California Federal Judge Dismisses Elon Musk's xAI Lawsuit Against OpenAI
A federal judge in California has dismissed a lawsuit filed by Elon Musk's artificial intelligence company xAI against ChatGPT-maker OpenAI. The decision, reported by Reuters, represents a significant legal setback for Musk in his ongoing battle with the AI research organization he helped establish.
Judge Finds No Evidence of OpenAI Misconduct
U.S. District Judge Rita Lin ruled that xAI failed to allege that OpenAI, led by CEO Sam Altman, committed any misconduct. The lawsuit, originally filed in September 2025, claimed that former xAI employees who joined OpenAI took source code related to the Grok chatbot and other confidential information with them when they changed employers.
In her dismissal order, Judge Lin stated: "Notably absent are allegations about the conduct of OpenAI itself. xAI does not allege any facts indicating that OpenAI induced xAI's former employees to steal xAI's trade secrets or that these former xAI employees used any stolen trade secrets once employed by OpenAI."
The judge further explained: "While xAI may state misappropriation claims against a couple of its former employees, it does not state a plausible misappropriation claim against OpenAI, which is the sole defendant in this case. Accordingly, and for the reasons set forth below, OpenAI's motion to dismiss is GRANTED WITH LEAVE TO AMEND."
OpenAI Welcomes Court Decision
OpenAI responded to the dismissal with a post on X (formerly Twitter), stating: "We welcome the court's decision. This baseless lawsuit was never anything more than yet another front in Mr. Musk's ongoing campaign of harassment."
The AI company also shared a link to what it describes as "The truth about Elon Musk and OpenAI," which it claims "presents the facts." The page asserts: "Elon is trying everything he can to slow down OpenAI for his personal benefit. Here, we present the facts."
Broader Legal Battle Between Musk and OpenAI
This dismissed lawsuit represents just one aspect of a broader legal conflict between Elon Musk and OpenAI, which he co-founded in 2015. Musk has separately filed a lawsuit challenging OpenAI's conversion to a for-profit company structure.
In that separate case, the Tesla CEO is seeking $134.5 billion in damages from both OpenAI and Microsoft. Jury selection for that significant lawsuit is scheduled for April 27, 2026, indicating that the legal tensions between Musk and his former organization will continue for the foreseeable future.
Despite the dismissal of the xAI lawsuit, Judge Lin's ruling allows xAI to refile the case with amended claims. This leaves open the possibility that Musk's company could pursue legal action against OpenAI again if they can present stronger evidence of misconduct.
The legal developments highlight the increasingly competitive landscape of artificial intelligence development, where talent acquisition and intellectual property protection have become critical battlegrounds between leading AI companies.
