A judge has partially limited the charges in Elon Musk’s lawsuit against OpenAI. Musk claims OpenAI violated its promise to operate as a public charity by planning to transform itself into a for-profit company.
This was reported by Bloomberg. On Thursday, US District Judge Yvonne Gonzalez Rogers in Oakland, California, ruled that Musk may continue his fraud claim. She also refused to dismiss a claim of unjust enrichment against both OpenAI and Microsoft, a major investor in OpenAI.
No breach of fiduciary duty
However, she did dismiss the allegations of misleading advertising and breach of fiduciary duty. She also rejected the claims of criminal conspiracy. Musk will have the opportunity to refile that specific charge with an amended complaint.
An OpenAI spokesperson responded to a request for comment by referring to an earlier social media post in which the company stated that Musk’s actions are an illegal attempt to hinder OpenAI’s growth. This is primarily to benefit his AI company, xAI, which he founded in 2023.
Musk’s lawyer welcomed the ruling, saying the court recognizes that his client’s allegations are serious enough to be dealt with in a lawsuit. According to the lawyer, Musk remains committed to OpenAI’s original mission as a charitable organization and to the safe development of artificial intelligence. Microsoft did not immediately respond to a request for comment.
OpenAI restructuring
The legal conflict between Musk and Sam Altman, who co-founded OpenAI, unfolds as the company negotiates with authorities in Delaware and California over restructuring plans. OpenAI is under pressure to complete these plans by the end of 2025. If it fails to do so, SoftBank could reduce its investment from $30 billion to $20 billion, as previously reported by Bloomberg. OpenAI could then look for other investors.
Judge Gonzalez Rogers previously indicated that she intended to narrow the scope of the charges when she scheduled a trial for March.
Musk claims that the collaboration between OpenAI and Microsoft, which began after he left the board in 2018, is intended to dominate the market for generative AI and suppress competition. His lawyers argue that Microsoft was aware of a plan by OpenAI founders Altman and Greg Brockman to sideline Musk and enrich themselves with his contributions.
The judge rejected Musk’s claim that Microsoft was involved in that fraud, but ruled that Microsoft must answer for alleged breach of contract. According to Musk, that contract stipulated that OpenAI’s technology must benefit the public.
According to the judge, Musk has made a plausible case that Microsoft was aware of OpenAI’s charitable nature and may have helped in the breach of contract.