Musk’s Claim against OpenAI May go to Trial In Part, Judge Says

Musk takes legal action against to obstruct OpenAI’s conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move needed for capital

Nonprofit to for-profit conversion unusual, professional states

(Adds judge did not choose whether to provide the injunction in paragraph 5, OpenAi’s lawyers’ comment in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) – A said on Tuesday that parts of Elon Musk’s claim against OpenAI to halt its conversion to a for-profit entity might go to trial, adding that the Tesla CEO will need to appear in court and testify.

„Something is going to trial in this case,“ U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

„(Elon Musk will) sit on the stand, present it to a jury, and a jury will decide who is right.“ Rogers was considering Musk’s current request for an initial injunction to obstruct OpenAI’s conversion before going to trial, the latest relocation in a grudge match between the world’s richest person and OpenAI CEO Sam Altman that is playing out openly in court.

Rogers did not choose whether or not to release the injunction Tuesday, however at one point recommended that Musk’s legal team had not presented sufficient evidence for her to provide the injunction, asteroidsathome.net and indicated she may hold an evidentiary hearing, where both sides might provide witnesses and proof. The last time Rogers provided a preliminary injunction remained in Epic Games’ case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, but left before the company took off and subsequently established the contending AI start-up xAI in 2023. OpenAI is now attempting to shift from a not-for-profit into a for-profit entity, which it says it needs to do to secure the capital required to develop the finest synthetic intelligence designs. In 2015, Musk submitted a claim against OpenAI and Altman, saying that OpenAI ´ s creators originally approached him to money a not-for-profit focused on establishing AI to benefit mankind, but that it is now concentrated on making money. He later on broadened the claim to add federal antitrust and other claims, setiathome.berkeley.edu and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In reaction to Musk ´ s claim, OpenAI has said it will move to dismiss Musk ´ s claims and that Musk „need to be contending in the marketplace instead of the courtroom.“ The stakes on OpenAI’s business shift have now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of up to $25 billion under conversation with SoftBank are conditioned on the business reorganizing to remove the nonprofit ´ s control.

During the hearing, OpenAI’s attorneys said the reason to allow OpenAI to end up being a for-profit entity is since it would be required to facilitate the mission of the not-for-profit.

Such a restructuring would be extremely unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care companies like health centers, not endeavor capital-backed business, bytes-the-dust.com she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)