Legal Battle Escalates Over Employee Moves and Trade Secrets

OpenAI has formally denied Apple's allegations of trade-secret theft, telling a federal court that the iPhone maker failed to show that any confidential information was actually stolen by the former employees who joined the AI company. In a filing submitted to the S. District Court in San Jose, California, OpenAI argued that the dispute is "a mess of Apple's own making."

The legal action stems from a lawsuit Apple filed in July against OpenAI and two former engineers, Chang Liu and Tang Tan, accusing them of misappropriating trade secrets related to hardware design, manufacturing, and supply-chain operations. The case comes as OpenAI, led by CEO Sam Altman, pushes into physical consumer devices, directly competing with Apple's hardware ecosystem.

Apple's Allegations and Forensic Evidence

Apple has alleged that Liu and Tang, both of whom previously worked on hardware engineering at Apple, downloaded confidential engineering files after leaving the company, possibly to help OpenAI develop its own AI hardware device. Apple also claimed that OpenAI systematically targeted its workforce, hiring around 400 former Apple employees for similar hardware initiatives, in an effort to learn its intellectual property.

In its latest court filing, Apple presented what it called "shocking evidence" based on forensic analysis of a MacBook owned by Liu. Apple told the court it found four pieces of evidence supporting its claims. Apple had previously been granted access to Liu's MacBook to conduct this forensic review.

OpenAI's Counter-Arguments and Attributions

In its response, OpenAI did not directly address each piece of forensic evidence but instead argued that any issues raised in Apple's lawsuit are due to Apple's own internal procedures and culture. The company specifically cited three problems: Apple encourages employees to use personal iCloud accounts for work, departing employees are not given enough time to return devices and transfer files, and former employees are contacted by their old teams for assistance after they leave.

OpenAI highlighted that California law permits employees to move freely between competitors. "Employees can leave a company like Apple that has struggled to adopt AI and move to an exciting startup that builds innovative products," the filing read, as reported by Reuters. "Apple may not like those choices. But it cannot claim those choices are unlawful, and it cannot use its own sloppy procedures to blame others for its own mess."

OpenAI also argued that the lawsuit is an attempt to stall an emerging rival and deter more employee departures, rather than a legitimate intellectual property dispute.

Responses from the Former Employees

Liu, one of the defendants, stated via OpenAI's filing that any access to Apple documents after his departure was solely to help former colleagues locate files or answer questions, and that Apple employees repeatedly contacted him for support. Tan, the other engineer, said he returned his Apple prototypes before leaving and retained only non-confidential material, including a standard departure checklist.

OpenAI pushed back that the lawsuit is a result of Apple's flawed internal procedures rather than intentional theft, and that Apple is attempting to punish employees for exercising their legal right to work for a competitor.

The case is set for a hearing before Judge Edward J. Davila on October 1, where arguments from both parties will be considered.