Apple Is Suing Open AI for Allegedly Stealing Hardware Secrets | WIRED

Overview

Apple Is Suing Open AI for Allegedly Stealing Hardware Secrets

Apple filed a lawsuit against Open AI and its hardware chief on Friday for allegedly stealing the i Phone-maker’s trade secrets, including unreleased parts and prototypes, confidential designs, and documents about stealth projects.

Details

The lawsuit accuses Open AI chief hardware officer Tang Tan, who spent 24 years at Apple and oversaw i Phone product design, and his colleagues at the AI company of encouraging people departing or considering leaving Apple to bring with them proprietary and unreleased technology. Tan allegedly helped coach recruits on how to evade Apple’s data security protocols and directed them to bring confidential Apple parts to job interviews at Open AI.

“Open AI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets,” Apple says in the lawsuit, which was filed in US district court in San Jose. The company describes Open AI as resorting “to taking unlawful shortcuts” while under “mounting pressure to deliver its first commercial hardware product.”

Open AI and Tan did not immediately respond to requests for comment.

The lawsuit opens what may become the highest-stakes and most dramatic battle over intellectual property theft in Silicon Valley since autonomous ride-hailing company Waymo in 2017 accused Uber of stealing hardware designs when it brought on a former Waymo engineer who had left with thousands of confidential files. Uber agreed to pay $245 million to settle the lawsuit during the middle of a trial the following year.

Apple and Open AI have been partners since 2024, when the companies announced a landmark deal to distribute Chat GPT on i Phones, Macbooks, and i Pads. But the relationship has frayed in recent years, prompting Apple to rely more on Google’s Gemini AI technology as the foundation for the company’s in-house AI models. Open AI and Apple are expected to more fiercely compete in the coming years in the emerging market for AI-powered consumer devices.

the relationship has frayed in recent years, prompting Apple to rely more on Google’s Gemini AI technology

Open AI has hired more than 400 former Apple employees, according to the lawsuit. That includes several former Apple veterans who are leading Open AI’s development of AI-powered consumer devices. Last year, Open AI paid $6.5 billion to acquire a startup called io Products that was cofounded by longtime Apple executives including Tan, Scott Cannon, Evans Hankey, and famed designer Jony Ive.

io Products and Chang Liu, an electrical engineer at Open AI who was at Apple until January, are also named as defendants in the lawsuit. (Liu didn't immediately respond to a request for comment.)

Apple’s investigation into the alleged theft relies on data and messages gathered from its employees’ devices. The company caught onto the alleged theft early this year after Liu never returned his company-issued laptop and wrote to a former colleague about still having access to Apple’s internal file-sharing system, according to the lawsuit. (Apple says in the filing that Liu’s access was enabled by a bug that’s now been fixed.)

Liu “downloaded dozens of Apple’s confidential hardware-related files,” including a presentation on manufacturing and testing complex circuit boards used in Apple’s hardware, the lawsuit states. It adds that Liu also coached an Apple employee he was recruiting to join Open AI on how to “‘avoid trouble with the security team’ when copying confidential Apple files.”

Apple wrote to Open AI in February raising initial concerns about alleged theft but did not receive any response. That led to further investigation and the filing of the lawsuit.

Apple learned that before leaving, Tan emailed himself information about the company’s suppliers. Other employees leaving for Open AI have done the same, Apple alleges. In addition, Tan “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 Open AI can elicit still more Apple confidential information,” the lawsuit alleges, naming batteries, logic boards, and shields as sought-after components.

In another instance, Apple identified a then-Apple employee “screenshotting and downloading files relating to a highly confidential Apple project” in the hours before an interview with Tan at Open AI.

Tan is further accused of taking an internal Apple document for managers that explains security procedures for departing workers. He and Open AI recruiters have allegedly used the file to counsel departing Apple employees to avoid disclosing their new employer, prolong access to company systems, and avoid signing any exit documents.

“Unsurprisingly, Apple has uncovered a concerning recent pattern among employees who depart and then go work for Open AI,” the lawsuit states. “Departing employees have been taking actions to evade security measures, such as failing to provide two-weeks’ notice, and ignoring outreach by security personnel to schedule exit processes and security reviews.”

Apple’s accusations against Open AI’s io unit include that it has approached at least two of the i Phone maker’s suppliers aiming to replicate work. One company carried out “a specific trade secret metal-finishing technique for Open AI” after being misled into thinking that Apple had signed off on the project, according to the lawsuit. Open AI approached the other supplier, which works on batteries, with “targeted questions” to learn more about Apple components and further its own interests, the lawsuit adds.

Open AI has said relatively little about its hardware efforts, except for the fact that it’s developing a “family” of AI-powered devices. While Open AI previously planned to use the io branding for its hardware products, the company has since indicated in court filings that it will choose a new name, and won’t ship any devices to customers until at least April 2027. Reports indicate that Open AI is working on an AI-powered puck that sits on a tabletop, and that users can control with their voice.

Apple is seeking an injunction barring Open AI from continuing to engage in the alleged theft. It also seeks monetary damages and a return of any pilfered property and data.

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Key Takeaways

Apple Is Suing Open AI for Allegedly Stealing Hardware Secrets
Apple filed a lawsuit against Open AI and its hardware chief on Friday for allegedly stealing the i Phone-maker’s trade secrets, including unreleased parts and prototypes, confidential designs, and documents about stealth projects
The lawsuit accuses Open AI chief hardware officer Tang Tan, who spent 24 years at Apple and oversaw i Phone product design, and his colleagues at the AI company of encouraging people departing or considering leaving Apple to bring with them proprietary and unreleased technology
“Open AI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets,” Apple says in the lawsuit, which was filed in US district court in San Jose
Open AI and Tan did not immediately respond to requests for comment