‘Show-And-Tell’ Of Confidential iPhone Technology, And Other Serious Trade Secret Theft Apple’s Lawsuit Accuses...

Apple escalated its legal battle with OpenAI on Friday, accusing the artificial intelligence company of orchestrating a years-long campaign to obtain confidential trade secrets from current and former Apple employees in what the iPhone maker describes as a systematic effort directed by senior leadership to accelerate OpenAI's hardware ambitions.

The 41-page complaint, filed in federal court in Northern California, alleges that OpenAI cultivated Apple employees, encouraged them to retain access to Apple's internal systems after leaving the company, instructed job candidates to bring confidential hardware and design materials to interviews, and exploited proprietary manufacturing techniques in developing its own hardware products.

Apple is seeking damages and injunctive relief, arguing that OpenAI's hardware business was built using misappropriated confidential information rather than independent innovation.

OpenAI has denied the allegations.

"We have no interest in other companies' trade secrets. We remain focused on building innovative technology that empowers people everywhere," an OpenAI spokesperson said in a statement posted on X on Friday.

Unlike many corporate trade secret disputes that focus on individual employees, Apple argues that the alleged misconduct was institutional and encouraged by OpenAI's leadership.

The complaint states that the alleged behavior was "normalized and exemplified by leadership," portraying what Apple describes as a coordinated corporate strategy rather than isolated actions by former employees.

Apple goes further, claiming OpenAI's hardware division "rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets."

The lawsuit also suggests that the evidence presented represents only a small portion of the alleged misconduct.

"This is the tip of the iceberg," Apple wrote, adding that discovery is expected to uncover far more evidence through internal communications, emails, and company records.

Detailed Allegations Span Employees, Suppliers, and Hardware Designs

Among the most striking allegations is Apple's claim that former senior systems electrical engineer Chang Liu exploited an authentication vulnerability after leaving the company to continue accessing Apple's internal network.

According to the complaint, Liu allegedly texted another Apple employee, Yu-Ting "Alyssa" Peng: "LOL, I found out I can access the [network storage], so funny."

Apple says Peng replied: "I'm ready."

The lawsuit alleges Liu gained access through a former colleague's Apple-issued computer by exploiting an authentication bug.

Apple also claims Liu sent another message shortly after leaving the company, stating: "I still have another computer."

The company argues that this refers to another Apple-issued device that could allegedly be used to continue accessing confidential information.

Another allegation centers on OpenAI Chief Hardware Officer Tang Yew Tan, who spent nearly a quarter-century at Apple before joining OpenAI.

According to Apple, Tan instructed Apple employees interviewing at OpenAI to bring confidential hardware components and engineering materials to interviews for what were described as "show-and-tell sessions."

The materials allegedly included:

• Physical Apple hardware components
• Computer-aided design (CAD) files
• Engineering artifacts
• Product prototypes

One candidate allegedly responded: "Didn't even know we could take those from the office."

Apple argues these requests went far beyond normal recruitment practices and were intended to expose OpenAI engineers to confidential product designs.

The complaint also alleges OpenAI coached Apple employees on how to resign without triggering Apple's internal security procedures. According to Apple, departing employees received guidance on avoiding the so-called "dreaded walkout"-Apple's practice of immediately terminating system access when employees resign rather than allowing them to work through a notice period.

The lawsuit further claims OpenAI advised recruits to notify the company immediately if Apple requested they sign any exit-related documents and instructed them not to sign before consulting OpenAI. Apple also alleges OpenAI circulated confidential Apple internal documents marked "Need to know" among prospective hires.

The lawsuit extends beyond former employees to OpenAI's $6.5 billion acquisition of io, the hardware startup founded by former Apple design chief Jony Ive and other former Apple executives.

Apple alleges io improperly used confidential industrial design techniques related to metal finishing and falsely suggested to an Apple manufacturing partner that it had authorization to use Apple's proprietary production methods. According to the complaint, OpenAI and io also approached Apple suppliers using internal Apple terminology when discussing batteries, components and manufacturing processes-terminology Apple says only insiders would know.

The company argues that these interactions demonstrate knowledge derived from confidential information rather than publicly available sources. It also reveals the scale of employee movement between the two companies, stating that more than 400 former Apple employees now work at OpenAI.

While acknowledging that former employees naturally possess experience gained during their careers, Apple argues that they remain legally obligated to protect confidential information and that OpenAI crossed legal boundaries by allegedly encouraging the disclosure of trade secrets.

The lawsuit comes as competition between the companies intensifies.

OpenAI has rapidly expanded beyond software following its acquisition of io, signaling ambitions to build AI-powered consumer hardware that could eventually compete with Apple's ecosystem. The case therefore carries significance beyond trade secret law, potentially shaping competition in the emerging AI hardware market.

Apple says it attempted to resolve the dispute privately before filing suit, alleging it first contacted OpenAI in February to raise its concerns but received no response.

The litigation now moves into the discovery phase, where Apple is expected to seek extensive internal OpenAI communications, recruitment records and technical documentation in an effort to substantiate what it describes as a coordinated effort to acquire confidential Apple technology.