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 needed for capital
Nonprofit to for-profit conversion uncommon, professional says
(Adds judge did not choose whether to issue the injunction in paragraph 5, OpenAi's attorneys' comment 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 stop its conversion to a for-profit entity may go to trial, adding that the Tesla CEO will have 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) rest on the stand, present it to a jury, and a jury will choose who is right." Rogers was considering Musk's recent demand for a preliminary injunction to obstruct OpenAI's conversion before going to trial, the most recent relocation in a grudge match between the world's wealthiest individual and OpenAI CEO Sam Altman that is playing out publicly in court.
Rogers did not decide whether to provide the injunction Tuesday, ratemywifey.com however at one point recommended that Musk's legal team had not presented sufficient evidence for her to provide the injunction, and showed she may hold an evidentiary hearing, where both sides might present witnesses and proof. The last time Rogers supplied a preliminary injunction remained in Epic Games' case against Apple in May 2021.
Musk cofounded OpenAI with Altman in 2015, but left before the company took off and subsequently founded the contending AI start-up xAI in 2023. OpenAI is now attempting to shift from a nonprofit into a for-profit entity, utahsyardsale.com which it states it needs to do to secure the capital required to develop the best artificial intelligence designs. In 2015, Musk submitted a claim against OpenAI and Altman, saying that OpenAI ´ s founders initially approached him to money a not-for-profit focused on AI to benefit humanity, but that it is now concentrated on earning money. He later expanded the claim to add federal antitrust and other claims, and in December asked the judge administering 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 "should be contending in the market instead of the courtroom." The stakes on OpenAI's business transition have now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of up to $25 billion under conversation with SoftBank are conditioned on the business reorganizing to remove the nonprofit ´ s control.
During the hearing, OpenAI's legal representatives said the reason to enable OpenAI to end up being a for-profit entity is because it would be needed to help with the objective 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 traditionally been for healthcare companies like healthcare facilities, not venture capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)