Hardware Startup iyO Escalates Legal Battle Against OpenAI Alleging Systematic Trade Secret Theft By Former Apple Designers

Startup iyO has amended its lawsuit against OpenAI, alleging that former employees stole CAD files and prototypes to help develop Jony Ive’s new AI hardware.

By: AXL Media

Published: Mar 27, 2026, 4:55 AM EDT

Source: Information for this report was sourced from 9to5Mac

The Transition From Trademark Dispute To Intellectual Property Theft

What began as a localized conflict over brand naming conventions has transformed into a high stakes corporate espionage case within the artificial intelligence hardware sector. In a significant procedural move, the startup iyO filed an amended complaint on March 13, shifting the focus from simple market confusion to the active exfiltration of technical trade secrets. This escalation introduces severe allegations that internal designs were systematically harvested to benefit OpenAI’s hardware ambitions, marking a definitive end to any potential for a quiet settlement between the competing tech firms.

Allegations Of Coordinated Exfiltration By Former Personnel

The heart of the new filing centers on the conduct of Dan Sargent, a former engineer at iyO who is accused of downloading dozens of sensitive files shortly before his departure. According to the complaint, Sargent utilized a series of gibberish character strings to rename and mask the identity of proprietary data, including CAD files and internal manufacturing details. This coordinated effort was allegedly designed to bypass security protocols while securing the foundational technical architecture that iyO spent years developing through its research and development initiatives.

The Role Of Former Apple Design Executives

The lawsuit now explicitly names Tang Tan, a co-founder of the OpenAI hardware initiative and former Apple executive, as a primary recipient of the stolen information. iyO alleges that Tan was granted unauthorized access to physical prototypes and confidential engineering documents during a private dinner in San Francisco in June 2024. By involving Tan, the prosecution aims to link the alleged theft directly to the leadership of OpenAI’s hardware division, suggesting that the very blueprints for their upcoming devices may be built upon misappropriated intellectual property.