OpenAI has scored a legal win against Elon Musk’s AI company, xAI, in a case involving claims of employee poaching and trade secret theft.
On Tuesday, a US district court judge granted OpenAI’s motion to dismiss the lawsuit. However, the dismissal was given with leave to amend, which means xAI can file a revised version of its complaint if it chooses.
In the ruling, Judge Rita F. Lin said that xAI failed to show any wrongdoing by OpenAI itself. Instead, the claims focused on eight former xAI employees who left the company and joined OpenAI around the same time. According to the judge, there was no indication that OpenAI directed or encouraged any improper actions during their departures.
xAI alleged that two former employees stole source code while they were in contact with an OpenAI recruiter. But the court noted there were no claims that the recruiter instructed them to take any confidential material. Other accusations included former employees keeping work chats on their devices after leaving, refusing to provide certifications about confidential information, attempting to access internal xAI data after joining OpenAI, or simply moving from one company to another. The judge concluded that none of these allegations demonstrated illegal conduct by OpenAI.
The decision is one chapter in an ongoing legal battle between OpenAI and Musk, who co-founded OpenAI but now leads xAI. The relationship between Musk and OpenAI CEO Sam Altman has grown increasingly tense in recent years, with public disagreements, social media exchanges, and multiple lawsuits.
One of the biggest disputes still ahead involves a lawsuit over OpenAI’s transition from a nonprofit structure to a for-profit entity. That case is currently scheduled to go to trial in April.
After the ruling, OpenAI posted on X that it welcomed the court’s decision, calling the lawsuit baseless and part of what it described as Musk’s continued campaign of harassment.
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For now, OpenAI has secured a partial victory, though xAI still has the option to revise and refile its claims.
