A federal judge in San Francisco dismissed a lawsuit filed by xAI, Elon Musk's artificial intelligence company, that accused rival OpenAI of stealing trade secrets for chatbots. According to reports from CN, U.S. District Judge Rita Lin ruled that xAI failed to demonstrate that OpenAI induced former xAI senior engineer Xuechen Li to divulge confidential information related to its Grok chatbot. The judge dismissed the lawsuit with prejudice, stating it would be 'futile' to continue, marking the second legal loss for Musk against OpenAI in four weeks. This decision follows Judge Lin's earlier dismissal of an earlier version of the lawsuit in February, with the final judgment preventing xAI from refiling the lawsuit. The lawsuit originally filed in September 2025 focused on broader alleged misappropriation of confidential information, including source code, by xAI employees who left for jobs at OpenAI.
This decision follows Musk's earlier legal defeat on May 18, when a federal jury ruled against the world's richest person in his $150 billion lawsuit accusing OpenAI and Sam Altman of 'stealing a charity' by betraying the company's original mission as a nonprofit to enrich themselves. As reported by CN, the xAI business operates as part of Musk's rocket, satellite and AI company SpaceX. Neither xAI nor its lawyers immediately responded to requests for comment, while OpenAI characterized the lawsuit as 'baseless' and part of Musk's ongoing campaign of harassment. The xAI business is part of Musk's rocket, satellite and AI company SpaceX.
The amended complaint focused on a presentation that Li gave while OpenAI was recruiting him, with xAI alleging that OpenAI wanted secrets related to the July 2025 release of Grok 4, knowing its forthcoming update to ChatGPT 'could not compete' on complex reasoning, and because OpenAI was 'lagging' in reinforcement learning and post-training techniques that Li understood. According to CN, Judge Lin rejected these claims, stating that asking job candidates to discuss their prior work was routine and one could not infer that OpenAI pushed Li to leak anything confidential. "To hold otherwise would potentially expose employers to liability any time they inquire about a candidate's past work," Lin wrote. OpenAI has maintained that Li never worked for the company and that it never acquired xAI secrets. In seeking dismissal, lawyers for OpenAI wrote that the company 'does not need or want anyone's trade secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent.'
Li is being sued separately by xAI and has denied wrongdoing. The lawsuit began in September 2025 when xAI first accused OpenAI of stealing trade secrets, which came a month after Musk's company directly sued one of its former employees for the same reason. CN reports that xAI sued OpenAI on February 3 after eight engineers and executives left the company in quick succession during the summer of 2025, most of them joining OpenAI. OpenAI countered by arguing that there wasn't a connection between itself and the 'alleged misappropriation of xAI's former employees,' with Judge Lin reiterating that xAI 'failed to sufficiently allege a connection between OpenAI and the alleged misappropriation of xAI's former employees.' Lawyers for xAI did not immediately respond to requests for comment, while OpenAI and its lawyers did not immediately respond to similar requests.
