A federal judge has dismissed Elon Musk's trade secrets lawsuit against OpenAI, ruling that his xAI company failed to show any misconduct by the ChatGPT maker itself.
US District Judge Rita Lin ruled Tuesday that xAI's complaint "does not point to any misconduct by OpenAI" and instead attributes all alleged wrongdoing to eight former employees who left for OpenAI around the same time.
The five-month-old lawsuit accused OpenAI of orchestrating a "coordinated, unfair, and unlawful campaign" to steal proprietary technology through targeted employee poaching. The case centered on allegations that former xAI engineers stole source code related to the Grok chatbot and data center optimization information before joining OpenAI.
One engineer, Xuechen Li, allegedly uploaded code to a personal cloud account while communicating with an OpenAI recruiter, according to court documents reviewed by Decrypt.
Judge Lin found no evidence that OpenAI induced the theft or used stolen material in its products.
"Without allegations showing OpenAI directed the transfers or used any misappropriated information,"
she wrote in her order granting dismissal with leave to amend.
xAI now has until March 17 to file an amended complaint with more specific allegations about OpenAI's conduct rather than focusing on individual ex-employees. A parallel suit against engineers who allegedly stole files continues separately.
OpenAI welcomed the decision, calling it "yet another front in Mr. Musk's ongoing campaign of harassment." The company maintains it has "no interest in trade secrets from other labs."
This trade secrets case runs alongside Musk's separate $134 billion lawsuit against OpenAI and Microsoft over the company's shift from non-profit to for-profit status. That broader legal battle dates back to March 2024 when Musk first filed claims that OpenAI violated its founding principles.
Musk co-founded OpenAI in 2015 as a not-for-profit organization but left in 2018 over disagreements about its direction. He launched competing AI startup xAI in 2023.
