Musk’s xAI Lawsuit Against OpenAI Dismissed

Judge Dismisses xAI’s Trade Secret Lawsuit Against OpenAI

A federal judge has dismissed xAI’s trade secret lawsuit against OpenAI, ruling that Elon Musk’s artificial intelligence company failed to demonstrate that the ChatGPT maker improperly obtained confidential information related to its Grok chatbot.

In an order issued Monday, U.S. District Judge Rita Lin granted OpenAI’s motion to dismiss the case without leave to amend. The judge concluded that xAI did not provide sufficient evidence that OpenAI encouraged a former xAI engineer to disclose trade secrets during the recruitment process.

“xAI insufficiently pled inducement in the prior complaint because it offered no nonconclusory allegations allowing a reasonable inference ‘that OpenAI told or encouraged’ xAI’s former employees to exfiltrate its confidential information,” the order stated.

This ruling marks the second legal setback for Musk, who co-founded OpenAI before leaving in 2018, in his ongoing dispute with OpenAI and its CEO, Sam Altman.

Last month, a federal jury rejected Musk’s $150 billion lawsuit, which alleged that OpenAI, Altman, and co-founder Greg Brockman had abandoned the organization’s original nonprofit mission by transitioning to a commercial structure and strengthening its ties with Microsoft.

The most recent lawsuit focused on a presentation given by Xuechen Li, a former xAI engineer, during his recruitment by OpenAI. xAI claimed that OpenAI targeted Li specifically because of his work on Grok 4’s reinforcement learning and post-training systems, and accused the ChatGPT developer of knowingly seeking confidential information about these efforts.

Judge Lin rejected this argument, writing that “merely asking Li to discuss his previous work—a routine part of the hiring process—does not allow a plausible inference that OpenAI induced Li to reveal anything confidential or secret about that work.” She added that accepting xAI’s theory could “potentially expose employers to liability any time they inquire about a candidate’s past work.”

The judge also found that xAI failed to prove that OpenAI knew or should have known Li disclosed trade secrets during the presentation.

“These allegations are insufficient to support a reasonable inference that OpenAI knew or should have known that Li disclosed xAI trade secrets during his presentation,” Lin wrote. “It is not clear how much detail Li shared about xAI’s reinforcement learning techniques. Similarly, while xAI does not allege that Li actually displayed the slide deck during his presentation, even assuming he did, the level of detail contained in the slides remains unclear.”

The decision comes as Musk recently became the world’s first trillionaire, following SpaceX’s record-breaking initial public offering, which valued the company at approximately $1.77 trillion and solidified its status as one of the globe’s most valuable corporations.

SpaceX (SPCX) shares continued to climb on Monday amid a broader market surge, influenced by the announcement of a ceasefire between the U.S. and Iran. The company’s stock rose nearly 20% by the close of trading, finishing the day at $192.50, which brings its valuation to over $2.5 trillion.