Apple and OpenAI Clash in US Court Over AI Device Trade Secrets

Apple Inc. and OpenAI are locked in a legal dispute before a US federal court, with the iPhone maker accusing the artificial intelligence company of misappropriating trade secrets related to the development of new AI-powered hardware.

A hearing before Judge Edward Davila in San Jose, California, is set to address competing motions from both parties. Apple is seeking an injunction to prevent OpenAI from using any confidential information it allegedly obtained, while OpenAI has filed a motion to dismiss the case entirely.

On Tuesday, Judge Davila granted Apple partial approval to accelerate the collection of evidence and documents tied to the case, but rejected another part of the request, according to Bloomberg.

Dispute Over Trade Secrets

Apple is asking the court to order OpenAI to cease using any proprietary information obtained from the company and to bar it from seeking additional confidential data.

OpenAI counters that the lawsuit lacks a specific legal foundation, arguing that Apple has not identified particular trade secrets that were allegedly stolen but has instead referred to broad categories of device-related information.

The lawsuit also names two individuals in their personal roles: Tang Tan, OpenAI’s head of hardware, and Zhang Liu, a former engineer on Apple’s iPhone team. Apple accuses them of taking part in coordinated efforts to obtain the company’s proprietary data. The design firm io Products is also named as a defendant.

Court Grants Access to Additional Documents

On Tuesday, Judge Davila issued a ruling allowing Apple to access certain evidence early, including forensic copies of data, checklists and interview scripts used when interviewing candidates who had come from Apple, summaries of those interviews, and messages exchanged between Zhang Liu and a former colleague since January.

However, the judge rejected a request to fast-track the production of research documents concerning metal finishes, power management and battery functions, leaving those to follow the standard discovery process.

According to 9to5Mac, the judge described Apple’s use of the category ‘information originating from Apple’ in its request as overly broad and insufficiently defined.

OpenAI Points to Apple’s Internal Policies

OpenAI’s defence focuses on Apple’s internal information-security practices, noting that the company encouraged its employees to use personal iCloud accounts for work-related purposes. It also argues that an authentication-system error allowed former engineer Zhang Liu to retain access to certain information after leaving the company.

In August, OpenAI told the court that Apple could not treat the foreseeable consequences of its internal policies as evidence of information theft. Apple rejects that interpretation, maintaining that information stored on iCloud is not central to its allegations. Instead, the case centres on Liu’s alleged exploitation of an authentication flaw to access storage systems on Apple’s network and download files.

New AI Device at the Centre of the Dispute

The legal fight is tied to OpenAI’s plans to develop a new generation of devices designed for the artificial-intelligence era. The company says it is working on a range of devices, beginning with a ring-shaped smart speaker priced at more than $300, which is expected to launch in 2027.

Apple’s lawsuit connects certain information about metal finishes to the exterior design of the anticipated device, making engineering details a key part of the dispute. According to the report, the lawsuit has slowed work on the project since it was filed in July, as OpenAI prepares for a potential stock market listing and targets a valuation of $1.4 trillion.

Differences Between US and European Laws

The dispute also highlights differences in legal protections for trade secrets and the movement of employees between competing companies. In California, non-compete agreements are generally unenforceable, requiring companies to prove that actual trade-secret theft occurred after an employee moved to another employer. In Germany, restrictions on competition can be imposed for up to two years, provided the employer pays compensation amounting to at least 50% of the employee’s previous salary.

The significance of the case therefore extends beyond the future of OpenAI’s planned AI device to broader questions about the protection of confidential information and employees’ rights to move between technology companies, amid growing competition to develop the next generation of smart devices.