OpenAI, Jony Ive, and iyO Involved in Legal Dispute Over AI Device Naming and Trade Secrets

A legal dispute has emerged regarding the development of new communication methods with artificial intelligence chatbots, as OpenAI addresses a trademark disagreement concerning its hardware collaboration with designer Jony Ive.

Trademark Dispute and Lawsuits

Tech startup iyO Inc., which previously filed a lawsuit against Ive and OpenAI CEO Sam Altman for trademark infringement, has initiated additional legal action against a former employee. The company alleges that this individual disclosed a confidential drawing of iyO’s unreleased product.

The central issue involves the development of a new AI interface that does not require users to interact with screens or voice assistants. The party that successfully creates this interface could benefit significantly.

OpenAI outlined its approach in May by acquiring io Products, a company co-founded by Ive, in a transaction valued at nearly $6.5 billion. Shortly after, iyO filed a trademark infringement suit, citing the similarity in names and previous interactions between the companies.

U.S. District Judge Trina Thompson determined last month that iyO's case is sufficient to proceed to a hearing in the fall. Until then, Altman, Ive, and OpenAI have been ordered to stop using the io brand, including removing related web content.

A separate lawsuit filed this week in San Francisco Superior Court accuses former iyO executive Dan Sargent of breach of contract and misappropriation of trade secrets. The complaint references Sargent's meetings with Tang Yew Tan, an io co-founder and former Apple Watch lead designer.

Sargent left iyO in December and is now employed at Apple. Neither Sargent nor Apple provided immediate comment.

Statements from Involved Parties

IyO CEO Jason Rugolo stated on Thursday:

"This is not an action we take lightly. Our primary goal here is not to target a former employee, whom we considered a friend, but to hold accountable those whom we believe preyed on him from a position of power."

Rugolo previously told The Associated Press that in 2022 he presented his ideas and prototypes to organizations associated with Altman and Ive. He later discussed his "audio computer" product in a TED Talk.

Rugolo was unaware that, soon after, Ive and Altman began working on their own AI hardware project with a similar name.

"I’m happy to compete on product, but calling it the same name, that part is just amazing to me. And it was shocking," Rugolo said.

The new venture was publicly announced in May. Rugolo learned of it approximately two months earlier after contacting Altman with an investment proposal. Altman responded in March:

"thanks but im working on something competitive so will (respectfully) pass!" (noting the project was called io).

Altman has described iyO’s lawsuit on social media as unfounded. Other executives, in court documents, stated that Rugolo's product did not function as intended during demonstrations.

Altman, in a written declaration, said he and Ive selected the "io" name two years ago, referencing "input/output." He noted that neither io nor iyO was the first to use this phrasing, as seen with Google's I/O conference. Altman indicated that he and Ive acquired the io.com domain in August 2023.

"We want to create new ways for people to input their requests and new ways for them to receive helpful outputs, powered by AI," Altman said.

Industry Context and Product Details

Several startups have attempted to develop devices for AI interactions. For example, Humane created a wearable pin, but it received negative reviews and sales ended after HP acquired its assets.

Altman has suggested that io’s product may differ from previous attempts. In a now-removed video, he mentioned using a prototype provided by Ive, describing it as a significant technological advancement.

The specific nature of the product has not been disclosed. However, court documents clarified certain aspects:

"Its design is not yet finalized, but it is not an in-ear device, nor a wearable device," Tan stated in a court declaration, distinguishing it from iyO’s product.

This declaration led iyO to file the recent lawsuit against Sargent. Tan's filing described conversations with a former iyO engineer who was dissatisfied with the company's progress and product plans. Tan concluded that iyO was offering "vaporware"—a product that does not exist or function as advertised—and decided not to pursue further engagement with iyO.

IyO stated that its investigators recently confirmed Sargent met with Tan.

Previous Interactions Between Parties

Rugolo told the Associated Press he initially presented his idea to Altman in 2022 through Apollo Projects, a venture capital firm established by Altman and his brothers. Rugolo demonstrated his products, but the firm declined, citing a lack of interest in consumer hardware investments.

That same year, Rugolo also presented the concept to Ive through LoveFrom, Ive’s design firm. This firm also declined.

"I feel kind of stupid now," Rugolo said. "Because we talked for so long. I met with them so many times and demo’d all their people — at least seven people there. Met with them in person a bunch of times, talking about all our ideas."