Apple sues OpenAI over alleged systematic trade secret theft

Apple filed a 41-page complaint against OpenAI on Friday, alleging a coordinated effort to misappropriate its trade secrets to build a competing hardware business. The complaint asserts that misconduct like this is part of OpenAI’s culture and is led from the top, and states that OpenAI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets. OpenAI is rumored to be working on a hardware device to challenge the iPhone, potentially a smartphone of its own, and Apple alleges that project was built on its confidential information.

The complaint names individuals and entities Apple says were central to the scheme:

• Chang Liu, previously a senior systems electrical engineer at Apple before joining OpenAI, allegedly exploited an authentication bug to access Apple’s systems from a former colleague’s Apple-issued work computer, and allegedly discussed the access with former Apple employee Yu-Ting “Alyssa” Peng, whom Apple says acted as a conduit between Apple and OpenAI before she, too, left to join OpenAI.
• Tang Yew Tan, OpenAI’s Chief Hardware Officer who spent 24 years at Apple, allegedly directed OpenAI job candidates still working at Apple to bring actual parts, CAD/design artifacts, and prototypes to their interviews.
• io, the industrial design firm co-founded by former Apple employee Jony Ive and acquired by OpenAI in a $6.5 billion deal, allegedly accessed, exploited and used Apple’s secret, proprietary industrial design techniques, processes, and know-how related to metal-finishing by misleading an Apple partner. Separately, Apple alleges OpenAI approached a supplier using Apple’s confidential design and component information related to power and batteries.
• Apple’s complaint states that over four hundred former Apple employees now work at OpenAI, a figure the company uses to argue the scale of the alleged problem.

Apple’s complaint also alleges that OpenAI coached departing Apple employees on how to evade Apple’s security procedures to reduce the chance their alleged trade secret theft would be caught, including guidance on avoiding what Apple calls the dreaded walkout — its practice of immediately escorting departing staff off the premises rather than letting them work out the typical two weeks’ notice. The complaint further alleges OpenAI advised departing employees not to sign anything at exit interviews and to notify OpenAI immediately if asked to. Apple’s complaint states that discovery — the pre-trial process in which parties exchange documents and communications — will expose that the misappropriation has been occurring on a scale many times greater than the instances described in the complaint. Apple says it first tried to contact OpenAI in February to raise its concerns, but OpenAI seemingly never responded.

OpenAI has denied the allegations. In a statement, the company said: “We have no interest in other companies’ trade secrets. We remain focused on building innovative technology that empowers people everywhere.”

Why it matters

Apple’s lawsuit alleges a coordinated effort by OpenAI to systematically extract confidential information and trade secrets using former Apple employees, potentially undermining OpenAI’s hardware ambitions before that business has shipped a product.