A federal judge dismissed a lawsuit filed by Elon Musk’s artificial intelligence company xAI accusing rival OpenAI of stealing trade secrets, delivering Sam Altman’s company a significant legal win in its escalating rivalry with Musk.
US District Judge Rita Lin in San Francisco ruled on Monday that xAI failed to show OpenAI induced former xAI senior engineer Xuechen Li to divulge confidential information related to its Grok chatbot, or that OpenAI engineers knew Li might have disclosed anything confidential.
Lin dismissed the case with prejudice, meaning xAI cannot bring the same claims again, stating that further amendment would be “futile.” She had already dismissed an earlier version of the lawsuit in February, giving xAI one opportunity to revise its complaint before this final ruling.
The lawsuit, originally filed last September, alleged that former xAI employees took confidential information, including source code tied to Grok, when they left for jobs at OpenAI.
Musk’s company claimed OpenAI specifically wanted secrets related to the July 2025 release of Grok 4, arguing that OpenAI knew its forthcoming ChatGPT update “could not compete” on complex reasoning and was “lagging” in reinforcement learning and post-training techniques that Li understood.
The judge rejected that theory, finding that asking job candidates to discuss their prior work during recruitment is routine practice, and that this alone did not support an inference that OpenAI pushed Li to leak anything confidential.
OpenAI has maintained that Li never worked for the company and that it never acquired any xAI secrets. In seeking dismissal, OpenAI’s lawyers wrote pointedly:
“OpenAI 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 in a related action and has denied any wrongdoing.
The ruling removes one legal overhang for OpenAI as the company remains locked in a broader fight with Musk spanning AI development, talent competition, and corporate control, stretching back to Musk’s departure from OpenAI’s board and his founding of xAI as a direct competitor.
