A hearing device startup called iyO has dramatically escalated its legal battle with OpenAI, alleging that former Apple designer Tang Tan stole confidential designs for the new io hardware company. In a March 13 filing, iyO claims its trade secrets were misappropriated to accelerate io's product development by nearly a decade.

The amended complaint centers on Dan Sargent, a former iyO engineer who allegedly downloaded confidential CAD files and physical prototypes before sharing them with Tan. According to court documents, Sargent renamed files with gibberish strings like 'ergetght.x_t' before exporting the data, and Tan allegedly reviewed the materials alongside a LoveFrom engineer during a June 2024 dinner in San Francisco.

The lawsuit initially focused on trademark infringement, with iyO arguing that OpenAI's io brand would confuse consumers and dilute its market position. OpenAI countered that iyO CEO Jason Rugolo had repeatedly offered to sell the company for $200 million after an unsolicited investment pitch was rejected. The case has now expanded to include trade secret theft claims against both Tan and OpenAI, potentially exposing the companies to substantial damages if the court allows the amended claims to proceed.