Federal judge dismisses xAI lawsuit against OpenAI over alleged trade secret theft

US District Judge Rita F. Lin in San Francisco ruled that xAI failed to allege misconduct by OpenAI itself. The lawsuit, filed in September, claimed that eight former xAI employees took source code related to its Grok chatbot and other confidential information when they left to join OpenAI.

In her decision, Judge Lin said the complaint did not include facts showing that OpenAI induced the former employees to misappropriate trade secrets or that any alleged confidential information was used after they joined the company.

"Notably absent are allegations about the conduct of OpenAI itself," Lin said. "xAI does not allege any facts indicating that OpenAI induced xAI’s former employees to steal xAI’s trade secrets or that these former xAI employees used any stolen trade secrets once employed by OpenAI."

The dismissal was granted with leave to amend, meaning xAI may file a revised complaint by March 17. Notably, the dispute is part of a broader legal conflict between the companies.

Musk, who was one of the first supporters of OpenAI, also filed a different lawsuit against Microsoft and OpenAI, alleging that OpenAI violated its initial nonprofit mission. He also engaged in a separate legal dispute with Apple and OpenAI last year.