Elon Musk loses lawsuit against OpenAI

OAKLAND, California, May 18 (Reuters) – A U.S. jury on Monday ruled against Elon Musk in his lawsuit against OpenAI, finding the artificial intelligence company not liable to the world’s richest person for having allegedly strayed from its original mission to benefit humanity.

In a unanimous verdict, the jury in Oakland, California, federal court said Musk had brought his case too late. The jury deliberated less than two hours.

The trial had widely been seen as a critical moment for the future of OpenAI and artificial intelligence generally, both in how it should be used and who should benefit from it.

The decision simplifies the path for OpenAI to proceed with a possible initial public offering that could value the business at $1 trillion. But the public face of the company, Chief Executive Sam Altman, must also deal with any challenges to his reputation from some extremely personal testimony, including multiple witnesses describing him as a liar.

Following the verdict, Musk’s lawyers said in court that he reserved the right to appeal. Addressing reporters after the verdict, Musk lawyer Marc Toberoff said Musk would have a strong basis for an appeal.

“This one is not over,” he said. “The ruling, based on the statute of limitations, has factual components but it has major legal components as well.”

U.S. District Judge Yvonne Gonzalez Rogers, who oversaw the trial, said in court that Musk may face an uphill battle for a potential appeal because whether the statute of limitations ran out before Musk sued was a factual issue.

“There’s a substantial amount of evidence to support the jury’s finding, which is why I was prepared to dismiss on the spot,” the judge said.

MUSK INVESTED EARLY IN OPENAI

In his 2024 lawsuit, Musk accused OpenAI, its Chief Executive Sam Altman and its President Greg Brockman of manipulating him into giving $38 million, then going behind his back by attaching a for-profit business to its original nonprofit and accepting tens of billions of dollars from Microsoft and other investors.

Musk called the OpenAI defendants’ conduct “stealing a charity.”

Toberoff said the verdict could encourage other startups that begin as non-profits but have greater ambitions to raise money, create for-profit entities to scale, and make their officers and directors rich.

“It’s a brand new formula for Silicon Valley,” he told reporters.

OpenAI was founded by Altman, Musk and several others in 2015. Musk left its board in 2018, and OpenAI set up a for-profit business the next year.

Musk has since founded his own artificial intelligence startup, xAI, which is now part of his space and rocket company SpaceX.

OpenAI countered that it was Musk who saw dollar signs, and that he waited too long to claim OpenAI breached its founding agreement to build safe artificial intelligence to benefit humanity.

Musk had a three-year statute of limitations to sue, and OpenAI’s lawyers said his August 2024 lawsuit came too late because he knew several years earlier about OpenAI’s growth plans.

Bill Savitt, a lawyer for OpenAI, told reporters after the verdict that Musk’s lawsuit was an “after-the-fact contrivance that bears no relationship to reality,” and jurors “kicked it exactly where it belongs, which is to the side.”

“The finding of the jury confirms that what this lawsuit was, was a hypocritical attempt to sabotage a competitor, and to overcome a long history of very bad predictions about what OpenAI has been and will become,” Savitt said.

The verdict followed 11 days of testimony and arguments where Musk’s and Altman’s credibility came under repeated attack.

Microsoft faced an aiding and abetting claim. In a statement, a Microsoft spokesperson said, “The facts and the timeline in this case have long been clear and we welcome the jury’s decision to dismiss these claims as untimely.”

Microsoft has spent more than $100 billion on its partnership with OpenAI, a Microsoft executive testified.

OPENAI PREPARES FOR IPO

People use AI for myriad purposes such as education, facial recognition, financial advice, journalism, legal research, medical diagnoses, and harmful deep-fakes.

Many people express distrust of the technology and worry it could displace people from their jobs.

Each side accused the other of being more interested in money than serving the public.

Musk accused OpenAI of wrongfully trying to enrich investors and insiders at the nonprofit’s expense, and failing to prioritize AI’s safety. He also contended that Microsoft knew all along that OpenAI cared more about money than being altruistic.

In his closing argument, Musk’s lawyer Steven Molo reminded jurors that several witnesses questioned Altman’s candor or branded him a liar, and that Altman did not give an unqualified yes when asked during the trial if he was completely trustworthy.

“Sam Altman’s credibility is directly at issue,” Molo said. “If you don’t believe him, they cannot win.”

Sarah Eddy, a lawyer for the OpenAI defendants, accused Musk and his legal team in her closing arguments of resorting to “sound bites and irrelevant false accusations.”

SpaceX is preparing an IPO that could exceed OpenAI’s in size.

(Reporting by Kenrick Cai and Deepa Seetharaman in Oakland, California; Additional reporting by Jonathan Stempel and Luc Cohen in New York; Editing by Noeleen Walder, Peter Henderson and Nick Zieminski)