Musk loses case against OpenAI

Elon Musk lost a key legal battle against OpenAI after a jury in Oakland, California, ruled his lawsuit was barred by the statute of limitations. The verdict, delivered Monday after about 90 minutes of deliberation, was advisory, but Judge Yvonne Gonzalez Rogers said she agreed with the jury’s findings. “The court now confirms the prior indication that it would accept the jury’s findings as its own,” Rogers said during court proceedings.

Musk cofounded and funded OpenAI in its early years, providing $38 million to the company. He sued CEO Sam Altman, President Greg Brockman, and OpenAI in February 2024, claiming they “stole a charity” and unjustly enriched themselves by restructuring the company to include a for-profit arm. The lawsuit threatened to disrupt OpenAI’s plans for what could be a major IPO.

“I was a fool,” Musk told the court earlier this month. “I gave them free funding to create a startup.” His legal team argued the restructuring violated the original nonprofit mission of OpenAI, but OpenAI’s attorneys countered that the company’s mission had not changed. They emphasized that OpenAI remains governed by a nonprofit foundation board and that Musk waited to file the suit until after he founded his own AI company, xAI, in 2023.

The jury found Musk was aware of the behavior outlined in the lawsuit as early as 2021. “The finding of the jury confirms that what this lawsuit was was a hypocritical attempt to sabotage a competitor,” said William Savitt, one of OpenAI’s attorneys. OpenAI’s legal team also pointed to internal documents showing Musk had previously supported creating a for-profit entity to compete with Google and had sought control over it before leaving the company in 2018.

Testimonies included Ilya Sutskever, a cofounder of OpenAI, and Shivon Zilis, a former board member and mother of four of Musk’s children. The trial included hundreds of pages of evidence, such as private emails, text messages, and Brockman’s personal diaries. Texts between Musk and Meta CEO Mark Zuckerberg discussing a potential joint bid to buy OpenAI were also presented.

Microsoft was named as a co-defendant for “aiding and abetting” the claims through its investments in OpenAI. A Microsoft spokesperson said the company welcomed the jury’s decision, calling the claims “untimely.” Musk, meanwhile, criticized Rogers in a social media post, calling her a “terrible judge” and accusing her of bias.

Musk sought to force OpenAI to abandon its current direction, but the company’s leadership argued the lawsuit was baseless. Marc Toberoff, Musk’s attorney, claimed the case was a fight for the future of artificial intelligence, though the jury did not agree.

OpenAI’s founding was influenced by Google’s early work in AI research, but the company has since carved its own path. The trial’s outcome may shape how other tech firms handle similar disputes, though the immediate focus remains on OpenAI’s next steps.

The case highlights growing tensions in the AI industry, with OpenAI facing pressure from both investors and former stakeholders. The jury’s decision underscores the challenges of balancing innovation with accountability in a rapidly evolving field.