Musk's Claim against OpenAI May go to Trial In Part, Judge Says
Musk takes legal action against to block OpenAI's conversion to a for-profit structure
Musk cofounded OpenAI with Altman in 2015
OpenAI argues for-profit move required for capital
Nonprofit to for-profit conversion uncommon, specialist states
(Adds judge did not choose whether or not to provide the injunction in paragraph 5, OpenAi's attorneys' remark in paragraph 13)
By Anna Tong and Akash Sriram
OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk's claim against OpenAI to halt its conversion to a for-profit entity may go to trial, adding that the Tesla CEO will need to appear in court and affirm.
"Something is going to trial in this case," U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.
"(Elon Musk will) sit on the stand, present it to a jury, and a jury will choose who is right." Rogers was thinking about Musk's current ask for a preliminary injunction to obstruct OpenAI's conversion before going to trial, the current relocation in an animosity match between the world's wealthiest person and OpenAI CEO Sam Altman that is playing out publicly in court.
Rogers did not decide whether or not to release the injunction Tuesday, however at one point recommended that Musk's legal group had actually not presented adequate proof for her to issue the injunction, and suggested she might hold an evidentiary hearing, where both sides could provide witnesses and proof. The last time Rogers offered an initial injunction remained in Epic Games' case against Apple in May 2021.
Musk cofounded OpenAI with Altman in 2015, visualchemy.gallery however left before the business took off and subsequently established the competing AI startup xAI in 2023. OpenAI is now attempting to shift from a nonprofit into a for-profit entity, which it states it needs to do to secure the capital needed to develop the finest artificial intelligence models. Last year, Musk filed a claim against OpenAI and Altman, stating that OpenAI ´ s creators originally approached him to fund a not-for-profit concentrated on establishing AI to benefit humanity, but that it is now focused on earning money. He later the claim to add federal antitrust and other claims, and in December asked the judge presiding over the case to stop OpenAI from transitioning to a for-profit.
In reaction to Musk ´ s claim, OpenAI has said it will transfer to dismiss Musk ´ s claims and that Musk "ought to be completing in the marketplace rather than the courtroom." The stakes on OpenAI's corporate transition have now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of as much as $25 billion under discussion with SoftBank are conditioned on the business reorganizing to eliminate the not-for-profit ´ s control.
During the hearing, OpenAI's lawyers said the factor to allow OpenAI to end up being a for-profit entity is due to the fact that it would be necessary to facilitate the mission of the not-for-profit.
Such a restructuring would be extremely unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually traditionally been for health care organizations like hospitals, not endeavor capital-backed companies, pipewiki.org she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)