Apple Targets 40 Ex-Staff at $100B Startup OpenAI, Chilling Key Hiring Pipeline

Startup founders obsess over hiring the best talent, often luring engineers with the promise of impact. But this case shows that when a critical mass of employees departs a corporate giant, the legal retaliation can be existential—not just for the individuals, but for the startup’s product roadmap. OpenAI’s hardware ambitions, now under a cloud of litigation, serve as a cautionary tale for any startup building a team from a single competitor. The 40 preservation letters amplify the risk that your entire core team could be legally immobilized.

Apple has escalated its trade secrets dispute with OpenAI by sending legal preservation letters to approximately 40 former Apple employees now working at the AI startup. This move, reported on July 17, 2026, comes just a week after Apple filed a lawsuit on July 10 in the US District Court for the Northern District of California against OpenAI and two named individuals—Chang Liu, a former senior systems electrical engineer at Apple, and Tang Yew Tan, former VP of product design for iPhone and Apple Watch, who now serves as OpenAI’s hardware head. The complaint alleges a coordinated scheme to misappropriate confidential product designs, manufacturing processes, and supply chain information, specifically to advance OpenAI’s hardware ambitions. The newly reported preservation letters signal that Apple believes the alleged trade secret theft extends far beyond the two named defendants, potentially encompassing a broader group of the more than 400 former Apple employees currently working at OpenAI.

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The hiring of Tang Yew Tan, a key architect of the iPhone and Apple Watch, signaled OpenAI’s serious intent to develop its own devices.

A preservation letter, unlike a formal lawsuit, instructs recipients to retain documents, records, and other evidence that may be relevant to ongoing or anticipated litigation. It does not name the recipient as a defendant, but it puts them on notice that they may possess information pertinent to the case. By expanding its legal hold to dozens of individuals, Apple is likely attempting to gather evidence of systematic knowledge transfer that could form the basis for additional claims or defendants. This tactic also increases the legal pressure on OpenAI and its staff, potentially hampering current projects that rely on the expertise of these ex-Apple employees.

The lawsuit and subsequent letters underscore the intense battle for talent in the technology sector, particularly in artificial intelligence and hardware design. OpenAI, known primarily for its large language models, is increasingly moving into consumer hardware—a domain where Apple’s decades of experience and trade secrets are invaluable. The hiring of Tang Yew Tan, a key architect of the iPhone and Apple Watch, signaled OpenAI’s serious intent to develop its own devices. Apple’s statistical disclosure that over 400 of its former employees now work at OpenAI illustrates the scale of the talent migration, making it difficult to draw a clear line between legitimate hiring and unlawful taking of confidential information.

From a legal perspective, the case raises important questions under the Defend Trade Secrets Act of 2016 (DTSA) and California’s Uniform Trade Secrets Act (CUTSA). California generally disfavors non-compete agreements, making trade secret protection the primary legal tool for preventing unfair competition from former employees. Apple must prove not only that its confidential information was misappropriated but also that it took reasonable measures to protect it. The preservation letters may also serve as a basis for a motion for a preliminary injunction if Apple can present enough evidence of imminent harm.