9th Circuit backs iyO in trademark fight with OpenAI over IO name

A federal appellate panel has upheld a temporary restraining order against OpenAI and its founder, Sam Altman -- as well as IO Products, Inc. and its founder Jony Ive - preventing them from using the name "IO" to market similar artificial intelligence hardware to that of competitor iyO Inc.

iyO claims the defendants infringed their trademark on a voice controlled "audio computer" headset, as well as their name, years after a meeting in 2022 when they allegedly discussed the technology with the defendants.

Northern District Judge Trina L. Thompson granted the temporary restraining order in June. The next stage is a preliminary injunction hearing in April 2026.

"We're thrilled that the court affirmed Judge Thompson's ruling and agreed that the temporary restraining order was properly granted," said iyO attorney Andrew Skale of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.

The three-judge 9th U.S. Circuit Court of Appeal panel rejected the defendants' arguments: that a temporary restraining order was not necessary as the case was not ripe and that iyO had failed to show a likelihood of consumer confusion.

Attorney for the defendants, Margret Mary Caruso of Quinn Emmanuel Urquhart & Sullivan LLP, was contacted for comment but did not respond by press time.

The judges, in an unpublished memorandum, affirmed that iyO demonstrated "irreparable harm" warranting preliminary relief.

When asked which part of the ruling gave most strength to his legal argument, Skale said, "The 9th Circuit recognized the district court did not err in its assessment of the likelihood of confusion factors. Now both the district court and appellate court have agreed IYO is likely to succeed in showing there is likelihood of confusion here."

OpenAI acquired Ive's IO Products in May for $6.5 billion, according to Cooley LLP, which advised on the deal. IYO, Inc. v. IO Products, Inc. et al. 25-4028 (9th Cal. App. filed Jun. 26, 2025).

An emailed statement from OpenAI said Thursday, "We respect the court's decision and will continue to comply with the temporary restraining order, even as we disagree with the underlying claims."

Jason Rugolo, CEO of iyO, said in a press release on the decision, "Today's ruling is a victory not just for iyO, but for every startup that refuses to be bullied by industry giants. They didn't just borrow our vision; they attempted to steal our name. When we stood up for our rights, they tried to bury us in legal fees and baseless appeals, hoping to bleed us dry before we could have our day in court."

Circuit Judges Sidney R. Thomas, Daniel A. Bress and Salvador Mendoza Jr. wrote in the memorandum, "Although the specifics of IO's product have not been released, IO's product, as the district court found, (1) already has a working prototype, (2) will compete with IYO's product, (3) will be marketed in connection with the disputed mark, and (4) will be released in at least a year."

The panel held that the district court's temporary restraining order functioned as a preliminary injunction because it followed a contested "adversarial hearing" and extended well beyond the 14-day limit for temporary restraining orders.

OpenAI and IO Products argued the case should be dismissed as premature because their IO-branded device has not yet launched and will not reach consumers for at least a year. However, the court found the alleged infringement was either already occurring or "sufficiently imminent."

The panel pointed to an announcement video released in May, which defendants created to generate anticipation for IO's first product and may constitute infringing advertising under the Lanham Act. The district court had also found that IO already had a working prototype and intended to market the device using the disputed IO term.

The court noted that "IO" and "IYO" differ by only one letter and are pronounced exactly the same, a similarity compared to the "perfect similarity of sound" between "Dreamworks" and "Dreamwerks" in a prior 9th Circuit case.

"The companies' goods are also related, as both companies describe their products as replacing traditional computers and providing a more natural way to interact with artificial intelligence," the memorandum said.

According to the panel, IO produced correspondence showing it was "competitive" with iyO's device. The court added that iyO's mark was conceptually strong, while OpenAI's commercial strength increased the risk of "reverse confusion" -- a scenario in which consumers mistakenly believe the smaller senior trademark holder is affiliated with the better-known junior user.

iyO's attorneys told the court that the IO Product's high-profile launch jeopardized the startup's fundraising efforts, the memo said. The panel agreed that such a loss of control over brand reputation constituted irreparable harm, especially because trademark plaintiffs are entitled to a presumption of harm once they show likely infringement.

The judges also noted that the order does not bar all use of the IO name. Instead, it narrowly restricts defendants from using "IO" in connection with products related to iyO's AI-based device.

In a recent district court ruling during the appeal, a judge denied iyO's contempt motion, clarifying that the temporary restraining order leaves unrelated uses of the IO term untouched.

james_twomey@dailyjournal.com