Apple vs OpenAI: Trade Secret Lawsuit Reaches Critical Court Hearing Over AI Hardware Secrets

Apple and OpenAI Face Off in High-Stakes Trade Secret Battle

Apple vs OpenAI reached a pivotal moment as US District Judge Edward Davila heard two opposing motions in San Jose federal court on Wednesday. Apple is demanding a preliminary injunction to stop OpenAI from using any confidential information allegedly taken from the company, while OpenAI filed a motion to dismiss the entire trade secret lawsuit1

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. This marks the first substantial hearing since Apple filed suit in July, accusing OpenAI and former Apple employees of conspiring to extract proprietary information about product design, manufacturing processes, and supply chain operations.

Court Grants Partial Access to Hiring Documents and Evidence

Judge Davila partially approved Apple's request for expedited discovery on Tuesday, ordering OpenAI to hand over forensic images of devices, interview summaries with certain Apple employees, and LINE messages exchanged between former Apple engineers Chang Liu and Yu-Ting Peng5

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. The judge also directed Liu, Peng, and Tang Tan—OpenAI's hardware chief who spent 24 years at Apple—to submit to depositions, citing valid risk that critical forensic evidence could be destroyed2

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. OpenAI must provide already-collected hiring documents within five days and other requested materials within 14 days, including interview guides, checklists, scripts, and technical presentations.

Apple Alleges Coordinated Theft by Former Employees

Apple's complaint centers on allegations that Chang Liu exploited a security flaw to access Apple's internal file storage after leaving the company in January, downloading confidential files related to AI hardware products3

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. The lawsuit claims Liu worked at Apple for more than eight years as a senior system electrical engineer and failed to return an Apple-issued computer upon departure. Apple further alleges Liu shared confidential information with Peng, who was still employed at Apple, helping her prepare for OpenAI job interviews using proprietary material. The suit also names Tang Tan and io Products—the design firm acquired by OpenAI for $6.4 billion—as defendants, alleging Tang and other OpenAI employees instructed Apple candidates to bring prototypes and design materials to "show and tell" sessions during interviews2

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OpenAI Denies Allegations and Blames Apple's Security Practices

OpenAI's motion to dismiss argues that Apple has failed to identify any specific trade secret, pointing instead to broad categories of hardware information1

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. The AI company contends the case highlights weaknesses in Apple's own security and offboarding practices, noting that Apple encouraged staff to use personal iCloud accounts for work and that an authentication error left Liu with access after he departed1

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. "This dispute is a mess of Apple's own making, and it is trying to blame everyone else," OpenAI stated in an August court filing4

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. OpenAI insists it has "no need or desire for Apple's trade secrets" as it develops a new family of devices designed for the AI era2

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Stakes Rise as OpenAI Pursues Consumer Hardware Market

The litigation threatens OpenAI's hardware ambitions and its path toward a $1.4 trillion valuation and potential IPO2

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. OpenAI is building a doughnut-shaped speaker priced above $300, scheduled for release in 2027, and the lawsuit has already slowed development since July1

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. More than 400 former Apple employees now work at OpenAI, according to Apple's complaint, raising concerns about the misappropriation of trade secrets across multiple product lines2

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. The case carries particular weight given California's prohibition on non-compete agreements, forcing Apple to prove theft of trade secrets after the fact rather than preventing employee movement through contractual restraints.

Partnership Unravels Amid Legal Battle

The legal clash marks a dramatic reversal from the 2024 partnership that integrated ChatGPT into iOS2

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. That arrangement has since unraveled, with Apple announcing in June that a rebuilt Siri would run on Google Gemini instead2

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. Judge Davila's decisions on Wednesday will determine whether OpenAI faces immediate restrictions on its use of alleged confidential information or whether the case proceeds to full litigation. The judge rejected some of Apple's broader requests, including faster access to OpenAI's research on metal finishes and power management—areas Apple's complaint ties directly to OpenAI's consumer hardware shell design1

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. Watch for how the court balances protecting proprietary information against OpenAI's argument that Apple's own security lapses enabled any alleged breaches.