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A federal judge dismissed xAI’s lawsuit accusing OpenAI of poaching employees to steal trade secrets, ruling that Musk’s company failed to allege concrete misconduct by Sam Altman’s firm.
A California federal judge has dismissed a lawsuit brought by Elon Musk’s AI startup xAI accusing OpenAI of poaching employees to steal trade secrets, marking a legal setback for Musk and a win for Sam Altman’s company.
US District Judge Rita Lin granted OpenAI’s motion to dismiss, ruling that xAI failed to allege sufficient facts showing misconduct by the ChatGPT maker.
“Notably absent are allegations about the conduct of OpenAI itself,” Lin wrote. “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.”
Instead, the judge noted, xAI pointed to “eight former xAI employees who left for OpenAI at around the same time,” without detailing concrete wrongdoing.
Lin gave xAI until March 17 to file an amended complaint correcting the deficiencies identified in her order, giving Musk’s company an opportunity to revise and refile.
Part of a widening legal feud
The ruling is the latest development in an escalating battle between Musk and Altman.
Last year, xAI sued Apple and OpenAI, alleging monopolistic behavior. Musk has also separately sued Altman and OpenAI — a company the two co-founded in 2015 — over claims it abandoned its nonprofit mission by shifting to a for-profit structure. OpenAI has countersued, accusing Musk of a “years-long campaign of harassment.” That case is scheduled for trial in April.
In a post on X, OpenAI welcomed the dismissal and described the lawsuit as “yet another front in Mr. Musk’s ongoing campaign of harassment.” Lawyers for xAI did not immediately respond to requests for comment.
Allegations over trade secrets
In the now-dismissed case, xAI alleged that OpenAI engaged in a “deeply troubling pattern” of recruiting former xAI employees to gain access to confidential information related to Grok, its flagship chatbot.
An amended complaint filed last year accused OpenAI of violating California and federal law by “inducing” former employees to “steal and share xAI’s trade secrets.”
The suit claimed at least eight employees were poached in a short period, including early engineer Jimmy Fraiture and a senior finance executive.
Two former employees were said to have admitted to stealing trade secrets.
OpenAI denied the claims. In its motion to dismiss, the company argued that xAI never alleged that OpenAI actually acquired or disclosed any trade secrets.
“xAI’s federal trade secret misappropriation claim fails as a matter of law,” OpenAI’s attorneys wrote. “Remarkably, xAI never alleges that OpenAI actually acquired or disclosed xAI’s trade secrets.”
The dismissal delivers an early courtroom win for Altman, though the legal fight between the two tech leaders appears far from over.
Source: Business Insider
