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

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

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move required for capital

Nonprofit to for-profit conversion rare, specialist says

(Adds judge did not decide whether to provide the injunction in paragraph 5, OpenAi’s attorneys’ 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 halt its conversion to a for-profit entity may go to trial, adding that the Tesla CEO will need to appear in court and .

“Something is going to trial in this case,” U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, wiki.dulovic.tech 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 thinking about Musk’s recent demand for a preliminary injunction to block OpenAI’s conversion before going to trial, the most recent move in a grudge match in between the world’s richest individual and OpenAI CEO Sam Altman that is playing out openly in court.

Rogers did not choose whether to release the injunction Tuesday, however at one point recommended that Musk’s legal group had not provided sufficient evidence for her to release the injunction, and indicated she may hold an evidentiary hearing, where both sides might provide witnesses and proof. The last time Rogers provided a preliminary injunction remained in Epic Games’ case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, however left before the business took off and consequently established the competing AI start-up xAI in 2023. OpenAI is now attempting to shift from a not-for-profit into a for-profit entity, which it says it requires to do to protect the capital required to develop the very best expert system designs. Last year, Musk submitted a claim against OpenAI and Altman, stating that OpenAI ´ s creators originally approached him to money a not-for-profit concentrated on developing AI to benefit mankind, but that it is now focused on generating income. He later on expanded 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 response to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims which Musk “must be contending in the market rather than the courtroom.” The stakes on OpenAI’s business transition have actually now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of as much as $25 billion under conversation with SoftBank are conditioned on the company restructuring to get rid of the not-for-profit ´ s manage.

During the hearing, OpenAI’s legal representatives said the factor to enable OpenAI to become a for-profit entity is since it would be needed to assist in the mission of the nonprofit.

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