A legal challenge raised by Elon Musk’s AI venture may soon face a major setback after a US court indicated that the claims do not appear strong enough to proceed.
Elon Musk-led xAI’s lawsuit against OpenAI could be dismissed after a federal judge signalled her “tentative view” in favour of OpenAI’s request. xAI had accused OpenAI of unfair competition and of stealing trade secrets linked to the Grok chatbot by hiring its former employees.
According to a news agency report, US District Judge Rita Lin has indicated that she may grant OpenAI’s motion to dismiss the case, subject to oral arguments scheduled for 03 February. The judge also noted that xAI may be allowed to amend its complaint if the case is dismissed.
xAI filed the lawsuit in September last year, alleging that OpenAI ran a coordinated campaign against it by targeting its staff and using them to obtain confidential information. OpenAI responded by saying the lawsuit was a “campaign to harass a competitor with unfounded legal claims” and argued that xAI’s chatbot could not compete with ChatGPT.
In a 4-page filing, Judge Lin said xAI did not plausibly show that OpenAI acquired or encouraged the theft of trade secrets. This was despite claims that some former xAI employees downloaded Grok source code before leaving the company.
She added that it was not reasonable to infer from xAI’s complaint that OpenAI used xAI’s trade secrets or that former xAI employees used such information after joining OpenAI.
The judge also dismissed the unfair competition claim. She stated that the startup’s poaching charges “all focus on poaching in service of acquiring xAI’s trade secrets and do not identify any other reason why the hiring of those employees was anticompetitive.”
What xAI alleged
“OpenAI is not merely soliciting or hiring a competitor’s employees. OpenAI is waging a coordinated, unfair, and unlawful campaign,” xAI said in its lawsuit.
The company further claimed that OpenAI “is targeting those individuals with knowledge of xAI’s key technologies and business plans—including xAI’s source code and its operational advantages in launching data centers—then inducing those employees to breach their confidentiality and other obligations to xAI through unlawful means.”
Before filing the case against OpenAI, xAI had also sued its former engineer Xuechen Li for allegedly stealing trade secrets related to Grok AI and taking them to the ChatGPT maker.
Separately, Musk has sued OpenAI for shifting away from its original mission in favour of profit. He is also seeking around $134.5 billion in damages from OpenAI and Microsoft in the same case.
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