‘Too late’ – Musk loses blockbuster OpenAI suit

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File: Elon Musk

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A federal jury ruled Monday that Elon Musk waited too long to sue OpenAI and its co-founders, delivering a decisive victory to the ChatGPT startup and ending one of Silicon Valley’s most closely watched courtroom battles.

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The swiftly reached decision caps a three-week trial that saw a parade of tech titans take the stand, with Musk arguing that OpenAI’s pivot to a profit-driven business betrayed its original nonprofit mandate.

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The jury in Oakland federal court found that Musk’s claims against OpenAI CEO Sam Altman, President Greg Brockman, The OpenAI Foundation and Microsoft were barred by statutes of limitations, rejecting the billionaire’s core arguments.

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Judge Yvonne Gonzalez Rogers, who had asked the jury to advise her on the matter, accepted and confirmed their decision.

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The outcome spared OpenAI from a potentially existential legal threat.

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Had Musk prevailed, he was seeking to force the company to revert to its nonprofit structure – a move that would have derailed its planned IPO and unwound ties to major investors including Microsoft, Amazon and SoftBank, who have poured billions into the company amid the global AI race.

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“The finding of the jury confirms that this lawsuit was a hypocritical attempt to sabotage a competitor and to overcome a long history of very bad predictions about what OpenAI has been and will become,” OpenAI attorney William Savitt said outside the courthouse after the decision.

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“Musk can bring his claims, and he can tell his stories, but what the nine members of this jury found is that his stories were just that — stories, not facts,” he added.

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Musk, the world’s richest person, had sued OpenAI over its transformation from a scrappy nonprofit into the $850 billion juggernaut behind ChatGPT, claiming Altman and Brockman improperly used a $38 million donation he had intended to sustain OpenAI as a research lab devoted to developing AI for the benefit of humanity.

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The jury first had to resolve a threshold issue: whether Musk, who filed suit in 2024 — four years after his last contribution — had done so within the statutory time limit.

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It found he had not, ending the case before jurors could weigh the underlying merits.

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The judge had ruled ahead of deliberations that the jury’s verdict on the statute of limitations would be advisory, but said she would likely follow its recommendation, which she did.

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Had the case proceeded, jurors — and ultimately the judge — would have determined whether OpenAI’s co-founders misappropriated Musk’s donations and broke promises to him in order to pursue a commercial path and enrich themselves.

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‘Soap opera’

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The outcome of the trial had largely been expected to come down to which of the bickering billionaires the nine-person jury would believe.

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Hours of questions and testimony had centered heavily on Altman’s integrity and behind-the-scenes maneuvering as a CEO that rankled colleagues, many of whom have since left OpenAI.

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OpenAI’s attorneys countered with attacks on Musk, pointing to his often varying narratives about the early days of OpenAI, as well as parsing through testimony from Shivon Zilis — a business associate of Musk with whom he has four children — who had served as an intermediary between the tech executives.

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Musk left OpenAI in 2018 and has since pursued AI projects through his rocket company SpaceX, while his AI startup xAI has struggled to gain traction against OpenAI and Anthropic, another prominent California-based AI company.

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Altman, who was fired unexpectedly by OpenAI’s board in November 2023 for a lack of candor before being reinstated under pressure from employees, emerged from the trial with allegations of manipulation and a toxic work culture largely unresolved by the verdict.

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Microsoft, OpenAI’s largest backer with $13 billion committed, was also spared.

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“This is an important victory for Altman and OpenAI and clears the path for an IPO by removing this black cloud trial,” Dan Ives of Wedbush Securities told AFP.

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“Musk was creating noise around this lawsuit but ultimately it was more of a soap opera than a long-term negative for OpenAI,” he added.

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