A California federal judge on Monday dismissed a lawsuit from Elon Musk’s artificial-intelligence company xAI that accused OpenAI of attempting to steal trade secrets, ruling that xAI failed to provide evidence to support its claims.
U.S. District Judge Rita Lin said xAI did not prove that OpenAI had recruited a former engineer to induce him to share information about the company’s Grok chatbot. The judge barred xAI from continuing to pursue the case, stating that allowing further amendments would be “futile.”
“In essence, xAI equates asking a candidate about their prior work experience with encouraging the candidate to divulge trade secrets obtained during that prior work experience,” Lin said in her ruling.
The engineer at the center of the lawsuit, Xuechen Li, was among the first 20 engineers at xAI in 2024 and helped develop the Grok chatbot, according to the company’s lawsuit against Li. A Chinese national with a doctorate in computer science from Stanford University, Li sold millions of dollars of stock before joining OpenAI, the lawsuit said. Lawyers for Li and xAI did not immediately respond to requests for comment.
xAI initially filed the trade-secret lawsuit against OpenAI in September. Lin dismissed the lawsuit in February over a lack of evidence and allowed xAI to refile a complaint the following month. In Monday’s ruling, she said permitting further amendments would be futile.
OpenAI referred to its statement from February when the earlier version of the lawsuit was dismissed. “This baseless lawsuit was never anything more than yet another front in Mr. Musk’s ongoing campaign of harassment,” the company said at the time.
Musk lost a separate legal challenge against OpenAI last month when another California federal judge ruled that the statute of limitations had expired for his lawsuit. Musk had alleged that leaders of then-nonprofit OpenAI manipulated him into donating millions of dollars before converting the company into a for-profit entity.
xAI is now a unit of Musk’s SpaceX company, which completed the largest initial public offering ever last week, according to the Wall Street Journal. Musk earlier this year merged SpaceX with xAI.
Tech companies are increasingly concerned about trade-secret theft, as the value of critical technology, particularly artificial intelligence, can reach billions of dollars. The Grok chatbot, developed by xAI, has lagged behind competitors in performance, the Journal reported.
The case is among several legal battles between Musk and OpenAI, which Musk co-founded in 2015 and later left. The two have clashed over the direction and governance of the AI research organization.