Elon Musk Loses Again to OpenAI as Judge Dismisses xAI Trade Secret Lawsuit

A federal judge has dismissed xAI’s trade secrets lawsuit against OpenAI, finding that Elon Musk’s AI company — which he has since folded into SpaceX — has failed to prove that the ChatGPT maker unlawfully obtained confidential information related to its Grok chatbot.

In a court of law order on Monday, U.S. District Judge Rita Lin granted OpenAIs motion to dismiss without authorization to amend, and concluded that xAI failed to prove that OpenAI encouraged a former xAI engineer to reveal trade secrets during the recruitment process.

“xAI failed to plead insufficient inducement in the prior complaint because no non-conclusive allegations were made that would permit a reasonable inference ‘that OpenAI told or encouraged xAI’s former employees’ to exfiltrate its confidential information,” the order said.

The decision is the second defeat Musk – who co-founded OpenAI before leaving in 2018 – has suffered in his ongoing feud with OpenAI and CEO Sam Altman.

Last month, a federal jury dismissed Musk’s $150 billion lawsuit, alleging that OpenAI, Altman and co-founder Greg Brockman abandoned the organization’s nonprofit mission by switching to a commercial structure and deepening its relationship with Microsoft.

This latest lawsuit focused on a presentation that Xuechen Li, a former xAI engineer, gave when he was recruited by OpenAI, which xAI claimed the ChatGPT developer was targeted for his work on Grok 4’s reinforcement learning and post-training systems. The complaint accused OpenAI of knowingly soliciting confidential information about these efforts.

Lin rejected that argument, writing that “merely asking Li to discuss his previous work — a routine part of the hiring process — does not establish that OpenAI induced Li to reveal anything confidential or secret about that work.” She added that accepting xAI’s theory “could potentially expose employers to liability whenever they inquire about a candidate’s past work.”

The judge also ruled that xAI failed to demonstrate that OpenAI knew or should have known that Li was disclosing trade secrets during the presentation.

“These allegations are insufficient to support a reasonable inference that OpenAI knew or should have known that Li was disclosing xAI trade secrets during his presentation,” Lin wrote. “It is not clear how much detail Li shared about xAI’s reinforcement learning techniques. Although xAI does not claim that Li actually showed the slide deck during his presentation, even if he did, the level of detail in the slides remains unclear.”

The decision also comes as Musk became the world’s first trillionaire following SpaceX’s record-breaking IPO, which valued the company at about $1.77 trillion and cemented the rocket company’s position as one of the world’s most valuable companies.

Shares of SpaceX (SPCX) continued to rise on Monday amid a broader market rally following the announcement of a ceasefire between the US and Iran, rising nearly 20%. closes the day at $192.50. That gives the company a valuation of more than $2.5 trillion.