Apple-OpenAI lawsuit won’t derail IPO, but may cloud io deal — securities lawyer

Investing.com -- Apple’s trade secret lawsuit named OpenAI and io Products directly as defendants, alongside two former Apple employees, but the litigation is unlikely to derail OpenAI’s IPO plans, according to Ross Carmel, a partner and IPO expert at Sichenzia Ross Ference Carmel LLP.

The suit, filed in the Northern District of California, accuses OpenAI’s Chief Hardware Officer Tang Tan and technical staffer Chang Liu of systematically stealing confidential Apple data, including unreleased hardware specifications and supplier information.

Apple has alleged the misconduct was "normalized and exemplified by leadership," directly implicating OpenAI itself rather than framing this solely as a rogue-employee matter.

io Products, the hardware startup OpenAI acquired for roughly $6.5 billion and co-founded by former Apple design chief Jony Ive, is also named as a defendant.

Carmel told Investing.com that IP theft claims are not unusual in Silicon Valley, but this case stands out for the brazenness of the alleged conduct, the companies’ prior partnership, and an email paper trail suggesting a coordinated effort.

Still, he expects the matter to be treated largely as a standard disclosure item. "Generally, this would be a disclosure item in the registration statement and a risk factor," he stated, adding that he doesn’t believe it will materially affect or obstruct OpenAI’s path to going public.

For the case to become more than a risk factor, Carmel said, it would need to escalate well beyond the current allegations and become deeply intertwined with OpenAI’s planned AI-native consumer products.

The litigation’s ties to the io Products acquisition add a separate layer of risk, Carmel said, since uncertainty in litigation can weigh on how investors value a deal.

“[It] provides uncertainty and litigation risk on the acquisition, and has the potential to devalue the acquisition itself in an investor’s mind,” he said. "An adverse judgment or expensive settlement could have a material impact on the company’s finances and product line."

Despite the high-profile nature of the dispute, Carmel doesn’t expect a wave of similar trade secret suits across the AI sector, calling such litigation rare in Silicon Valley.

“Leading into a listing, a company should conduct internal and external IP audits to confirm ownership of its patents, trademarks, copyrights, and trade secrets verifying that employee invention-assignment agreements and third party contracts are properly documented,” Carmel added, highlighting a playbook Meta, Uber and Dropbox used before their own offerings.

Overall, Carmel believes that there is no “real impediment to OpenAI’s listing plans, as the potential TAM is so large and not yet capable of really being calculated accurately,” and investor appetite for AI should remain strong regardless of the litigation, given the scale of the technology’s potential market.

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