- A U.S. federal judge dismissed Elon Musk’s xAI lawsuit against OpenAI with prejudice, ruling that xAI failed to prove the company misappropriated Grok chatbot trade secrets.
- Judge Rita Lin found no evidence that OpenAI encouraged former xAI engineer Xuechen Li to disclose confidential information during the hiring process, calling such recruitment discussions routine.
- The ruling marks Musk’s second legal defeat against OpenAI in four weeks, following a jury verdict against his separate $150 billion lawsuit over OpenAI’s shift from a nonprofit model.
A U.S. federal judge dismissed a lawsuit filed by Elon Musk’s artificial intelligence firm, xAI, alleging that Sam Altman’s OpenAI had stolen chatbot trade secrets.
According to US District Judge Rita Lin in San Francisco, xAI was unable to demonstrate that OpenAI programmers knew Xuechen Li might have revealed any private information about its Grok chatbot, or that OpenAI had coerced Li into disclosing such information. Lin declared the lawsuit to be “futile” and dismissed it with prejudice.
When xAI personnel departed for positions at OpenAI, an artificial intelligence research and technology company , the complaint, which was first filed in September, focused on more general claims of misuse of private information, including source code.
Musk’s Latest Legal Defeat Comes Amid Growing Scrutiny Of AI Companies
The artificial intelligence startup founded by billionaire entrepreneur Musk’s legal loss against OpenAI on Monday is his second in four weeks.
In his $150 billion lawsuit, the world’s richest person accused OpenAI and Altman of “stealing a charity” by abandoning the company’s initial aim as a nonprofit in order to enrich themselves. On May 18, a federal jury found against him.
The decision was made as legal and regulatory issues in the AI sector continue to grow. In addition to Musk’s disagreements with OpenAI, the commercial practices of other significant AI companies are coming under further scrutiny.
A proposed class-action complaint regarding the cost of Anthropic’s premium Claude AI membership plans was filed earlier this week in the U.S. District Court for the Northern District of California.
Anthropic faces allegations in the case of deceiving customers about the usage caps of its $100 and $200 monthly Max 5x and Max 20x plans, respectively, and of giving customers far less access than promised.
Karl Kahn, a plaintiff from Washington, D.C., filed the lawsuit, requesting class-action status for consumers who have been enrolled in Claude’s premium plans since April 2024. Anthropic chose not to address the accusations.
Moreover, the complaint asks that Anthropic’s marketing be deemed fraudulent and/or misleading. It seeks relief for affected subscribers. It has put the much-awaited Anthropic IPO under scrutiny.
OpenAI Calls xAI’s Lawsuit A ‘Campaign Of Harassment’
SpaceX, Musk’s rocket, satellite, and AI enterprise, includes the xAI division. Requests for comment were not immediately answered by xAI or its attorneys. “This baseless lawsuit was never anything more than yet another front in Mr. Musk’s ongoing campaign of harassment,” OpenAI stated on Monday.” Following the firing in February, it said the same thing. A presentation Li made during OpenAI’s hiring process was the subject of the amended lawsuit.
Judge Rita Lin Says OpenAI Did Not Induce Trade Secret Theft
Knowing that its next update to ChatGPT “could not compete” on complicated reasoning and that OpenAI was “lagging” in reinforcement learning and post-training techniques that Li knew, Musk’s business said that OpenAI sought information about the July 2025 release of Grok 4.
However, the judge stated that it was customary to question job applicants about their previous work and that it was impossible to conclude that OpenAI coerced Li into disclosing anything private. If this were not the case, businesses might be held accountable whenever they ask a candidate about their prior employment, Lin wrote.
Li never worked for OpenAI, according to the company, and it never obtained xAI secrets. OpenAI’s attorneys claimed in their dismissal request that “OpenAI does not need or want anyone’s trade secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent.” Li has denied any misconduct and is being sued separately by xAI.
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