Court Filings Reveal OpenAI and io Explored AI Hardware Beyond Earbuds

New court filings have revealed early efforts by OpenAI and Jony Ive’s hardware startup, io, to develop an AI-powered consumer device—one that may not resemble the in-ear wearable many observers expected.

The update follows yesterday’s news that OpenAI removed all promotional materials related to its $6.5 billion acquisition of io, complying with a court order tied to a trademark lawsuit filed by iyO, a Google-backed startup developing custom-molded earpieces.

The documents, submitted as part of the case, offer a rare look at the companies’ research and early-stage plans. OpenAI denies the allegations and is contesting the case.

Device May Not Be a Headphone or Wearable

Legal filings from OpenAI and io show that the companies spent the past year researching in-ear hardware, purchasing more than 30 sets of headphones to study the market. Internal emails also reveal that executives from both companies met with iyO to test its custom earpiece technology.

Despite that interest, the product now in development appears to be something else entirely. Tang Tan, io’s chief hardware officer and a longtime Apple executive, stated in a court declaration that the prototype referenced in the company’s launch video “is not an in-ear device, nor a wearable device.” He noted the design remains unfinished and won’t be available for sale or promotion for at least another year.

The physical design remains largely unknown. In the company’s launch video, Sam Altman said they were developing a “family” of AI devices with different capabilities, while Jony Ive described the first prototype as something that “completely captured” his imagination.

Altman had previously described the device as a “third device,” one meant to complement smartphones and laptops. In an internal meeting reported by The Wall Street Journal, Altman told OpenAI staff the hardware would be pocket-sized or sit on a desk and would be fully aware of a user’s surroundings.

“Our intent with this collaboration was, and is, to create products that go beyond traditional products and interfaces,” Altman said in a June 12 court filing.

OpenAI’s lawyers added that the company has evaluated multiple device formats, including desktop-based, mobile, wireless, wired, wearable, and portable designs.

Behind the Meeting With Iyo

According to case documents, OpenAI and io showed early interest in iyO’s technology. In May, OpenAI VP of Product Peter Welinder and io’s Tang Tan met with iyO CEO Jason Rugolo at io’s Jackson Square office in San Francisco. During the meeting, they tested iyO’s in-ear device, but according to follow-up emails, the demonstration failed to meet expectations.

Tan said he agreed to the meeting as a favor to a former mentor—Apple veteran Steve Zadesky—and claimed he took precautions to avoid exposure to proprietary information, including asking his lawyers to review materials before he did. He also said that after evaluating iyO’s offering, he declined multiple proposals from Rugolo, including a $200 million acquisition offer and a potential developer-kit partnership.

Additional emails suggest io staff considered insights from iyO’s ecosystem. Marwan Rammah, a former Apple engineer now at io, suggested buying a 3D ear scan database from iyO’s partner, The Ear Project, to better understand ergonomic design. It remains unclear if any transaction occurred.

Despite the interactions, io co-founder and Chief Product Officer Evans Hankey stated in a declaration that the company is not working on a custom-molded earpiece.

What This Means

The court filings offer the clearest window yet into OpenAI and io’s early-stage hardware plans—and reveal just how uncertain and unfinalized those plans still are. What began as speculation about AI-powered earbuds now appears to be something different altogether. And while the device remains more than a year from market, the legal dispute has already forced OpenAI to remove public-facing content and defend its intent in court.

That matters. For a company as secretive and brand-sensitive as OpenAI, being compelled to explain its product direction under oath is unusual—and telling. The filings suggest the company is still actively exploring different form factors, and that its prototype isn’t as far along as public hype may have suggested. Whether this is strategic secrecy or necessary backtracking isn’t yet clear, but the company’s tone in the filings is notably cautious.

More broadly, this legal conflict underscores how competitive and legally risky the AI hardware race has become. Companies like OpenAI, Apple, Meta, and Google are not only competing to define the next interface—but are also moving into one another’s hardware turf. That overlap is likely to trigger more intellectual property disputes as startups and tech giants alike fight for design and market share.

For now, the filings show that OpenAI’s vision for a mass-market AI device is still evolving. And though the legal fight may slow down public rollout, it’s also offering the public an unusual look at how one of the most influential AI firms is thinking about the future of human-computer interaction.

This glimpse into OpenAI’s hardware strategy suggests its first AI device won’t be worn—it will be something altogether new.

Editor’s Note: This article was created by Alicia Shapiro, CMO of AiNews.com, with writing, image, and idea-generation support from ChatGPT, an AI assistant. However, the final perspective and editorial choices are solely Alicia Shapiro’s. Special thanks to ChatGPT for assistance with research and editorial support in crafting this article.