Elon Musk loses again to OpenAI as judge dismisses xAI trade secrecy lawsuit

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

In court to request On Monday, U.S. District Judge Rita Lynn granted OpenAI Motion to dismiss Without leave to amend, he concluded that xAI failed to prove that OpenAI encouraged a former xAI engineer to disclose trade secrets during the hiring process.

“xAI did not sufficiently plead incitement in the prior complaint because it did not make any nonconclusive allegations that would permit a reasonable inference that OpenAI told or encouraged former xAI employees to leak its confidential information,” the order said.

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

Last month, a federal grand jury Musk’s $150 billion lawsuit was dismissed OpenAI, Altman, and co-founder Greg Brockman allegedly abandoned the organization’s founding nonprofit mission by shifting toward a commercial structure and deepening its relationship with Microsoft.

This latest lawsuit centered on a presentation made by Xuechen Li, a former xAI engineer, while employed by OpenAI, which xAI claimed the ChatGPT developer targeted because of its work on Grok 4’s reinforcement learning and post-training systems. The complaint accused OpenAI of knowingly seeking confidential information about those efforts.

Lin rejected this argument, writing that “merely asking Lee to discuss his prior work—a routine part of the hiring process—does not allow for a reasonable inference that OpenAI induced Lee to disclose anything secret or confidential about that work.” She added that accepting the XAI theory “may expose employers to liability any time they inquire about a candidate’s prior work.”

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

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

The decision also comes when Musk became the world’s first trillionaire after the record set by SpaceX IPOThe company’s value is estimated at approximately $1.77 trillion It strengthened the position of the missile company as one of the most valuable companies in the world.

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%. It ended the day at $192.50. This gives the company a valuation of more than $2.5 trillion.