In a dispute hinging on a single letter, the Ninth Circuit refused Wednesday to lift an injunction that bars OpenAI from using the "IO" trademark in certain contexts tied to its acquisition of competitor IO Products — a ruling that deepens a high-stakes branding battle in the fast-evolving AI market.

Trademark Clash Over Nearly Identical AI Brands

In a six-page unpublished order, the appellate panel upheld U.S. District Judge Trina L. Thompson’s decision granting IYO Inc. temporary protection under the Lanham Act. IYO argues that OpenAI — and CEO Sam Altman personally — knew of its “IYO” mark before announcing plans to acquire IO in May for $6.5 billion, then moved forward in a way that immediately destabilized IYO’s business.

The plaintiff claims OpenAI intends to launch a product “eerily similar” to its own, warning that the market confusion triggered by the acquisition announcement has already harmed its ability to secure contracts and investment.

Competing Products With the Same Goal: Hands-Free Computing

IYO says its flagship product — the IYO ONE — is an ear-based device enabling users to interact with digital systems without screens or keyboards. IO, according to correspondence cited in court, plans to create a similar interface-free product enabling users to engage with artificial intelligence, smartphones, or the internet through more natural, non-physical inputs.

Judge Thompson concluded that OpenAI’s use of the “IO” mark could “swamp the reputation” of IYO’s brand — a finding the Ninth Circuit agreed was supported by the record.

Appellate Panel: Only One Letter Apart, Identical Pronunciation

The Ninth Circuit said the district court was correct to determine IYO showed a likelihood of consumer confusion, noting the companies’ marks “only differ by one letter and are pronounced identically.” The similarities in their AI-driven, computer-replacing product lines also weighed heavily in IYO’s favor.

The ruling arrives just weeks after oral arguments in which OpenAI sought to overturn the temporary restraining order. OpenAI’s attorneys insisted IYO had no evidence of irreparable harm and argued that speculation about a future “io” product — mentioned once by Altman in email correspondence — was insufficient grounds for emergency relief.

Panel Finds Evidence of Harm, Despite OpenAI’s Pushback

But on Wednesday, the panel said IYO had provided adequate proof of imminent harm, pointing to declarations from its CEO and investors suggesting the IO acquisition immediately disrupted fundraising efforts.

Crucially, the court emphasized that the TRO is narrow: it prohibits use of the “IO” mark only in the marketing or sale of products closely resembling IYO’s AI-focused “audio computer.” It does not ban all uses of the term “IO.”

“The TRO would not encompass using the ‘IO’ mark in connection with unrelated products,” the court concluded.

Next Steps in a High-Profile AI Branding War

Representatives for neither party responded to requests for comment Wednesday.

U.S. Circuit Judges Sidney R. Thomas, Daniel Bress and Salvador Mendoza Jr. served on the appellate panel.