A federal judge dismissed xAI’s trade secret claim against OpenAI, denying any opportunity to amend the complaint.
Judge Rita Lin determined that xAI did not demonstrate OpenAI prompted a former xAI engineer to reveal trade secrets.
The decision comes after Musk’s earlier defeat in a separate case alleging OpenAI abandoned its nonprofit origins.
A federal judge dismissed xAI’s trade secret action against OpenAI, concluding that Musk’s AI firm—now integrated into SpaceX—did not prove that OpenAI improperly accessed confidential information tied to the Grok chatbot.
In her Monday order, U.S. District Judge Rita Lin granted OpenAI’s motion to dismiss without leave to amend, finding that xAI did not establish that OpenAI encouraged a former xAI engineer to divulge trade secrets during recruitment.
The order noted that xAI’s prior complaint lacked sufficient factual allegations to support a reasonable inference that OpenAI instructed or encouraged its former employees to exfiltrate confidential information.
The ruling marks Musk’s second legal setback in his ongoing dispute with OpenAI and its CEO Sam Altman, following his earlier departure from the company in 2018.
Last month, a federal jury dismissed Musk’s $150 billion lawsuit claiming that OpenAI, Altman, and co‑founder Greg Brockman abandoned the organization’s nonprofit roots by pursuing a commercial model and strengthening ties with Microsoft.
This latest suit revolved around a presentation delivered by former xAI engineer Xuechen Li during his recruitment by OpenAI, which xAI claimed was targeted due to his involvement with Grok 4’s reinforcement learning and post‑training systems, alleging that OpenAI knowingly sought confidential information about those efforts.
Judge Lin rejected that contention, stating that simply asking Li to discuss his prior work—a standard hiring practice—does not support a plausible inference that OpenAI induced him to disclose confidential information. She warned that adopting xAI’s theory could expose employers to liability whenever they ask candidates about past employment.
The judge also concluded that xAI did not demonstrate that OpenAI knew—or should have known—that Li disclosed trade secrets during his presentation.
Lin wrote that the allegations fail to support a reasonable inference that OpenAI knew—or should have known—that Li disclosed xAI trade secrets during his presentation, noting that it remains unclear how much detail Li shared about xAI’s reinforcement learning techniques. She added that, even if Li had presented the slide deck, the level of detail in those slides is uncertain.
The ruling arrives shortly after Musk became the world’s first trillionaire, following SpaceX’s record‑breaking IPO that valued the company at approximately $1.77 trillion and solidified its status among the world’s most valuable firms.
SpaceX (SPCX) shares climbed further on Monday as a broader market rally followed the U.S.–Iran ceasefire announcement, gaining almost 20% to close at $192.50 and pushing the company’s valuation above $2.5 trillion.
