A federal judge on Monday dismissed a lawsuit brought by Elon Musk’s artificial intelligence company, xAI, accusing rival OpenAI of stealing trade secrets related to its Grok chatbot, marking the billionaire’s second courtroom loss against OpenAI in less than a month.
U.S. District Judge Rita Lin, an appointee of former President Joe Biden, ruled that xAI failed to demonstrate that OpenAI improperly obtained confidential information from former xAI engineer Xuechen Li during a recruitment process, according to a series of court filings added to the docket Monday.
Lin dismissed the lawsuit with prejudice, meaning the claims cannot be refiled, concluding that further amendments would be “futile.”
The lawsuit, originally filed in September, accused OpenAI of misappropriating confidential information from departing xAI employees. After Lin dismissed an earlier version of the complaint in February, xAI narrowed its allegations to focus on a presentation Li gave while OpenAI was attempting to recruit him.
According to xAI, OpenAI sought information about the development of Grok 4, arguing that OpenAI’s forthcoming ChatGPT updates were struggling to compete with Grok’s capabilities in advanced reasoning and reinforcement learning techniques.
Lin rejected that argument, writing that discussions about prior work are a routine part of recruiting and do not, by themselves, suggest an effort to obtain trade secrets.
“To hold otherwise would potentially expose employers to liability any time they inquire about a candidate’s past work,” the judge wrote.
The court also found no evidence that OpenAI induced Li to disclose confidential information or that OpenAI employees knew any proprietary information may have been shared.
OpenAI maintained throughout the litigation that Li never worked for the company and that it never obtained xAI trade secrets.
“This baseless lawsuit was never anything more than yet another front in Mr. Musk’s ongoing campaign of harassment,” OpenAI said in a statement Monday.
The Washington Examiner contacted an attorney for xAI.
The ruling adds to a string of legal setbacks for Musk in his increasingly bitter feud with OpenAI CEO Sam Altman.
Last month, a federal jury rejected Musk’s blockbuster lawsuit accusing Altman and OpenAI of abandoning the organization’s original nonprofit mission in pursuit of profits. Jurors unanimously concluded Musk’s claims were filed too late and fell outside the applicable statute of limitations.
That case centered on OpenAI’s transition from a nonprofit research organization into a for-profit artificial intelligence company. Musk, who co-founded OpenAI before departing in 2018, argued that Altman had betrayed the company’s founding principles by prioritizing commercial success.
The jury’s verdict preserved Altman’s leadership of OpenAI and allowed the company to continue operating under its current corporate structure.
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Musk, whose AI startup xAI competes directly with OpenAI’s ChatGPT platform through its Grok chatbot, sought hundreds of billions of dollars in damages and attempted to force sweeping changes to OpenAI’s governance structure in that case.
The latest dismissal in a separate high-profile lawsuit further underscores the legal challenges facing Musk as his rivalry with Altman increasingly plays out both in court and in the rapidly expanding AI marketplace.