US Judge Dismisses Elon Musk's xAI Trade Secret Lawsuit Against OpenAI

A federal judge has dismissed a lawsuit filed by Elon Musk’s artificial intelligence company xAI accusing rival OpenAI of stealing trade secrets related to chatbot development.

US District Judge Rita Lin in San Francisco ruled that xAI had failed to demonstrate that OpenAI induced former xAI senior engineer Xuechen Li to disclose confidential information about its Grok chatbot, or that OpenAI staff knew he might have done so.

The judge dismissed the case with prejudice, stating that further proceedings would be “futile”. She had previously dismissed an earlier version of the complaint in February. The lawsuit, initially filed in September, alleged broader misappropriation of confidential material, including source code, following the departure of xAI employees to OpenAI.

The ruling marks Musk’s second legal setback against OpenAI within a month. On May 18, a federal jury rejected his $150 billion lawsuit, in which he accused OpenAI and its chief executive Sam Altman of “stealing a charity” by abandoning the company’s original non-profit mission to enrich themselves.

xAI operates under Musk’s wider technology portfolio, which includes SpaceX (SPCX.O). Neither xAI nor its legal representatives immediately responded to requests for comment.

OpenAI, however, welcomed the decision, saying the lawsuit was “never anything more than yet another front in Mr Musk’s ongoing campaign of harassment.” The company had made similar remarks following the February dismissal.

The amended complaint focused on a presentation delivered by Mr Li during OpenAI’s recruitment process. xAI alleged that OpenAI sought insights linked to the planned July 2025 release of Grok 4, claiming the company was aware its forthcoming ChatGPT upgrade “could not compete” on advanced reasoning and was lagging in reinforcement learning and post-training techniques understood by Mr Li.

However, Judge Lin ruled that discussing previous work during job interviews is routine and does not, on its own, suggest any solicitation of confidential information.

“To hold otherwise would potentially expose employers to liability any time they inquire about a candidate’s past work,” she wrote.

OpenAI has maintained that Mr Li never worked for the company and that it did not obtain any xAI trade secrets. In its motion to dismiss, OpenAI’s lawyers said: “OpenAI does not need or want anyone’s trade secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent.”

Mr Li is also facing a separate lawsuit from xAI and has denied any wrongdoing.

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