Apple and OpenAI are heading to court for their first major trade secret showdown

Apple $AAPL and OpenAI are scheduled to face off in federal court Wednesday in the first major hearing of the iPhone maker's trade secret lawsuit against the artificial intelligence company.

Wednesday's hearing before U.S. District Judge Edward Davila in San Jose, California, will address two disputes, according to Bloomberg: an Apple bid for a preliminary injunction that would force OpenAI to halt its use of any allegedly misappropriated secrets, and an OpenAI motion seeking full dismissal of the suit.

Any injunction the court issues would hold through the duration of the underlying litigation. Apple has argued that OpenAI used job interviews with its current and former employees to extract proprietary information, including by instructing candidates to bring prototypes and other design materials for "show and tell" sessions, according to Bloomberg.

The previous day, Davila issued an order requiring OpenAI to produce forensic images of devices, summaries of interviews with certain Apple employees, and messages exchanged between former Apple engineers Chang Liu and Yu-Ting Peng on the LINE messaging platform. The judge additionally directed Liu, Peng, and former Apple hardware chief Tang Yew Tan to submit to depositions. The judge cited a valid risk that critical forensic evidence on those devices could be destroyed.

OpenAI's dismissal motion contends that Apple has not pinpointed any particular trade secrets at issue and has instead described only sweeping, general categories of hardware-related information. The company also contends that the case actually highlights weaknesses in Apple's own security and offboarding practices, according to Bloomberg. "OpenAI is developing a new family of devices designed for the AI era," the company said in an October court filing. "OpenAI has no need or desire for Apple's trade secrets."

Apple sued OpenAI in July, accusing the company and two former Apple employees — Liu and Tan — of conspiring to extract confidential information about product design, manufacturing, component technologies, testing methodologies, and Apple's supply chain. The complaint alleged that more than 400 former Apple employees now work at OpenAI, and that OpenAI is exploiting stolen information to advance its push into consumer hardware.

The two companies have an existing partnership, formed in 2024, that integrated ChatGPT into Apple software. That arrangement has since unraveled: Apple announced in June that a rebuilt version of Siri would run on Google $GOOGL Gemini instead. The litigation threatens to complicate OpenAI's path forward as the company pursues a $1.4 trillion valuation and moves toward an IPO, according to Bloomberg.

The case is Apple v. Liu, 5:26-cv-07078, U.S. District Court, Northern District of California (San Jose Division).