Elon Musk loses lawsuit against OpenAI and Sam Altman

A jury in California has ruled against Elon Musk in his lawsuit against OpenAI, its CEO Sam Altman, and co-founder Greg Brockman. The jury found that Musk’s claims were filed too late, past the legal deadlines. Musk had accused the defendants of stealing a charity by creating a for-profit affiliate of the advanced artificial intelligence developer (frontier AI lab).

The trial focused on the statute of limitations, which is the legal time limit for filing a claim. The jury agreed that any harms Musk may have suffered occurred before the legal deadlines for his claims. Specifically, these deadlines were August 5, 2021, for the first count; August 5, 2022, for the second count; and November 14, 2021, for the third count. Following the verdict, Judge Yvonne Gonzalez Rogers dismissed the case. During the proceedings, the judge also questioned the analysis of Musk’s expert witness, Dr. C. Paul Wazzan, who had estimated OpenAI and Microsoft’s wrongful gains at some $78.8 billion to $135 billion. Judge Gonzalez Rogers told Wazzan that his analysis appeared to be devoid of connection to the underlying facts.

The legal battle featured sharp exchanges from both sides. Bill Savitt, OpenAI’s lead attorney, stated, “It did not take [the jury] two hours to conclude … that Mr. Musk’s lawsuit is nothing more than an after-the-fact contrivance that bears no relationship to reality” and characterized the lawsuit as a hypocritical attempt to sabotage a competitor. Microsoft, which was also a defendant in the lawsuit, welcomed the verdict. A spokesperson stated that the company remained committed to its work with OpenAI to advance and scale AI. Musk, however, remained defiant, asserting that Altman and Brockman did enrich themselves by stealing a charity, and arguing that the only remaining question was when they did it.

With the lawsuit dismissed, a major threat to OpenAI is resolved. The prospect of a court-ordered restructuring is now off the table as the company prepares for its reported Initial Public Offering (IPO). However, the legal dispute is not entirely over. Musk announced that he plans to file an appeal with the Ninth Circuit, the US federal appellate court, asserting that creating a precedent to loot charities is destructive to charitable giving in America. Musk’s lead counsel, Marc Toberoff, confirmed the plan to appeal.

Why it matters

The dismissal removes a significant threat to OpenAI—specifically the risk of a forced restructuring—clearing the path for the company’s reported IPO.