Apple has filed a blockbuster lawsuit against OpenAI, accusing the artificial intelligence company of systematically stealing trade secrets through two former Apple employees to accelerate its push into consumer hardware.

The complaint, filed on July 10, 2026, in Northern California federal court, marks a dramatic escalation between two of the world's most valuable technology companies. Apple alleges that OpenAI engaged in a scheme of corporate espionage that reached "at every level" of its hardware division. The case centers on the rivalry between Apple and OpenAI to develop next-generation AI-powered consumer devices.

Two Former Apple Employees at the Center

The lawsuit names two former Apple employees: Chang Liu, a former senior engineer, and Tang Yew Tan, who spent 24 years at Apple and most recently served as vice president of product design for the iPhone and Apple Watch. Tan is now OpenAI's chief hardware officer.

According to the complaint, Liu exploited "a rare, previously unknown authentication bug" to access Apple's shared network folders using a colleague's computer credentials. This occurred after Liu had failed to return his Apple work devices. Liu began working for OpenAI in January 2026.

Apple alleges that Tan told potential job candidates still working at Apple to bring "actual parts" from the company to their interviews at OpenAI for what he described as "show and tell" sessions with the OpenAI team. Apple characterizes this as "part of OpenAI's strategy to extract Apple's confidential information."

The io Products Connection

The lawsuit also names io Products, a San Francisco-based AI hardware startup co-founded by Tan and legendary designer Jony Ive. OpenAI acquired io Products as part of its hardware ambitions, and Fortune reported that the acquisition is a central focus of Apple's complaint.

Apple says it has "invested hundreds of billions of dollars and decades of effort in developing groundbreaking consumer hardware products like iPhone, Apple Watch and MacBook, along with the business acumen and infrastructure to bring them to market at scale." The company argues that rather than building its own capabilities from scratch, OpenAI "has resorted to taking unlawful shortcuts."

Legal Claims and Remedies Sought

Apple is suing under the Defend Trade Secrets Act, a federal law that provides robust protections for proprietary business information. The complaint includes additional claims of breach of intellectual property agreements against both Liu and Tan.

The iPhone maker is asking the court for a preliminary injunction to prevent OpenAI and the former employees from using its trade secrets and confidential information. Apple is also demanding that the former employees return all Apple property in their possession, along with monetary damages for OpenAI's alleged unjust enrichment. The company has requested a jury trial.

Industry Implications

The lawsuit comes at a pivotal moment for both companies. OpenAI has been aggressively expanding beyond its software roots into hardware, hiring former Apple executives and partnering with Jony Ive to develop AI-powered consumer devices. Apple, meanwhile, has been working to integrate AI capabilities into its own product ecosystem.

The legal battle highlights the intensifying competition in the AI hardware space, where companies are racing to build dedicated devices optimized for artificial intelligence. It also underscores the fierce talent war in Silicon Valley, where engineers and designers with expertise in both hardware and AI are among the most sought-after professionals.

Legal experts note that trade secret cases involving former employees are common in the technology industry, but lawsuits of this magnitude between two companies of Apple's and OpenAI's stature are relatively rare. The Defend Trade Secrets Act, enacted in 2016, has given companies a powerful federal tool for pursuing such claims.

Neither Apple nor OpenAI responded immediately to requests for comment from multiple news outlets including Reuters, CNBC, and The Associated Press.

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