US judge dismisses Musk's xAI trade secret lawsuit against OpenAI

A federal judge ‌dismissed a lawsuit on Monday by Elon Musk’s artificial intelligence company xAI that accused rival Sam Altman’s OpenAI of stealing trade secrets for chatbots.

U.S. District Judge Rita Lin in San Francisco said xAI failed to show that OpenAI induced former xAI ​senior engineer Xuechen Li to divulge confidential information related to its Grok chatbot, or that ​OpenAI engineers knew Li might have disclosed any.

Lin dismissed the lawsuit with prejudice, saying ⁠it would be “futile” to continue. She dismissed an earlier version in February. The lawsuit originally filed in September ​focused on broader alleged misappropriation of confidential information, including source code, when xAI employees left for jobs at ​OpenAI.

Monday’s decision is Elon Musk’s second legal loss against OpenAI in four weeks.

On May 18, a federal jury ruled against the world’s richest person in his $150 billion lawsuit accusing OpenAI and Altman of “stealing a charity” by betraying the company’s original mission ​as a nonprofit to enrich themselves.

The xAI business is part of Musk’s rocket, satellite and AI company SpaceX. Neither ​xAI nor its lawyers immediately responded to requests for comment.

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OpenAI said on Monday: “This baseless lawsuit was never anything more ‌than yet ⁠another front in Mr. Musk’s ongoing campaign of harassment.” It made the same statement after February’s dismissal.

TALKING ABOUT PAST WORK IS ROUTINE

The amended complaint focused on a presentation that Li gave while OpenAI was recruiting him.

Elon Musk company said OpenAI wanted secrets related to the July 2025 release of Grok 4, knowing ​its forthcoming update to ChatGPT “could ​not compete” on complex ⁠reasoning, and because OpenAI was “lagging” in reinforcement learning and post training techniques that Li understood.

But the judge said asking job candidates to discuss their prior ​work was routine, and one could not infer that OpenAI pushed Li to ​leak anything ⁠confidential.
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“To hold otherwise would potentially expose employers to liability any time they inquire about a candidate’s past work,” Lin wrote.

OpenAI has said Li never worked for the company and that it never acquired xAI secrets.

In seeking ⁠dismissal, lawyers ​for OpenAI wrote: “OpenAI does not need or want anyone’s trade ​secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent.”

Li is being sued separately by xAI and ​has denied wrongdoing.