US District Judge Rita F. Lin dismissed a trade secret lawsuit filed by Elon Musk’s xAI against OpenAI. The judge ruled that xAI’s complaint failed to allege misconduct directly by OpenAI itself, instead attributing alleged actions to eight former employees who left for the rival company. The lawsuit accused the employees of various misdeeds, including stealing source code and retaining confidential work chats, but did not claim OpenAI directed these actions.
In her dismissal order, Judge Lin detailed the specific allegations against the former employees. xAI claimed two individuals stole source code while already communicating with an OpenAI recruiter, though the lawsuit did not allege the recruiter instructed them to do so. Two other former employees were accused of keeping work chats on their devices after departing, while another allegedly refused to provide certifications regarding confidential information. A sixth employee allegedly attempted to access xAI hiring and datacenter optimization data after already working at OpenAI, but that attempt was unsuccessful.
Lin’s decision emphasized that xAI’s complaint lacked essential allegations regarding OpenAI’s direct involvement. “Notably absent are allegations about the conduct of OpenAI itself,” the judge wrote. The court found no assertion that OpenAI directed the alleged thefts or that any stolen trade secrets were utilized by OpenAI once the employees joined the company. Consequently, the complaint did not support a claim of direct misappropriation by the defendant.
The dismissal was granted with leave to amend, allowing xAI an opportunity to revise its legal filing. xAI must address the court’s specific concerns and file an amended complaint by March 17, 2026. This legal action represents just one facet of the ongoing feud between the two artificial intelligence firms. Musk, an early funder of OpenAI, has a separate, ongoing complaint against OpenAI and Microsoft regarding alleged violations of the startup’s original nonprofit status. In that separate dispute, Musk is seeking between $79 billion and $134 billion in damages, citing “wrongful gains.”
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