Labor & Employment Law Daily Wrap Up, AI NEWS—Apple accuses former employees of taking confidential hardware info to OpenAI, (Jul 14, 2026)

By Thomas Long, J.D.

OpenAI allegedly encouraged Apple engineers to bring trade secrets to it and coached them on evading Apple’s protective measures.

Apple Inc. has filed suit against OpenAI and two former high-level Apple employees for allegedly engaging in a complex and far-reaching “strategy to extract Apple’s confidential information” regarding computer hardware components and systems. According to Apple, “OpenAI’s nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets.” Apple accuses OpenAI of taking unlawful shortcuts to bring its first hardware products to market, including reliance on large-scale misappropriation of multiple categories of proprietary Apple information. The complaint accuses the former employees and OpenAI of multiple violations of the Defend Trade Secrets Act (Apple Inc. v. Liu, No. 5:26-cv-07078 (N.D. Cal. Jul. 10, 2026)).

Trade secrets. Among the asserted trade secrets detailed in the complaint are hardware engineering information such as circuit and system design specifications, component architecture, and power management innovations; proprietary product designs; product roadmaps, milestone schedules, and development timelines; AI and machine learning integration data developed for Apple’s hardware products; and proprietary coexistence and electromagnetic interference engineering data. Apple also asserts trade secret status for information relating to its manufacturing design, product design, and process engineering. Other categories of trade secrets include component technologies, testing and development methods, supply-chain and other business relationships.

Efforts to protect information. The complaint describes Apple’s efforts to maintain secrecy of its proprietary information, such as use of a secure network file repository, database access permissions policies employing a “need to know” basis, and requirements for nondisclosure agreements with contractors and other third parties.

Employee defendants. The complaint names as defendants two former Apple employees: Chang Liu, who served as a senior system electrical engineer for Apple’s iPhone product line for at least part of his eight-year tenure there, and Tang Yew Tan, who worked at Apple for over 24 years and served as Vice President of Product Design for Apple’s iPhone and Apple Watch product lines. Both of them signed Apple’s Intellectual Property Agreement (IPA) as a condition of their employment, the complaint states. The IPA details employees’ confidentiality and non-disclosure obligations, which include a prohibition against disclosing proprietary information without Apple’s written consent. The IPA also bars employees from permitting anyone else from making such disclosures. Employees agree through the IPA to follow Apple’s information security rules, to use best efforts to safeguard confidential information, and to refrain from taking “any documents, materials, or copies thereof, whether on paper or any other medium, containing any Proprietary Information.”

Corporate defendants. Along with the former employees, the complaint lists as defendants three business entities: OpenAI Foundation, OpenAI PBC, and io Products, LLC. The last corporate defendant is the dedicated hardware vehicle for OpenAI; it was founded by Tan and other former senior Apple executives in 2024 and was acquired by OpenAI in May 2025.

Alleged misappropriation. Apple asserts that OpenAI entered into a partnership in 2025 with Foxconn, Apple’s iPhone assembler, for production of its own hardware products. OpenAI also allegedly engaged with two Apple suppliers for components. However, according to the complaint, OpenAI ran into difficulties in completing development of its first hardware product and then “resorted to taking unlawful shortcuts.”

These shortcuts have included trade secrets theft on a large scale, the complaint asserts. “Apple’s former engineers and executives—recruited, directed, and rewarded by OpenAI—along with OpenAI itself and its business cohorts, have been stealing Apple’s most sensitive information for a would-be competitor,” according to Apple. “With over four hundred former Apple employees now working at OpenAI, it is not surprising that certain OpenAI personnel have knowledge of Apple’s confidential and proprietary information, which they are obligated to keep confidential. But OpenAI has resorted to exploiting this confidential information, using it to extract still more from Apple’s current employees and trusted partners, and to structure its interview processes to try to solicit additional confidential Apple information—all while taking steps to conceal its actions.”

According to Apple, the misconduct it has uncovered reaches across seniority levels, technical disciplines, and departments at OpenAI. Liu failed to return at least one Apple-owned computer when he left the company, while ignoring Apple’s attempts to get him to comply with exit procedures. Weeks after leaving Apple, Liu allegedly accessed Apple’s network storage and exploited a then-unknown security vulnerability. “Liu then proceeded to select, access, and download dozens of confidential files from Apple’s network repository,” states the complaint. Liu also allegedly collaborated with an employee at Apple to obtain updates on active confidential projects, vendor decisions, and engineering details. This all allegedly occurred while Liu was working on OpenAI’s hardware projects.

As for Tan, Apple asserts that its former executive has unlawfully exploited Apple’s trade secrets and other confidential information in recruiting Apple employees for OpenAI, including the use of Apple’s internal information to solicit trade secrets from job candidates. Tan allegedly directed candidates to bring physical hardware components, “parts,” and product samples from their Apple work to their OpenAI interviews for “show and tell” sessions.

“OpenAI also instructs new hires on how to avoid scrutiny when they leave Apple,” the complaint asserts. For example, they are warned not to tell Apple they have taken jobs at OpenAI so they can keep working at Apple as long as possible. Apple alleges that Tan improperly took or kept an internal Apple managers’ document marked “Need to Know” that describes security procedures for employee departures. “Messages left on Apple-issued work devices show that Mr. Tan and his OpenAI colleagues have been sharing this document with new hires before they give notice to Apple of their departures, previewing Apple’s security protocols,” the complaint states. Apple alleges that it has detected a pattern of employees who leave for OpenAI taking steps to evade Apple’s procedures designed to prevent trade secret misappropriation.

“OpenAI and its cohorts have been engaging in a coordinated pattern of misconduct at an institutional level as well,” according to Apple. “The Corporate Defendants, with or through their employees or partners, have been acting in concert and as an enterprise, exploiting Apple’s confidential information to advance OpenAI’s efforts to enter the consumer hardware market.” For example, OpenAI allegedly persuaded one of Apple’s “trusted partners” to demonstrate a secret metal-finishing technique for OpenAI, misleading the partner into believing Apple had given its permission. In addition, Apple alleges that OpenAI encouraged Apple employees to bring “CAD/design artifacts” and “prototypes” to interviews and to divulge such details as “subsystem and component selection,” the “tools or methodologies you use for system integration, such as CAD software, simulation tools,” and “Vendor selection and communication/collaboration with vendors.”

Although Apple asserts that it has not been able to discover the full extent of OpenAI’s unlawful conduct, it contends that “at every level, from members of its Technical Staff to its Chief Hardware Officer, and in coordination with business partners, OpenAI has been stealing Apple’s trade secrets and confidential information.”

Causes of action; remedies sought. The complaint contains claims for violations of the Defend Trade Secrets Act by all defendants, as well as breach of the IPA by Liu and Tan. Apple seeks preliminary and permanent injunctive relief, an order directing defendants to return Apple’s property, compensatory damages (possibly in the form of a reasonable royalty, if other methods of calculating damages are unavailable), recovery for unjust enrichment, exemplary damages, interest, and attorney fees and costs.

The Case is No. 5:26-cv-07078.

Judge: DeMarchi, V.

Attorneys: Christopher W. Henry (Weil, Gotshal & Manges LLP) for Apple Inc.

Companies: Apple Inc.; OpenAI Foundation; OpenAI PBC; io Products, LLC

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