Apple’s Trade Secrets Suit Against OpenAI Is Europe’s Problem Too

Apple filed a 41-page federal lawsuit against OpenAI on July 10, accusing the ChatGPT maker, its hardware unit io Products and two former Apple engineers of running a coordinated scheme to lift confidential hardware work. The case has no non-compete claim anywhere in it. It could not, legally, have one.

That detail is the part getting skipped in most coverage of the fight, and it matters more in Europe than in California. When a company cannot stop an employee from walking to a rival, trade secret law becomes the only real fence left, a position most European founders already occupy and one the UK is actively deciding whether to adopt too.

Inside Apple’s Forty-One-Page Complaint

The 41-page complaint, filed in the US District Court for the Northern District of California, names OpenAI Chief Hardware Officer Tang Yew Tan and engineer Chang Liu. Apple filed the complaint in the U.S. District Court for the Northern District of California on July 10, 2026. Apple alleges that the defendants engaged in a “coordinated pattern of misconduct at an institutional level” involving confidential product designs, manufacturing methods, and supplier information.

Liu worked at Apple for eight years before joining OpenAI in January 2026. Apple claims he failed to return a company laptop and later discovered that an authentication flaw still allowed him to access Apple’s network storage. According to the complaint, Liu wrote to a former colleague: “LOL, I found out I can access the [network storage], so funny.” He then allegedly downloaded dozens of files, including technical presentations, engineering data and information about unreleased products. One collection exceeded 1,000 pages.

Tan’s alleged conduct reads differently. The complaint alleges that Tan used insider knowledge of Apple’s confidential projects to grill job candidates in interviews and learn more confidential information. Additionally, Tan directed job candidates still working at Apple to bring actual Apple hardware components and samples for “show and tell” sessions. The allegations, which also include claims that OpenAI built parts of its device roadmap on stolen iPhone blueprints in the hardware fight, sit at the center of io Products, the hardware arm OpenAI built around Jony Ive’s old startup. Relations between the two companies have chilled since OpenAI announced plans to enter the hardware industry last year, when it bought former Apple designer Jony Ive’s startup, called IO Products, for $6.4 billion. OpenAI’s hardware efforts are being led by Jony Ive, Apple’s former chief design officer. While io was named in the filing, Ive was not.

An Apple spokesperson said: “At Apple, our teams are constantly developing breakthrough technologies to create the best products and services in the world, and protecting their work and intellectual property is something we take very seriously. Recently, significant evidence has emerged suggesting individuals employed by OpenAI wrongfully took Apple’s secret and confidential information regarding our unreleased technologies, processes, and products.” “We have no interest in other companies’ trade secrets. We remain focused on building innovative technology that empowers people everywhere,” a representative for OpenAI said in a statement.

• What we know: Apple’s complaint names OpenAI, io Products, Tan and Liu, and the complaint reveals the extent to which Apple employees have left the iPhone maker to work for OpenAI, putting the figure over four hundred.
• What’s unconfirmed: No court has tested any of the claims, and Apple has not said whether the dispute will touch its ongoing ChatGPT integration work with OpenAI.

Apple’s lawyers are not shy about where they think this goes next. “This is the tip of the iceberg.” Apple is suggesting that the alleged misconduct outlined in the complaint is only a fraction of what it will uncover after the discovery process gets underway.

OpenAI’s Familiar Playbook Problem

Apple is not the first company to make this accusation. Elon Musk’s xAI sued OpenAI separately, alleging a nearly identical pattern aimed at a different rival’s engineers. “OpenAI is not merely soliciting or hiring a competitor’s employees,” Musk’s lawyers wrote in the complaint. “OpenAI is waging a coordinated, unfair, and unlawful campaign: OpenAI is targeting those individuals with knowledge of xAI’s key technologies and business plans.”

The lawsuit also alleges that OpenAI has encouraged these recruits to violate confidentiality agreements with xAI. “This new lawsuit is the latest chapter in Mr. Musk’s ongoing harassment,” OpenAI said in a statement. “We have no tolerance for any breaches of confidentiality, nor any interest in trade secrets from other labs.” The lawsuit names ex-xAI engineer Xuechen Li, who is facing a separate case filed by xAI over alleged trade secret theft, and xAI won a court order to temporarily block Li from working on or communicating about AI technology with OpenAI.

Two rivals, two nearly identical complaints, the same denial each time. That is not a coincidence anyone in the AI industry can plausibly write off as one bad hire.

Trade Secret Law Is Apple’s Only Real Weapon Here

Notice what Apple did not file. No non-compete claim, no request to bar Tan or Liu from working at OpenAI at all. There is a reason for that, and it is written into California statute.

California Business and Professions Code section 16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Unlike the majority of U.S. states, California prohibits virtually all non-compete agreements. The rule was recently amended to “void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored.”

Apple simply cannot ask a judge to keep its former staff away from OpenAI. Its only tool is proving they carried out something they were bound by contract to keep secret. That is exactly the legal terrain most European founders already work on, whether or not they realize it.

The Same Legal Floor Runs Under Much of Europe

Directive 2016/943 on the protection of undisclosed know-how and business information against unlawful acquisition, use and disclosure was adopted on 8 June 2016. It was folded into the European Economic Area Agreement in 2019, making it binding for Iceland, Liechtenstein and Norway too. The Directive expressly promotes the free movement of workers, and it leaves each member state to set its own rules on non-compete clauses.

Recital 13 of the Directive says it is not intended to affect the possibility of non-competition agreements, but the possibility of entering into such agreements is quite restricted in European countries. The result is a patchwork, but the pattern runs one direction: toward weaker non-competes and heavier reliance on trade secret protection.

To actually collect on a trade secrets claim in Europe, a company has to show its work. To secure protection under the Directive, an employer must demonstrate the information it wishes to protect meets the definition of a trade secret, which requires a strategy for ensuring reasonable steps are taken to identify and actively protect that information. A pricing model nobody bothered to mark confidential rarely survives that test in court.

Britain Is Debating Whether to Join Them

On 26 November 2025, the UK government published a working paper seeking views on options to reform the law governing non-compete clauses in employment contracts. Roughly 5 million employees in Great Britain currently work under a contract containing a non-compete clause, typically lasting around six months. The government is weighing a duration cap, a salary threshold or an outright ban.

Consultation remained open until 18 February 2026, and there is currently no fixed timescale for the reforms since the changes will require primary legislation. Meanwhile, across the Atlantic, the FTC’s attempt to introduce a nationwide ban on most employee non-competes has effectively stalled, after federal courts held that the FTC lacked authority to implement the rule and the FTC withdrew its appeals in September 2025. Britain is moving toward restriction just as the federal US effort collapsed, leaving California’s own statute as the country’s toughest non-compete ban regardless of what Washington does.

What Should a European Founder Do Now?

Start by treating confidentiality agreements as the actual legal shield, not the paperwork step nobody reads. Match them to what the Directive’s reasonable-steps test actually asks for, keep access records current, and run an offboarding process the day someone gives notice, not the day they leave.

• Write confidentiality terms specific enough to survive a reasonable-steps test in court, not a generic template pulled from a founder forum.
• Restrict sensitive files by role, and cut access the moment an employee gives notice rather than on their last day.
• Keep dated records of who accessed what, since courts weighing a trade secrets claim in Europe expect proof of active protection.
• Treat non-competes as a weak backstop at best, given how many European jurisdictions already restrict or void them outright.
• Brief interviewers on what they can and cannot ask a candidate to reveal, the exact conduct Apple alleges against Tan.

A judge in the Northern District of California will eventually decide whether Apple’s evidence holds up against OpenAI, io Products, Tan and Liu. Discovery, the phase where internal messages and files get handed over, has not yet begun, and Apple has already told the court to expect more than what is in the current filing.

Frequently Asked Questions

What is a trade secret, and how is it different from a patent?

A trade secret is information that has value specifically because it stays secret, and unlike a patent, it never expires as long as the company keeps taking active steps to protect it. The burden of proving those steps sits with the company, not the departing employee.

What is the US Defend Trade Secrets Act, and how does it compare with Europe’s law?

The Defend Trade Secrets Act gave US trade secret owners a new federal civil cause of action to pursue misappropriation claims. The European Parliament approved its own trade secrets Directive text on 14 April 2016, by a vote of 503 to 131. Both frameworks landed the same year, on opposite sides of the Atlantic.

Can something said in a job interview count as a stolen trade secret?

Yes, if it discloses protected information the interviewer had no right to extract. That is the theory behind Apple’s claims about Tan’s alleged interview tactics, and it is a real exposure for any founder whose hiring managers interview people who still work at competitors.

Does the EU Trade Secrets Directive protect whistleblowers?

Article 5(b) of the Directive provides that whistleblowing may be permitted if there is a general public interest. Founders drafting confidentiality policies need that carve-out written in, or risk a policy that overreaches.

Will the UK’s non-compete reform apply to contracts already signed?

Nothing has been decided yet. The consultation closed in February 2026 with no implementation date set, and any change requires new legislation, so existing UK contracts remain governed by the current common-law reasonableness test for now.

Disclaimer: This article is for general information only, not legal advice, and non-compete and trade secret rules vary by country and even by region within a country, so founders should consult a qualified employment lawyer before drafting or relying on any agreement; figures are accurate as of publication.