US judge dismisses Musk’s xAI trade secret lawsuit against OpenAI

A United States federal judge has dismissed a lawsuit by Elon Musk’s artificial intelligence company xAI that accused rival Sam Altman’s OpenAI of stealing trade secrets for chatbots.

US District Judge Rita Lin in San Francisco said on Monday that 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 last September focused on broader alleged misappropriation of confidential information, including source code, by xAI employees who 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 Musk, the world’s richest person, in his $150bn 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.

Lawyers for xAI did not immediately respond to requests for comment. OpenAI and its lawyers did not immediately respond to similar requests.

Discussing past work

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.