What Apple v. OpenAI can teach employers about trade secrets

By David Dubberly

On July 10, 2026, Apple filed a trade secrets lawsuit against OpenAI and two of its employees who previously worked for Apple, accusing them of taking trade secrets to help OpenAI develop artificial intelligence hardware.  The lawsuit offers lessons for employers on (1) reducing the risk of losing trade secrets when an employee resigns to join a competitor; and (2) minimizing litigation risk when hiring from a competitor.

Apple’s complaint is captioned Apple Inc. v. Chang Liu, Tang Yew Tan, OpenAI Foundation, OpenAI Group PBC, and io Products, LLC, No. 5:26-cv-07078 (N.D. Cal.).  Chang Liu had been a senior system electrical engineer at Apple, and Tang Tan had been the company’s chief hardware officer.  The complaint asserts claims against OpenAI, io Products, and the individual defendants for violation of the Defend Trade Secrets Act.  In addition, it asserts claims against the individuals for breach of Apple’s Intellectual Property Agreement.

According to the lawsuit, Liu spent eight years at Apple before leaving to join OpenAI in January 2026.  After his departure, Liu allegedly failed to return an Apple-issued laptop authenticated to the company network; exploited an authentication bug to access Apple’s internal systems after his departure; and downloaded dozens of Apple’s confidential files after starting at OpenAI, “many expressly labeled confidential,” per Apple’s complaint.  The lawsuit further alleges that Liu coached a colleague who was still employed at Apple on how to copy files so as “to avoid trouble with the security team” and to study Apple’s confidential materials before her interview with OpenAI.

It further claims that Tan, who spent 24 years at Apple, e-mailed himself confidential supplier information before he left.  After arriving at OpenAI, he used interviews of job candidates from Apple to extract more trade secret and allegedly used Apple’s internal project codenames to ask recruits about Apple’s confidential plans, and directed them to bring Apple “actual parts,” prototypes, and CAD files to “show and tell” during interviews.  In addition, he allegedly gave recruits an internal Apple document bearing a “Need to Know” designation that describes the company’s security procedures for departing employees so they could anticipate and evade the exit-security protocols when they left to join OpenAI.

In its lawsuit, Apple is seeking injunctions; monetary damages; an additional award for unjust enrichment; a reasonable royalty in lieu of damages measured by other methods; exemplary damages for alleged willful misappropriation; prejudgment and post-judgment interest; and its attorneys’ fees.

On August 5, 2026, OpenAI filed a motion to dismiss Apple’s complaint, stating that it (1) fails to identify a protectable trade secret, and (2) misrepresents the actions of its employees.  Apple’s preliminary injunction hearing is set for October 1, 2026.  While the case is at an early stage and there has been no ruling on the merits, the pleadings so far offer lessons for employers.

Lessons on Protecting Trade Secrets From Departing Employees

Develop an off-boarding checklist and follow it scrupulously.  When a resignation occurs, revoke the employee’s access to all applications and systems.  Require confirmation in writing from the departing employee that all company property and information have been returned or deleted.  If an employee fails to return company-owned equipment, address the situation immediately.

If the employee is moving to a competitor, monitor his or her recent activity to make sure nothing suspicious has occurred, and preserve activity logs before any devices are wiped.  Promptly investigate when there is suspicious activity.  Consider releasing the employee early, with pay if necessary.

Label sensitive information as confidential, and limit access to people who need to know.  Train employees on the importance of protecting confidential information and trade secrets.  Require employees to sign NDAs and other restrictive covenants (where they are legal), and go over these documents during the exit interview to remind employees of their obligations.

Topics to be covered at the exit interview should include the new role the employee will be assuming to help identify any potential conflicts.

For additional suggestions on protecting trade secrets, see Lessons Learned From Prosecution of Google Employee for Theft of Trade Secrets and Espionage.

Lessons on Recruiting From a Competitor

Asking a job candidate to bring his or her employer’s parts, prototypes, and/or CAD files can expose the hiring company to liability.  Do not ask for or accept confidential information about a prior employer’s operations, clients, strategies, or finances.  Focus instead on the candidate’s qualifications and suitability for the position.

Train employees on the penalties for trade secret misappropriation.  For example, criminal penalties for trade secret theft include fines of up to $5 million for individuals and up to ten years in prison.

Respond to any “cease and desist” letters.  In its lawsuit, Apple alleged it raised concerns directly with OpenAI in February 2026 and requested information about  precautions it was taking to avoid misappropriation, but received no response.

The U.S. economy is dynamic, and employees come and go, including to and from competitors.  Regardless of how Apple v. OpenAI turns out, the case is a useful reminder for employers to re-assess employee agreements, off-boarding and on-boarding procedures, and other trade secret protection efforts.

To find out more about protecting trade secrets, contact any member of the Maynard Nexsen Labor & Employment Group.

David Dubberly is a labor and employment lawyer with Maynard Nexsen PC.