US judge dismisses Musks xAI trade secret lawsuit against OpenAI

June 15 – A federal judge on Monday dismissed a lawsuit filed by Elon Musk’s artificial intelligence company xAI accusing rival Sam Altman’s OpenAI of stealing trade secrets for its chatbots.

U.S. District Judge Rita Lin in San Francisco said xAI failed to show that OpenAI encouraged former xAI senior engineer Xuechen Li to disclose confidential information about the Grok chatbot or that OpenAI engineers knew Li might have disclosed any information.

Lin dismissed the case with prejudice, saying it would be “futile” to continue. He rejected an earlier version in February. The lawsuit, first filed in September, focused on allegations of broader misuse of confidential information, including source code, as xAI employees left for their jobs at OpenAI.

Monday’s decision was 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 charity” by betraying the company’s original mission to enrich themselves as a nonprofit organization.

The xAI business is part of SpaceX, Musk’s rocket, satellite and artificial intelligence company.

Neither xAI nor its lawyers immediately responded to requests for comment.

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

TALKING ABOUT PAST DEEDS IS ROUTINE

The amended complaint focused on a presentation Li made while recruiting OpenAI.

Musk’s company said it knew OpenAI wanted secrets about the July 2025 release of Grok 4, that the upcoming update to ChatGPT “couldn’t compete” on complex reasoning, and that OpenAI was “lagging” on reinforcement learning and post-training techniques that Li understood.

But the judge said it was routine to ask job candidates to discuss their previous work, and it could not be inferred that OpenAI had pushed Li to leak anything confidential.

“To hold otherwise would potentially expose employers to liability when they obtain information about a candidate’s past employment,” Lin wrote.

OpenAI said Li never worked for the company and never obtained xAI secrets.

“OpenAI does not need or want anyone’s trade secrets, especially from xAI, which has failed in the market and is bleeding talent,” OpenAI lawyers wrote in filing for dismissal.

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

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