AI device startup that sued OpenAI and Jony Ive is now suing its own ex-employee over trade secrets

By MATT O BRIEN A secretive competition to pioneer a new way of communicating with artificial intelligence chatbots is getting a messy general airing as OpenAI fights a trademark dispute over its stealth hardware collaboration with legendary iPhone designer Jony Ive Related Articles TikTok faces fresh European privacy study over China information transfers Ticker Italian candy giant buys Tony the Tiger Ford recalls over cars Ford recalls over cars in the US due to likely fuel pump failure Hot Property Fiske House in Weston a breathtaking classic This entrepreneur spots deepfakes for celebrities Can he help average Joes too In the latest twist tech startup iyO Inc which already sued Ive and OpenAI CEO Sam Altman for trademark infringement is now suing one of its own former employees for allegedly leaking a confidential drawing of iyO s unreleased product At the heart of this bitter legal wrangling is a big idea we shouldn t need to stare at computer or phone screens or talk to a box like Amazon s Alexa to interact with our future AI assistants in a natural way And whoever comes up with this new AI interface could profit immensely from it OpenAI maker of ChatGPT started to outline its own vision in May by buying io Products a product and engineering company co-founded by Ive in a deal valued at nearly billion Soon after iyO sued for trademark infringement for the similar sounding name and because of the firms past interactions U S District Judge Trina Thompson ruled last month that iyO has a strong enough episode to proceed to a hearing this fall Until then she ordered Altman Ive and OpenAI to refrain from using the io brand leading them to take down the web page and all mentions of the venture A second lawsuit from iyO filed this week in San Francisco Superior Court accuses a former iyO executive Dan Sargent of breach of contract and misappropriation of exchange secrets over his meetings with another io co-founder Tang Yew Tan a close Ive ally who led design of the Apple Watch Sargent left iyO in December and now works for Apple He and Apple didn t straightaway respond to a request for comment This is not an action we take lightly reported iyO CEO Jason Rugolo in a declaration Thursday 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 described The Associated Press last month that he thought he was on the right path in when he pitched his ideas and proved off his prototypes to firms tied to Altman and Ive Rugolo later publicly expanded on his earbud-like audio computer product in a TED Talk last year What he didn t know was that by Ive and Altman had begun quietly collaborating on their own AI hardware initiative 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 noted in an interview The new venture was revealed publicly in a May video announcement and to Rugolo about two months earlier after he had emailed Altman with an outlay pitch thanks but im working on something competitive so will respectfully pass Altman wrote to Rugolo in March adding in parentheses that it was called io Altman has dismissed iyO s lawsuit on social media as a silly disappointing and wrong move from a quite persistent Rugolo Other executives in court documents characterized the product Rugolo was pitching as a failed one that didn t work properly in a demo Altman reported in a written declaration that he and Ive chose the name two years ago in reference to the concept of input output that describes how a computer receives and transmits information Neither io nor iyO was first to play with the phrasing Google s flagship annual innovation showcase is called I O but Altman disclosed he and Ive acquired the io com domain name in August The idea was to create products that go beyond traditional products and interfaces Altman explained We want to create new tactics for people to input their requests and new avenues for them to receive helpful outputs powered by AI A number of startups have already tried and mostly failed to build gadgetry for AI interactions The startup Humane developed a wearable pin that you could talk to but the product was poorly reviewed and the startup discontinued sales after HP acquired its assets earlier this year Altman has suggested that io s version could be different He stated in a now-removed video that he s already trying a prototype at home that Ive gave him calling it the coolest piece of mechanism that the world will have ever seen Altman and Ive still haven t noted is what exactly it is The court occurrence however has forced their association to disclose what it s not Its design is not yet finalized but it is not an in-ear device nor a wearable device disclosed Tan in a court declaration that sought to distance the venture from iyO s product It was that same declaration that led iyO to sue Sargent this week Tan revealed in the filing that he had talked to a now former iyO engineer who was looking for a job because of his frustration with iyO s slow pace unscalable product plans and continued acceptance of preorders without a sellable product Those conversations with the unnamed employee led Tan to conclude that iyO was basically offering vaporware advertising for a product that does not in fact exist or function as advertised and my instinct was to avoid meeting with iyO myself and to discourage others from doing so IyO announced its investigators in recent weeks reached out to Sargent and endorsed he was the one who met with Tan FILE Jason Rugolo founder and CEO of iyO wears the iyO One audio computer in his ears while being interviewed at the company s office in Redwood City Calif Tuesday June AP Photo Jeff Chiu File Rugolo notified the AP he feels duped after he first pitched his idea to Altman in through the Apollo Projects a venture capital firm started by Altman and his brothers Rugolo revealed he demonstrated his products and the firm politely declined with the explanation that they don t do consumer hardware investments That same year Rugolo also pitched the same idea to Ive through LoveFrom the San Francisco design firm started by Ive after his -year career at Apple Ive s firm also declined I feel kind of stupid now Rugolo added Because we talked for so long I met with them so a multitude of 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 The Associated Press and OpenAI have a licensing and machinery agreement that allows OpenAI access to part of AP s text archives