Elon Musk Loses Again To OpenAI As Judge Strikes Down xAI Trade Secret Law

A federal judge dismissed xAI’s privacy lawsuit against OpenAI, after finding that Elon Musk’s AI company – which he spun off at SpaceX – failed to show that developer ChatGPT improperly obtained privacy related to its Grok chatbot.

In court system On Monday, US District Judge Rita Lin ruled in OpenAI’s favor directions to stop without permission to change, concluding that xAI failed to prove OpenAI encouraged a former xAI engineer to disclose trade secrets during recruitment.

“xAI did not sufficiently plead guilty in the previous complaint because it did not allege false allegations that permit a reasonable inference” that OpenAI told or encouraged” former xAI employees to disclose its secrets,” it said.

The decision is the second defeat that Musk – who founded OpenAI before his departure in 2018 – has suffered in an ongoing dispute with OpenAI and CEO Sam Altman.

Last month, a federal judge rejected Musk’s $150 billion lawsuit stating that OpenAI, Altman, and co-founder Greg Brockman left the nonprofit organization to turn to business and expand its relationship with Microsoft.

The latest case involved allegations Xuechen Li, a former xAI engineer, made while employed by OpenAI, which xAI said the ChatGPT developer was targeting for its work on Grok 4 training and graduate systems. The complaint accused OpenAI of wanting to know the privacy of its operations.

Lin rejected the argument, writing that “simply asking Li to discuss his previous work — a routine part of the hiring process — does not allow for a clear inference that OpenAI induced Li to disclose any secret or confidential information about the work.” He added that the acceptance of the xAI theory “can be shown to employers every time they ask about previous work.”

The judge also found that xAI failed to show OpenAI knew or should have known that Li disclosed trade secrets during the presentation.

“These claims are insufficient to prove that OpenAI knew or should have known that Li disclosed xAI’s trade secrets at the time of the disclosure,” Lin wrote. “It is unclear what information Li has shared about xAI’s motivational strategies.” Similarly, although xAI does not claim that Li actually showed the slide at the time of the presentation, even if he did, the amount of detail contained in the slides is unclear.

The idea also comes as Musk became the world’s first billionaire following SpaceX’s record-breaking feat IPOwho considered the company very important $1.77 billion and solidify the rocket company’s position as one of the most important companies in the world.

Shares of SpaceX (SPCX) continued to rise on Monday amid a market rally after the announcement of the end of the war between the US and Iran, rising almost 20% near finish the day at $192.50. This gives the company a value of over $2.5 trillion.