Matt O’Brien
The secret race to unlock new ways to communicate with Poioneer’s artificial intelligence chatbots is undergoing messy public broadcasts as Openai fights the trademark conflict over a stealth hardware collaboration with legendary iPhone designer Jony Ive.
With the latest twist, Tech Startup IYO Inc., which has already sued IVE and Openai CEO Sam Altman for trademark infringement, is suing one of its former employees allegedly leaking a secret drawing of IYO’s unpublished products.
At the heart of this bitter legal dispute is a big idea. You don’t have to stare at your computer or phone screen, or talk to a box like Amazon’s Alexa and interact with your future AI assistant in a natural way. And anyone who comes up with this new AI interface can benefit greatly from it.
Openai, the maker of ChatGpt, began outlining its own vision in a nearly $6.5 billion deal by purchasing IO Products in May, and purchasing the IO and engineering company IVE co-founded. Soon afterwards, Iyo sued trademark infringement for similar sound names and for past interactions with the company.
US District Judge Trina Thompson last month determined that IYO had enough strong cases to advance to the hearing this fall. Until then, she ordered Altman, Ive, and Openai to refrain from using the IO brand, leading her to remove all mentions of the webpage and venture.
The second lawsuit from IYO, filed this week in San Francisco Superior Court, blames former IYO executive Dan Sargent for breach of contract and misappropriation of trade secrets in a meeting with Tang Yew Tan, another IO co-founder who led the design of the Apple Watch.
Sgt.gent left IYO in December and is currently working for Apple. He and Apple did not immediately respond to requests for comment.
“This is not an action we underestimate,” IYO CEO Jason Lugoro said in a statement Thursday. “Our main goal here is not to target former employees we considered friends, but to hold people who we believe have preyed him from a position of power.”
Lugolo told The Associated Press last month that he thought he was on the right path in 2022 when he pitched his ideas and showed off his prototype to a company linked to Altman and Ive. Rugolo later publicly expanded its “audio computer” products like earphones in TED talk last year.
What he didn’t know was that by 2023, Ive and Altman had started quietly collaborating on their own AI hardware initiatives.
“I’m happy to compete in products, but I call it the same name. That part is amazing to me. It was shocking,” Lugoro said in an interview.
The new venture was revealed in a video announcement in May and was released to Rugolo after emailing the investment pitch to Altman about two months ago.
“Thank you, but I’m working on something competitive, so I’ll pass (in honor)!” Altman wrote to Rugolo in March, adding brackets called IO.
Altman dismissed IYO’s lawsuit on social media as a “silly, disappointing, wrong” move from Rugolo. Other executives in the court documents are characterized by Lugoro pitching as a failure to function properly in the demonstration.
In a written declaration, Altman said he and Ive chose their name two years ago in relation to the concept of “input/output” that explains how computers receive and transmit information. Neither IO nor IYO used phrases at first. Google’s flagship annual technology showcase is called I/O, but Altman said it acquired the IO.com domain name in August 2023.
The idea was to “create products that go beyond traditional products and interfaces,” Altman said. “We want to create new ways for people to enter requests and new ways to receive useful output with AI.”
Many startups have already tried and tried to build gadgets for AI interactions, and have mostly failed. Startup Humane has developed a wearable pin that you can talk about, but the product reviews are poor and the startup has stopped selling after HP acquired the assets earlier this year.
Altman suggests that IO versions may differ. He says in the now-deleted video he’s already experimenting with the prototype he’s given him at home, calling it “the coolest technique the world has ever seen.”
Altman and Ive haven’t said what it is yet. However, the trial forced the team to disclose what they were not.
“The design is yet to be finalized, but it is not an in-ear device or a wearable device,” Tan said in the court declaration, which attempts to distance the venture from Iyo’s products.
It was the same declaration that IYO sued SAREGNT this week. Tan revealed in submission that he spoke with “now previous” IYO engineers who were looking for work because they were unhappy with “IYO’s slow pace, nonexempt product planning, and ongoing acceptance of pre-orders without products that can be sold.”
A conversation with an unnamed employee concluded that Tan “conclusively concluded that Iyo was basically providing a ‘steamer’. They were promoting products that actually existed or did not function as they were advertised.
Iyo said the investigator recently contacted Sargent to confirm that he was the person who met Tan.
Lugolo said he feels the AP is being dupled after pitching the idea to Altman in 2022 through the Apollo project. Rugolo said he demonstrated his product and the company politely declined, with an explanation that he had not invested in consumer hardware.
That same year, Lagoro also pitched the same idea through Lovefrom, and was started by the San Francisco design company after a 27-year career at Apple. Ive’s company has also declined.
“I’m a bit stupid right now,” Lugoro added. “We had been talking for a long time, so I met them many times and demonstrated at least seven people there.
Associated Press and OpenAI have licenses and technology agreements that allow OpenAI to access some of the AP’s text archives.
Original issue: July 10th, 2025, 7:58pm EDT
