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.
Second Loss For Elon Musk
Monday’s decision is 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 SPCX.O.
Neither xAI nor its lawyers immediately responded to requests for comment.
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.
What Is Elon Musk’s Lawsuit Against OpenAI?
The amended complaint focused on a presentation that Li gave while OpenAI was recruiting him.
Musk’s 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.
“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.
(With inputs from Reuters)
Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
