The legal battle between Elon Musk and Sam Altman on the AI field has reached a major turning point. A federal judge in California dismissed a lawsuit filed by Musk’s AI startup, xAI, which accused OpenAI of stealing AI trade secrets and poaching talent. The creators of ChatGPT have clearly won this first round of the legal battle, although the legal battle is far from over.
US District Judge Rita F. Lin, presiding over the case in San Francisco, noted a critical flaw in xAI’s argument. Basically, the plaintiff lacked evidence connecting OpenAI to any actual wrongdoing. According to court documents reported by Reuters, the lawsuit primarily focused on the actions of eight former xAI employees who moved to OpenAI. However, the judge pointed out that xAI failed to show that OpenAI itself directed or encouraged these individuals to steal confidential information.
OpenAI wins dismissal of xAI trade secrets lawsuit
The lawsuit claimed that some employees took source code related to the Grok chatbot. xAI also alleged that these employees retained private work chats on their personal devices after leaving Musk’s company. One specific allegation mentioned an employee who unsuccessfully tried to access data center optimization info after joining OpenAI.
Despite these claims, Judge Lin was firm. “notably absent are allegations about the conduct of OpenAI itself,” she said Essentially, the court found that just because employees moved from one company to another at the same time, it doesn’t mean their new employer conspired to steal secrets. There was also no evidence provided that any alleged stolen data was ever actually used by OpenAI.
What’s next?
This dismissal isn’t the end of the road for xAI. The judge granted the company “leave to amend,” which means they have until March 17, 2026, to refile a modified version of the lawsuit with more specific evidence.
In a statement on X (formerly Twitter), OpenAI welcomed the decision. The company described the legal action as “baseless” and a part of Musk’s “ongoing campaign of harassment.” On the other side, Musk is simultaneously pursuing a massive multi-billion dollar lawsuit against OpenAI over its shift from a non-profit to a for-profit entity. The jury trial for this case is expected to begin this April.
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