In 2026, a former Apple engineer named Chang Liu noticed something. He had left Apple for a job on OpenAI's hardware team, but a bug in Apple's systems let him keep browsing its internal file servers anyway. He texted a former colleague still working at Apple: "LOL, I found out I can access the [network storage], so funny."
He was not joking for long. That text message now sits in a federal court exhibit, cited by name in a lawsuit that pits Apple against OpenAI, the company racing to build the device that could one day replace the iPhone.
On July 10, 2026, Apple sued OpenAI in the U.S. District Court for the Northern District of California, accusing the company of running a scheme to steal Apple's trade secrets "at every level, from members of its Technical Staff to its Chief Hardware Officer, and in coordination with business partners." The case, styled Apple Inc. v. Liu and filed under docket number 5:26-cv-07078, names OpenAI's Chief Hardware Officer Tang Tan, engineer Chang Liu, and io Products, the hardware startup OpenAI bought from Apple's former design chief Jony Ive, as defendants alongside OpenAI itself.
Apple's language is unusually blunt for a company that guards its public statements as carefully as it guards its products. The complaint describes OpenAI's hardware division as "rotten to its core" and says it rests on "illegal reliance on misappropriated trade secrets." OpenAI's public reply, issued the same day, did not dispute a single fact in the complaint.
At Every Level
Apple's complaint reads less like a legal filing and more like an internal investigation report, because that is close to how it started. Apple says it noticed a pattern: employees who left for OpenAI seemed to know more about Apple's unreleased hardware than they should have. It wrote to OpenAI in February 2026 to raise the concern directly. Apple says OpenAI never replied, and its investigation kept turning up more in the months that followed.
"This is the tip of the iceberg," Apple wrote in the complaint. "Apple lacks visibility into what's been happening behind closed doors at OpenAI, where such misconduct is normalized and exemplified by leadership. As a natural result, OpenAI's nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets."
The number at the center of the complaint is 400. That is how many former Apple employees Apple says now work at OpenAI, a workforce transfer so large that Apple's own lawyers cite it as evidence of exposure.
"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," the complaint states. "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."
Apple is not just asking for damages. Bloomberg reported that Apple's demands include forcing OpenAI to stop the practices described in the complaint, destroy any proprietary materials in its possession, and redesign upcoming hardware products so they no longer rely on Apple's technology.
Two Defendants, One Playbook
Two names carry most of the weight in Apple's complaint: Tang Tan and Chang Liu.
Tan spent 24 years at Apple, rising to vice president of product design for the iPhone and Apple Watch, before leaving in 2024. He joined Jony Ive's hardware studio, which OpenAI acquired the following year in a $6.5 billion deal, and now holds the title of Chief Hardware Officer at OpenAI. Apple accuses him of using confidential Apple project code names during recruiting conversations, emailing himself supplier information before his departure, and circulating an internal Apple document marked "Need to Know" so new hires would know how to slip past Apple's exit security checks.
One allegation in particular stands out for its specificity. Apple says Tan told job candidates still working at Apple to bring "actual parts" (batteries, logic boards, chip modules) to interviews for what the complaint calls "show and tell" sessions. One candidate, according to the complaint, seemed surprised the request was even allowed, telling Tan's team he "didn't even know we could take those from the office."
Liu spent eight years at Apple as a senior systems electrical engineer. After leaving for OpenAI, he kept his Apple-issued laptop and discovered the network storage bug he later joked about over text. Apple says he used that access to download dozens of confidential files, including engineering presentations and technical specifications for unreleased products, while working on OpenAI's hardware. He is also accused of coaching a current Apple employee, identified in the filing as Yu-Ting "Alyssa" Peng, on how to copy confidential files without detection.
| Tang Tan | Chang Liu | |
|---|---|---|
| Apple role | VP of product design, iPhone and Apple Watch (24 years at Apple) | Senior systems electrical engineer (8 years at Apple) |
| OpenAI role | Chief Hardware Officer | Member of technical staff, hardware division |
| Core allegation | Used Apple code names while recruiting; told candidates to bring hardware parts to interviews; circulated Apple's internal exit-security memo to new hires | Kept his Apple laptop after leaving; exploited a bug to keep accessing Apple's file servers; downloaded confidential files; coached a current employee on copying files |
| Apple's claims | Trade secret misappropriation, breach of contract | Trade secret misappropriation, breach of contract |
OpenAI itself is named as a defendant too, listed in court records under its corporate entities OpenAI Foundation and OpenAI Group PBC, alongside io Products. Jony Ive, who co-founded io and now leads OpenAI's device work, is not named. Neither is CEO Sam Altman. Apple's complaint does not accuse either man of wrongdoing.
How the Partnership Curdled
Apple and OpenAI were partners two years ago. In 2024, they announced a deal to weave ChatGPT into Siri, iOS, iPadOS, and macOS, letting iPhone users query OpenAI's chatbot through Siri and sign up for ChatGPT subscriptions from their settings menu.
The relationship cooled as OpenAI's hardware ambitions grew. Here is how two partners became opposing counsel.
The Talent War Behind the Hardware Race
For engineers who move between frontier AI labs and Big Tech, this case previews what happens when hiring flows hard enough in one direction. OpenAI is trying to build a consumer device to compete with, or eventually replace, the iPhone. To do that quickly, it recruited people who spent decades building the iPhone itself.
That created exposure most companies try to avoid, and it is why practitioners well beyond Cupertino are watching the case: it is as much a test of talent-war norms as it is a test of trade secret law.
The timing raises the stakes further. OpenAI has confidentially filed paperwork for a public offering, and incoming Apple CEO John Ternus, who takes over from Tim Cook in September, leads the engineering division that lost the most people to OpenAI. Bloomberg reported that Tan's relationship with Ternus was strained during his years at Apple. A discovery process that surfaces years of internal communications is not the backdrop either company wants heading into a leadership transition and a stock listing.
Apple, meanwhile, has spent the past year reducing its dependence on any single AI partner. It struck a deal to let Google power a rebuilt Siri and later opened iOS to Anthropic's Claude and xAI's Grok as alternatives to ChatGPT. Losing OpenAI as a hardware rival, rather than as a software supplier, is a different kind of problem, and one Apple's legal team appears to be taking seriously.
The Other Side
OpenAI's only public response to the lawsuit was one sentence from Drew Pusateri, the company's director of strategic communications, posted on X: "We have no interest in other companies' trade secrets. We remain focused on building innovative technology that empowers people everywhere."
Readers noticed what the statement did not say. It did not deny that Tan emailed himself supplier information. It did not deny that Liu downloaded confidential files. It did not address the 400 former employees, the show-and-tell interviews, or the exit-security memo. It asserted a general disinterest in trade secrets without answering whether OpenAI's own people took any.
The fight then moved to social media. Elon Musk, who spent roughly two years suing OpenAI over its retreat from nonprofit status before a jury rejected his case in May, posted on X that Altman had gone from stealing "an open source AI charity" to stealing "all of Apple's phone technology." Altman replied that he was "not afraid of apple" but had "tremendous respect for them," calling Apple an "s-tier company."
The dispute is also less one-sided than Apple's complaint suggests. Reuters reported in May that OpenAI itself had been weighing legal action against Apple, including a notice accusing Apple of breaching the terms of their Siri partnership. Apple's lawsuit does not raise that dispute. A footnote in the complaint states that the existing ChatGPT-Siri integration "is not at issue here."
Whether Apple's case actually holds up in court is a genuinely open question, not a formality on the way to an inevitable win. Mark Lemley, a law professor at Stanford, noted that hiring a competitor's engineers is not illegal in California, a state with a long history of protecting worker mobility over employer secrecy claims. The case turns on a narrower question, he said: whether Apple can show that specific confidential documents were taken and then used by OpenAI. If it can, Lemley said, that is a genuine problem for the company.
Camilla Hrdy, a law professor at Rutgers, added that the dispute could prove unusually complex because most prior AI trade secret fights have centered on software, not physical hardware, where the line between an engineer's general know-how and an employer's protected secrets is harder to draw. Four hundred hires and one unfortunate text message make for a compelling complaint. They are not, by themselves, a verdict.
The Bottom Line
Strip away the legal language and the facts are stark. A federal complaint identifies more than 400 people who used to build Apple products and now work at OpenAI. It names two of them as defendants: one accused of emailing himself supplier data and asking job candidates to smuggle hardware into interviews, the other accused of keeping a company laptop and exploiting a security bug to keep pulling files after he left.
Apple wants OpenAI to stop, hand back what it took, and rebuild whatever hardware it built on top of it. OpenAI's answer, so far, is a sentence that denies nothing and defends nothing.
None of this is happening in a vacuum. OpenAI is trying to build the device that outlives the smartphone while quietly preparing for a public listing, with the design studio behind that device now sitting as a named defendant. Apple is trying to prove that four hundred departures and one careless text message add up to theft rather than an unusually effective recruiting pipeline. A federal court will now decide which story the evidence supports.
Liu's joke about the network storage bug reached exactly one friend. A judge, a jury, and two of the most valuable companies in technology are now deciding whether it says everything about how OpenAI built its hardware future.
Sources
- Apple sues OpenAI over alleged trade secret theft — TechCrunch, July 10, 2026
- Apple Sues OpenAI for Stealing Trade Secrets to Build AI Hardware — MacRumors, July 10, 2026
- OpenAI Responds After Being Sued by Apple — MacRumors, July 11, 2026
- Apple sues OpenAI, two former employees for trade secrets theft — Reuters (via Yahoo Finance), July 10, 2026
- Apple sues OpenAI for trade secret theft — Axios, July 10, 2026
- Apple accuses OpenAI, and former design star Jony Ive's io Products firm, of stealing hardware trade secrets in blockbuster lawsuit — Fortune, July 10, 2026
- Apple calls OpenAI's hardware business 'rotten to its core' in trade secret theft lawsuit — Engadget, July 10, 2026
- Apple Lawsuit Exposes High-Stakes AI Hardware Talent War — PYMNTS, July 10, 2026
- Apple lawsuit reveals how many of its former employees now work at OpenAI — 9to5Mac, July 13, 2026
- OpenAI Engineer's 'LOL' Moment Set Stage for Legal Fight With Apple — Bloomberg, July 11, 2026
- How Apple's Lawsuit Threatens to Disrupt OpenAI's Bid to Rival the iPhone — Bloomberg, July 13, 2026
- 'Not Afraid Of Apple,' Says OpenAI CEO Sam Altman After Trade Secret Lawsuit — Stocktwits (via Yahoo Finance), July 12, 2026
- Elon Musk, Sam Altman bicker on X after Apple files OpenAI lawsuit — The Hill, July 13, 2026
- Apple Sues OpenAI, Two Former Employees for Trade Secrets Theft — Associated Press (via U.S. News), July 10, 2026
- Apple Inc. v. Liu, 5:26-cv-07078 — CourtListener (federal docket), filed July 10, 2026
- OpenAI is buying iPhone designer Jony Ive's AI devices startup for $6.4 billion — CNBC, May 21, 2025