Judge throws out xAI trade secrets case against OpenAI
A San Francisco federal judge found xAI had not shown OpenAI induced a former engineer to disclose confidential Grok-related information.
By Sofia Marchetti · World Affairs Correspondent
3 min read
A federal judge in San Francisco dismissed Elon Musk’s xAI lawsuit accusing OpenAI of taking trade secrets tied to chatbot technology, Reuters reported. The ruling ends, for now, one of several legal fights between Musk and the company led by Sam Altman.
US District Judge Rita Lin ruled Monday that xAI had not shown OpenAI encouraged former xAI senior engineer Xuechen Li to share confidential material about Grok, Reuters reported. Lin also said xAI had not shown OpenAI engineers knew Li might have disclosed protected information.
Lin dismissed the case with prejudice, meaning xAI cannot file the same claims again in that court. According to Reuters, the judge said allowing the case to continue would be “futile.”
The decision followed an earlier dismissal of the case in February. Reuters reported that xAI first sued in September, alleging broader misuse of confidential information, including source code, by employees who left xAI for OpenAI.
Recruiting presentation at issue
The amended complaint centered on a presentation Li gave while OpenAI was recruiting him, according to Reuters. xAI alleged OpenAI sought confidential details connected to the July 2025 release of Grok 4.
Musk’s company also claimed OpenAI wanted the information because its coming ChatGPT update “could not compete” on complex reasoning and because OpenAI was behind in reinforcement learning and post-training methods Li understood, Reuters reported.
Lin rejected the inference that OpenAI’s recruiting questions amounted to improper conduct. Reuters reported that the judge described questions about a job candidate’s previous work as common in hiring.
“To hold otherwise would potentially expose employers to liability any time they inquire about a candidate’s past work,” Lin wrote, according to Reuters.
OpenAI has said Li never worked for the company and that it did not obtain xAI trade secrets, Reuters reported. Lawyers for OpenAI, in seeking dismissal, wrote that the company “does not need or want anyone’s trade secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent.”
Li is facing a separate lawsuit from xAI and has denied wrongdoing, according to Reuters.
Another courtroom setback for Musk
Monday’s ruling marked Musk’s second legal defeat against OpenAI in four weeks, Reuters reported. On May 18, a federal jury ruled against Musk in a $150bn lawsuit accusing OpenAI and Altman of betraying the organization’s original nonprofit mission to enrich themselves.
Reuters identified Musk as the world’s richest person. The news agency also reported that xAI is part of Musk’s rocket, satellite and artificial intelligence company SpaceX.
Lawyers for xAI did not immediately respond to requests for comment, Reuters reported. OpenAI and its lawyers also did not immediately respond to requests for comment.
This story draws on original reporting from Al Jazeera.