A US federal judge indicated on Tuesday that portions of Elon Musk’s lawsuit against OpenAI over its transition to a for-profit entity could go to trial, with the Tesla CEO expected to testify.
“Something is going to trial in this case,” said U.S. District Judge Yvonne Gonzalez Rogers during a court hearing in Oakland, California. She added that Musk will have to “sit on the stand, present it to a jury, and a jury will decide who is right.”
The judge was reviewing Musk’s request for a preliminary injunction to block OpenAI’s restructuring before the case goes to trial. While no decision was made on the injunction, Rogers suggested that Musk’s legal team may not have provided enough evidence to justify the move. Instead, she indicated that an evidentiary hearing could be necessary, where both sides would present evidence and witness testimony.
Musk, who co-founded OpenAI in 2015 alongside Sam Altman but left the company before it gained prominence, filed a lawsuit against OpenAI in February 2024. He accused the company of deviating from its original nonprofit mission of developing AI for the benefit of humanity and instead prioritising profit-driven motives.
Musk later expanded the lawsuit to include federal antitrust and other claims, arguing that OpenAI’s leadership had breached their commitments. In December, he filed a motion seeking to halt OpenAI’s transition to a for-profit entity.
In response, OpenAI has rejected Musk’s claims and moved to dismiss the lawsuit, arguing that “Musk should be competing in the marketplace rather than the courtroom.”
The stakes in the lawsuit have risen sharply, as OpenAI’s latest $6.6 billion fundraising round, along with a potential $25 billion investment from SoftBank, depends on the company completing its restructuring to remove nonprofit control.
During the hearing, OpenAI’s lawyers defended the company’s decision to transition to a for-profit structure, arguing that it is necessary to attract the capital required to develop cutting-edge AI models.
Legal experts have pointed out that nonprofit conversions into for-profit entities are rare, particularly for venture capital-backed firms like OpenAI. Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits, noted that such transitions have historically been seen in healthcare organisations like hospitals, rather than technology firms.
The next steps in the legal battle remain uncertain, but if the case goes to trial, it could have significant implications for the governance of AI research organisations and the broader ethical debate over AI development.