Apple v. OpenAI: Lawsuit Alleges Systematic Theft of Hardware Trade Secrets

Apple Alleges Systematic Misappropriation of Hardware Trade Secrets

Apple has filed a lawsuit in the Northern District of California against OpenAI, its subsidiary io Products, and former employees Chang Liu and Tang Yew Tan, alleging the systematic theft of trade secrets to jumpstart OpenAI's consumer hardware ambitions. Apple claims that OpenAI engaged in a coordinated institutional effort to extract proprietary engineering, manufacturing, and supply chain data from Apple employees and partners.

Coordinated Recruitment and Data Extraction

Apple asserts that OpenAI utilized a predatory recruiting process designed specifically to elicit trade secrets from current Apple employees. According to the complaint, this process involved several illicit tactics:

"Show and Tell" Interviews: OpenAI allegedly directed job candidates to bring physical hardware components ("actual parts"), such as batteries, System-in-Package (SIP) modules, and main logic boards (MLBs), to interviews to disclose proprietary technologies.
Technical Deep Dives: Candidates were reportedly asked to provide "CAD/design artifacts" and prototypes, and to divulge specific details regarding subsystem selection and system integration methodologies.
Insider Probing: Former Apple executives now at OpenAI, including Chief Hardware Officer Tang Yew Tan, allegedly used internal Apple project code names during interviews to probe candidates for current status updates on unannounced products.
Evading Security: OpenAI allegedly coached new hires on how to avoid Apple's security protocols, including advising them not to disclose their new employer and sharing an internal Apple "Need to Know" document detailing employee departure security procedures.

Specific Allegations Against Former Employees

Chang Liu (Former Senior System Electrical Engineer)

Apple alleges that Liu, who joined OpenAI in January 2026, engaged in active espionage after his departure:

Unauthorized Access: Liu allegedly exploited a previously unknown authentication bug to maintain access to Apple's network storage, downloading dozens of confidential files, including technical presentations on MLB manufacturing and testing.
Coaching Colleagues: The complaint claims Liu coached a former colleague, Yu-Ting "Alyssa" Peng, on how to copy confidential files while avoiding detection by Apple's security team.
Device Retention: Liu allegedly failed to return an Apple-issued laptop, which he reportedly used to facilitate unauthorized access to Apple systems.

Tang Yew Tan (Former VP of Product Design)

Now OpenAI's Chief Hardware Officer, Tan is accused of orchestrating the misappropriation of Apple's intellectual property:

Supplier Manipulation: Apple claims Tan used confidential knowledge of Apple's supplier relationships to approach partners and, in one instance, misled a partner into using a trade secret metal-finishing technique for OpenAI by claiming Apple had granted permission.
Data Exfiltration: In the months preceding his departure, Tan allegedly emailed himself internal summaries of the consumer electronics industry and detailed information about Apple's suppliers.

Scope of Compromised Trade Secrets

Apple identifies five primary categories of trade secrets that were allegedly misappropriated:

Hardware Engineering: Circuit and system design specifications, component architecture, and AI/ML integration data for hardware.
Manufacturing and Industrial Design: Proprietary metal alloys, custom machinery designs, and "Design for Manufacturability" (DFM) expertise.
Component Technologies: Technical specifications for power management, battery systems, and display subsystems developed with specialized vendors.
Development Methodologies: Lifecycle simulation data, failure analyses, and proprietary testing workflows.
Supply Chain Operations: Confidential contractual arrangements, supplier qualification strategies, and the integrated "systems-level" knowledge of managing a global vendor network.

Community and Industry Perspective

Technical observers and community members have noted the severity of the allegations, suggesting that the evidence presented in the complaint—particularly the claims of coaching employees to evade security—goes beyond typical talent poaching.

"Non-competes and the like are gross but what's described here isn't just 'bring your expertise to OpenAI' it's 'here is how to steal secrets on your way out' which is even grosser."

Some analysts suggest this litigation could significantly impact OpenAI's hardware roadmap and its upcoming IPO, with others speculating that the legal friction may have influenced Apple's decision to integrate alternative AI models, such as Google's Gemini, into its ecosystem.

Legal Demands

Apple is seeking preliminary and permanent injunctions to prevent further use of its trade secrets, the return of all misappropriated materials, and monetary damages for actual loss and unjust enrichment. The suit is brought under the Defend Trade Secrets Act (DTSA) and claims for breach of the Intellectual Property Agreement (IPA).