Elon Musk legal challenge to OpenAI’s for-profit conversion advances to trial

The U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California signaled that Elon Musk’s high-profile lawsuit will proceed to a jury trial regarding allegations that ChatGPT maker OpenAI has breached its founding mission by reorganizing as a for-profit entity.

Tesla CEO was a founder of OpenAI in 2015 but left in 2018; he now runs an AI company(xAI) that competes with it.

According to the judge there was plenty of evidence suggesting that OpenAI’s leaders made assurances that its original non-profit structure was going to be maintained.

The judge said that there were conflicting claims that should be considered by a jury at a trial scheduled for March, rather than a decision by her. She added that she would issue a written order addressing OpenAI’s bid to throw out the case.

OpenAI in a statement after the hearing said,“ Mr Musk’s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial.”

In response, Steven Molo, a lead trial attorney for Musk and xAI said after the hearing: "We look forward to presenting all the evidence of the defendant's wrongdoing to the jury.”

While Musk asserted that he contributed about $38 million, roughly 60% of OpenAI’s early funding, along with competent oversight, he now claims that OpenAI betrayed those assurances by becoming a for-profit entity.

According to Reuters, Microsoft-which is also a defendant- urged Judge Gonzalez Rogers to toss Musk’s claims against it. A lawyer for Microsoft said there was no evidence that the company “aided and abetted” OpenAI.

In contrast, lawyers for OpenAI at the hearing asked Gonzalez Rogers to rule against Musk, asserting a lack of factual support to sustain his allegations, including fraud and breach of contract.

The judge's decision represents a significant victory for Musk, and it ensures that both parties will be required to testify under oath in open court.

Additionally, OpenAI argues that Musk failed to file his claims in a timely manner. The jury will now be asked to decide whether any exceptions apply or if the lawsuit was filed after the statute of limitations had already expired.