave behind.

Apple’s complaint alleges OpenAI did not just benefit from the normal flow of talent. It alleges OpenAI directed the theft, coached employees on evasion, and leveraged stolen materials through its business partnerships. That is a different category entirely.

The case also arrives at a moment when courts are increasingly willing to let major corporate accountability claims proceed. A Virginia judge recently blocked certification of a redistricting referendum, demonstrating that courts are not shy about intervening when institutional actors are accused of overstepping their authority.

OpenAI has built its public brand on the promise of democratizing artificial intelligence. But building hardware is a different game than building software models. It requires manufacturing expertise, supplier networks, and design knowledge that take years to accumulate. Apple spent decades building those capabilities. If OpenAI wanted to compete in hardware, the honest path was to build its own, not, as Apple alleges, to strip-mine its partner’s vault while the partnership was still warm.

The courtroom will sort out the facts. But the allegations alone tell a familiar story: an institution that talks about empowering people everywhere while allegedly helping itself to someone else’s work.