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Home Technology

AI device startup that sued OpenAI is now suing its own ex-employee

INBV News by INBV News
July 13, 2025
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AI device startup that sued OpenAI is now suing its own ex-employee
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A secretive competition to pioneer a brand new way of communicating with artificial intelligence chatbots is getting a messy public airing as OpenAI fights a trademark dispute over its stealth hardware collaboration with legendary iPhone designer Jony Ive.

In the newest twist, tech startup iyO Inc., which already sued Ive and OpenAI CEO Sam Altman for trademark infringement, is now suing considered one of its own former employees for allegedly leaking a confidential drawing of iyO’s unreleased product.

At the guts of this bitter legal wrangling is an enormous idea: we shouldn’t have to stare at computer or phone screens or refer to a box like Amazon’s Alexa to interact with our future AI assistants in a natural way. And whoever comes up with this recent AI interface could profit immensely from it.

Tech startup iyO Inc., which already sued Jony Ive and Sam Altman (pictured), can also be now suing considered one of its former employees for leaking an unreleased product. Getty Images

OpenAI, maker of ChatGPT, began to stipulate its own vision in May by buying io Products, a product and engineering company co-founded by Ive, in a deal valued at nearly $6.5 billion. Soon after, iyO sued for trademark infringement for the same sounding name and due to the firms’ past interactions.

U.S. District Judge Trina Thompson ruled last month that iyO has a powerful enough case 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 online page and all mentions of the enterprise.

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 trade secrets over his meetings with one other io co-founder, Tang Yew Tan, a detailed Ive ally who led design of the Apple Watch.

Sargent left iyO in December and now works for Apple. He and Apple didn’t immediately reply to a request for comment.

“This shouldn’t be an motion we take calmly,” said iyO CEO Jason Rugolo in a press release Thursday. “Our primary goal here shouldn’t be to focus on a former worker, whom we considered a friend, but to carry accountable those whom we consider preyed on him from a position of power.”

Jason Rugolo, founder and CEO of iyO Inc., shows the motherboard of the iyO One audio computer. AP

Rugolo told The Associated Press last month that he thought he was on the appropriate path in 2022 when he pitched his ideas and showed 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 yr.

What he didn’t know was that, by 2023, Ive and Altman had begun quietly collaborating on their very own AI hardware initiative.

“I’m comfortable to compete on product, but calling it the identical name, that part is just amazing to me. And it was shocking,” Rugolo said in an interview.

The brand new enterprise was revealed publicly in a May video announcement, and to Rugolo about two months earlier after he had emailed Altman with an investment 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.

Jason Rugolo wearing the iyO One audio computer in his ears for demonstration AP

Altman has dismissed iyO’s lawsuit on social media as a “silly, disappointing and improper” move from a “quite persistent” Rugolo. Other executives in court documents characterised the product Rugolo was pitching as a failed one which didn’t work properly in a demo.

Altman said in a written declaration that he and Ive selected the name two years ago in reference to the concept of “input/output” that describes how a pc receives and transmits information. Neither io nor iyO was first to play with the phrasing — Google’s flagship annual technology showcase is named I/O — but Altman said he and Ive acquired the io.com domain name in August 2023.

The concept was “to create products that transcend traditional products and interfaces,” Altman said. “We would like to create recent ways for people to input their requests and recent ways for them to receive helpful outputs, powered by AI.”

Various startups have already tried, and mostly failed, to construct gadgetry for AI interactions. The startup Humane developed a wearable pin that you can refer to, however the product was poorly reviewed and the startup discontinued sales after HP acquired its assets earlier this yr.

Altman has suggested that io’s version might be different. He said in a now-removed video that he’s already trying a prototype at home that Ive gave him, calling it “the good piece of technology that the world can have ever seen.”

iyO sued OpenAI for trademark infringement for the same sounding name, “io,” and due to the firms’ past interactions. REUTERS

Altman and Ive still haven’t said is what exactly it’s. The court case, nonetheless, has forced their team to reveal what it’s not.

“Its design shouldn’t be yet finalized, however it shouldn’t be an in-ear device, nor a wearable device,” said Tan in a court declaration that sought to distance the enterprise from iyO’s product.

It was that very same declaration that led iyO to sue Sargent this week. Tan revealed within the filing that he had talked to a “now former” iyO engineer who was on the lookout for a job due to his frustration with “iyO’s slow pace, unscalable product plans, and continued acceptance of preorders with no sellable product.”

Those conversations with the unnamed worker led Tan to conclude “that iyO was principally offering ‘vaporware’ — promoting for a product that doesn’t actually exist or function as advertised, and my instinct was to avoid meeting with iyO myself and to discourage others from doing so.”

IyO said its investigators recently reached out to Sargent and confirmed he was the one who met with Tan.

Rugolo told the AP he feels duped after he first pitched his idea to Altman in 2022 through the Apollo Projects, a enterprise capital firm began by Altman and his brothers. Rugolo said he demonstrated his products and the firm politely declined, with the reason that they don’t do consumer hardware investments.

That very same yr, Rugolo also pitched the identical idea to Ive through LoveFrom, the San Francisco design firm began by Ive after his 27-year profession at Apple. Ive’s firm also declined.

“I feel sort of silly now,” Rugolo added. “Because we talked for therefore long. I met with them so persistently and demo’d all their people — a minimum of seven people there. Met with them in person a bunch of times, talking about all our ideas.”

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A secretive competition to pioneer a brand new way of communicating with artificial intelligence chatbots is getting a messy public airing as OpenAI fights a trademark dispute over its stealth hardware collaboration with legendary iPhone designer Jony Ive.

In the newest twist, tech startup iyO Inc., which already sued Ive and OpenAI CEO Sam Altman for trademark infringement, is now suing considered one of its own former employees for allegedly leaking a confidential drawing of iyO’s unreleased product.

At the guts of this bitter legal wrangling is an enormous idea: we shouldn’t have to stare at computer or phone screens or refer to a box like Amazon’s Alexa to interact with our future AI assistants in a natural way. And whoever comes up with this recent AI interface could profit immensely from it.

Tech startup iyO Inc., which already sued Jony Ive and Sam Altman (pictured), can also be now suing considered one of its former employees for leaking an unreleased product. Getty Images

OpenAI, maker of ChatGPT, began to stipulate its own vision in May by buying io Products, a product and engineering company co-founded by Ive, in a deal valued at nearly $6.5 billion. Soon after, iyO sued for trademark infringement for the same sounding name and due to the firms’ past interactions.

U.S. District Judge Trina Thompson ruled last month that iyO has a powerful enough case 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 online page and all mentions of the enterprise.

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 trade secrets over his meetings with one other io co-founder, Tang Yew Tan, a detailed Ive ally who led design of the Apple Watch.

Sargent left iyO in December and now works for Apple. He and Apple didn’t immediately reply to a request for comment.

“This shouldn’t be an motion we take calmly,” said iyO CEO Jason Rugolo in a press release Thursday. “Our primary goal here shouldn’t be to focus on a former worker, whom we considered a friend, but to carry accountable those whom we consider preyed on him from a position of power.”

Jason Rugolo, founder and CEO of iyO Inc., shows the motherboard of the iyO One audio computer. AP

Rugolo told The Associated Press last month that he thought he was on the appropriate path in 2022 when he pitched his ideas and showed 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 yr.

What he didn’t know was that, by 2023, Ive and Altman had begun quietly collaborating on their very own AI hardware initiative.

“I’m comfortable to compete on product, but calling it the identical name, that part is just amazing to me. And it was shocking,” Rugolo said in an interview.

The brand new enterprise was revealed publicly in a May video announcement, and to Rugolo about two months earlier after he had emailed Altman with an investment 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.

Jason Rugolo wearing the iyO One audio computer in his ears for demonstration AP

Altman has dismissed iyO’s lawsuit on social media as a “silly, disappointing and improper” move from a “quite persistent” Rugolo. Other executives in court documents characterised the product Rugolo was pitching as a failed one which didn’t work properly in a demo.

Altman said in a written declaration that he and Ive selected the name two years ago in reference to the concept of “input/output” that describes how a pc receives and transmits information. Neither io nor iyO was first to play with the phrasing — Google’s flagship annual technology showcase is named I/O — but Altman said he and Ive acquired the io.com domain name in August 2023.

The concept was “to create products that transcend traditional products and interfaces,” Altman said. “We would like to create recent ways for people to input their requests and recent ways for them to receive helpful outputs, powered by AI.”

Various startups have already tried, and mostly failed, to construct gadgetry for AI interactions. The startup Humane developed a wearable pin that you can refer to, however the product was poorly reviewed and the startup discontinued sales after HP acquired its assets earlier this yr.

Altman has suggested that io’s version might be different. He said in a now-removed video that he’s already trying a prototype at home that Ive gave him, calling it “the good piece of technology that the world can have ever seen.”

iyO sued OpenAI for trademark infringement for the same sounding name, “io,” and due to the firms’ past interactions. REUTERS

Altman and Ive still haven’t said is what exactly it’s. The court case, nonetheless, has forced their team to reveal what it’s not.

“Its design shouldn’t be yet finalized, however it shouldn’t be an in-ear device, nor a wearable device,” said Tan in a court declaration that sought to distance the enterprise from iyO’s product.

It was that very same declaration that led iyO to sue Sargent this week. Tan revealed within the filing that he had talked to a “now former” iyO engineer who was on the lookout for a job due to his frustration with “iyO’s slow pace, unscalable product plans, and continued acceptance of preorders with no sellable product.”

Those conversations with the unnamed worker led Tan to conclude “that iyO was principally offering ‘vaporware’ — promoting for a product that doesn’t actually exist or function as advertised, and my instinct was to avoid meeting with iyO myself and to discourage others from doing so.”

IyO said its investigators recently reached out to Sargent and confirmed he was the one who met with Tan.

Rugolo told the AP he feels duped after he first pitched his idea to Altman in 2022 through the Apollo Projects, a enterprise capital firm began by Altman and his brothers. Rugolo said he demonstrated his products and the firm politely declined, with the reason that they don’t do consumer hardware investments.

That very same yr, Rugolo also pitched the identical idea to Ive through LoveFrom, the San Francisco design firm began by Ive after his 27-year profession at Apple. Ive’s firm also declined.

“I feel sort of silly now,” Rugolo added. “Because we talked for therefore long. I met with them so persistently and demo’d all their people — a minimum of seven people there. Met with them in person a bunch of times, talking about all our ideas.”

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