Musk’s Claim against OpenAI May go to Trial In Part, Judge Says

Musk takes legal action against to obstruct OpenAI’s conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit relocation needed for capital

Nonprofit to for-profit conversion uncommon, expert says

(Adds judge did not decide whether to release the injunction in paragraph 5, OpenAi’s legal representatives’ comment in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) – A federal judge said on Tuesday that parts of Elon Musk’s claim against OpenAI to stop its conversion to a for-profit entity may go to trial, adding that the Tesla CEO will have to appear in court and testify.

“Something is going to trial in this case,” U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

“(Elon Musk will) sit on the stand, present it to a jury, and a jury will decide who is right.” Rogers was considering Musk’s recent ask for a preliminary injunction to block OpenAI’s conversion before going to trial, the current relocation in a grudge match between the world’s richest individual and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not choose whether to provide the injunction Tuesday, however at one point recommended that Musk’s legal team had actually not presented adequate proof for her to provide the injunction, and suggested she may hold an evidentiary hearing, where both sides might present and proof. The last time Rogers offered an initial injunction remained in Epic Games’ case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, however left before the company took off and consequently founded the contending AI start-up xAI in 2023. OpenAI is now trying to transition from a nonprofit into a for-profit entity, which it says it needs to do to secure the capital required to develop the finest expert system models. Last year, Musk submitted a claim against OpenAI and Altman, stating that OpenAI ´ s founders initially approached him to money a nonprofit focused on establishing AI to benefit humanity, but that it is now focused on earning money. He later broadened the claim to include federal antitrust and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In reaction to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims which Musk “must be competing in the market rather than the courtroom.” The stakes on OpenAI’s corporate transition have now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and gratisafhalen.be a brand-new round of as much as $25 billion under conversation with SoftBank are conditioned on the business restructuring to remove the nonprofit ´ s control.

During the hearing, OpenAI’s lawyers said the factor to permit OpenAI to become a for-profit entity is because it would be essential to assist in the mission of the nonprofit.

Such a restructuring would be highly unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care companies like healthcare facilities, not endeavor capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)