In a recent legal development, a U.S. District Judge in Oakland, California, has turned down Elon Musk’s legal plea to halt OpenAI’s transition from a nonprofit entity to a for-profit organization. The decision was delivered by Judge Yvonne Gonzalez Rogers, who stated that Musk had not sufficiently demonstrated the likelihood of success to warrant a preliminary injunction. However, she expressed readiness to hasten proceedings, suggesting a trial could take place as early as this fall due to the potential public implications and possible legal breaches if OpenAI’s conversion proceeds.
Musk, who was an early financier of OpenAI, initiated legal action against the organization and its CEO, Sam Altman, last year. He accuses them of deviating from the nonprofit’s original mission. This legal dispute intensified last year when Musk included additional allegations and defendants, such as Microsoft. He also called for a court order to block OpenAI’s for-profit transformation. Furthermore, he listed his AI enterprise, xAI, as a plaintiff, arguing that OpenAI was unfairly restraining market competition.
In a recent strategic maneuver, Musk and a group of investors proposed a $97.4 billion unsolicited bid to acquire a controlling interest in OpenAI, a move that Judge Rogers noted undermines Musk’s claim of potential irreparable damage. OpenAI responded positively to the court’s ruling, emphasizing that the conflict centered on market rivalry. The organization contended that Musk aimed to merge a commercial version of OpenAI into Tesla for personal gain, contrary to OpenAI’s mission and U.S. interests.
Musk’s lawsuit claims OpenAI and its affiliates have breached agreements tied to his early charitable contributions to the startup. His attorney, Marc Toberoff, highlighted Musk’s role as an initial supporter, having invested approximately $45 million from the company’s inception until 2018. Toberoff was pleased with the expedited trial offer on the main claims, expressing confidence in a jury affirming that Altman knowingly accepted Musk’s donations intended for public benefit.
During a recent hearing, Judge Rogers cast doubt on Musk’s allegations of “irreparable harm,” characterizing the case as a dispute among billionaires. She questioned Musk’s decision to invest substantial amounts without formal contracts, to which Toberoff replied that the investments were based on trust and a close relationship at the time.
The controversy traces back to a 2017 internal struggle within OpenAI, which eventually led to Altman assuming the role of CEO. OpenAI’s disclosed emails suggest Musk had aspirations to lead the company but withdrew after other co-founders noted that his dual role as a significant shareholder and CEO might overly concentrate power, especially in the pursuit of advanced artificial intelligence.
Altman managed to maintain his CEO role, with a brief interruption in 2023 when he was dismissed and reinstated shortly after the board that ousted him was replaced. Judge Gonzalez Rogers, who has previously presided over notable tech cases, remarked that Musk’s case differs significantly, notably from a past legal battle between Apple and Epic Games, which was the last instance she granted a preliminary injunction prior to trial.
