A major US federal appeals court has delivered a significant setback to OpenAI and former Apple design chief Jony Ive's ambitious $6.5 billion artificial intelligence hardware venture. The court has barred them from using the name "io" for their upcoming AI device, siding with a smaller, Google-backed startup.
Court Upholds Ban, Cites Consumer Confusion
The Ninth Circuit Court of Appeals has upheld a temporary order preventing the tech giants from marketing products under the io brand. This decision came after iyO, an AI audio startup, argued that the names "IO" and "iyO" are phonetically identical and would confuse customers. Both companies are developing AI-powered hardware that uses natural language interaction.
The court agreed that consumers could easily mix up the two brands. Judges were particularly concerned about "reverse confusion," a scenario where a massive company like OpenAI could flood the market and make the public believe the original, smaller brand (iyO) is the imitator.
A Legal Saga With Roots in 2023
The trademark dispute began in June when iyO filed a lawsuit against OpenAI. This happened shortly after OpenAI announced it had acquired Jony Ive's hardware design firm. Court records show that Ive and OpenAI CEO Sam Altman selected the "io" name in mid-2023. However, iyO had secured the trademark for its name two years prior, in 2021.
The case took a dramatic turn with revelations about a failed business proposal. In early 2025, iyO's CEO, Jason Rugolo, approached Sam Altman seeking investment for a project on the future of human-computer interfaces. Altman declined, stating he was working on "something competitive." Later, Altman also rejected Rugolo's offer to sell iyO to OpenAI for $200 million.
Long Road Ahead and Launch Plans
OpenAI tried to argue that its first product would not be a wearable device like iyO's planned AI earbuds, but the court was not convinced. As a result of the ruling, OpenAI has already scrubbed the io branding from its website and removed promotional videos featuring Ive and Altman.
The legal battle is far from over. A preliminary injunction hearing is set for April 2026, and a full jury trial could stretch through 2027 and even into 2028. Despite this major hurdle, industry insiders expect OpenAI's first hardware product, now needing a new name, to launch in late 2026 or 2027 as originally planned.
This ruling highlights the intense competition and complex legal challenges emerging in the race to build the next generation of AI hardware. It serves as a cautionary tale for even the best-funded ventures about the importance of thorough trademark due diligence.
