US judge dismisses Musk's xAI trade secret lawsuit against OpenAI (updated)

Space Exploration Technologies

Mon 18:45

No proof OpenAI induced former xAI engineer to divulge secrets
Judge dismisses lawsuit with prejudice, saying amendment would be futile
Musk's second legal loss against OpenAI in four weeks
Lawyers for xAI not available for comment
Adds OpenAI statement, additional requests for xAI comment, paragraphs 7-8
By Jonathan Stempel

    June 15 (Reuters) - A federal judge dismissed a lawsuit on Monday by Elon Musk's artificial intelligence company xAI that accused rival Sam Altman's OpenAI of stealing trade secrets for chatbots.
U.S. District Judge Rita Lin in San Francisco said xAI failed to show that OpenAI induced former xAI senior engineer Xuechen Li to divulge confidential information related to its Grok chatbot, or that OpenAI engineers knew Li might have disclosed any.
Lin dismissed the lawsuit with prejudice, saying it would be "futile" to continue. She dismissed an earlier version in February. The lawsuit originally filed in September focused on broader alleged misappropriation of confidential information, including source code, when xAI employees left for jobs at OpenAI.
Monday's decision is Musk's second legal loss against OpenAI in four weeks.
On May 18, a federal jury ruled against the world's richest person in his $150 billion lawsuit accusing OpenAI and Altman of "stealing a charity" by betraying the company's original mission as a nonprofit to enrich themselves.
The xAI business is part of Musk's rocket, satellite and AI company SpaceX SPCX.O.

    Neither xAI nor its lawyers immediately responded to requests for comment.
  

    OpenAI said on Monday: "This baseless lawsuit was never anything more than yet another front in Mr. Musk's ongoing campaign of harassment." It made the same statement after February's dismissal.
  
     
TALKING ABOUT PAST WORK IS ROUTINE
The amended complaint focused on a presentation that Li gave while OpenAI was recruiting him.
Musk's company said OpenAI wanted secrets related to the July 2025 release of Grok 4, knowing its forthcoming update to ChatGPT "could not compete" on complex reasoning, and because OpenAI was "lagging" in reinforcement learning and post training techniques that Li understood.
But the judge said asking job candidates to discuss their prior work was routine, and one could not infer that OpenAI pushed Li to leak anything confidential.
"To hold otherwise would potentially expose employers to liability any time they inquire about a candidate’s past work," Lin wrote.
OpenAI has said Li never worked for the company and that it never acquired xAI secrets.
In seeking dismissal, lawyers for OpenAI wrote: "OpenAI does not need or want anyone’s trade secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent."
Li is being sued separately by xAI and has denied wrongdoing.

 (Reporting by Jonathan Stempel in New York; Editing by Mark Porter, Sanjeev Miglani and Cynthia Osterman)
 ((jon.stempel@thomsonreuters.com ; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net /))