Elon Musk‘s lawsuit against OpenAI may move forward to trial, a federal judge ruled on Tuesday. The Tesla CEO is seeking to block OpenAI’s transition from a nonprofit to a for-profit entity. U.S. District Judge Yvonne Gonzalez Rogers, speaking in Oakland, California, said parts of the case could go to trial, with Musk required to testify in court.
“Something is going to trial in this case,” Judge Rogers said. “Elon Musk will sit on the stand, present it to a jury, and a jury will decide who is right.”
The lawsuit stems from Musk’s objection to OpenAI’s shift in business model. Musk has filed for a preliminary injunction to stop the conversion, arguing that OpenAI’s founding goal was to develop artificial intelligence for the public good, not for profit. However, Judge Rogers did not make a decision on the injunction during Tuesday’s hearing. She suggested Musk’s legal team might not have presented enough evidence for the injunction and said she might hold a hearing where both sides could present further evidence.
Musk co-founded OpenAI in 2015 but left before the company grew into a major player in the AI field. In 2023, Musk launched a competing AI venture, xAI. OpenAI is now seeking to transition into a for-profit company to secure the funding needed to build more advanced AI systems. The move is part of an ongoing rivalry between Musk and OpenAI’s CEO, Sam Altman.
In his lawsuit, Musk claims that OpenAI’s founders initially promised to focus on AI development for the benefit of humanity. However, Musk argues that OpenAI is now prioritizing profits. He expanded the lawsuit to include federal antitrust claims and has asked the court to halt the company’s transition to a for-profit model.
OpenAI has responded, seeking to dismiss Musk’s claims and arguing that Musk should focus on competing in the market, not the courtroom. The stakes are high, as OpenAI is in the midst of raising funds, including a $6.6 billion round and a potential $25 billion investment from SoftBank. These funding rounds are contingent upon OpenAI restructuring to remove nonprofit control.
OpenAI’s legal team argues that converting to a for-profit entity is necessary to fulfill its mission. However, experts have noted that such a transformation is rare, particularly for venture-backed companies like OpenAI. Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits, pointed out that nonprofit-to-for-profit conversions typically occur in healthcare sectors, not in technology ventures.
The outcome of this case could have significant implications for OpenAI’s future and the broader AI industry.
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