OpenAI’s Legal Nightmare Isn’t Over: Judge Greenlights Jury Trial In Elon Musk’s Lawsuit Challenging For-Profit Shift

The development sets the stage for a major showdown between two of the most high-profile tech executives.

• Musk’s lawsuit against OpenAI, alleging that the AI giant violated its founding mission, would go to trial, the judge says.
• OpenAI converted to a for-profit entity last year and is laying the groundwork for an IPO.
• Musk and OpenAI CEO Sam Altman have sparred on several issues lately, and the AI firm is a defendant in another one of Musk’s suits.

OpenAI could be in for a long-drawn legal battle, as a federal judge has indicated that the court would allow a high-profile lawsuit by billionaire Elon Musk to proceed to a jury trial.

Musk, Sam Altman Showdown

Musk, who was a co-founder when OpenAI started as a research lab in 2015 and left three years later, sued the maker of ChatGPT in 2023. He has alleged that OpenAI violated its founding mission of nonprofit-style, equitable growth of AI by restructuring into a for-profit entity, which it completed last year. 

“This case is going to trial,” and there is “plenty of evidence” suggesting OpenAI’s leaders made assurances that its original nonprofit structure was going to be maintained, U.S. District Judge Yvonne Gonzalez Rogers said, indicating that she plans to reject OpenAI’s plea to dismiss the case. A written order has not been issued so far.

OpenAI’s Supercharged Growth

After the November 2022 launch of ChatGPT, OpenAI has grown at a phenomenal rate, with this AI technology and chatbot ushering in a major shift in business and society. The company, last valued at around $500 billion, grew with significant early investment and a cloud partnership with Microsoft, and is now reportedly laying the groundwork for a massive initial public offering.

OpenAI Legal Woes

The legal fight is unfolding against the backdrop of an intensifying contest for leadership in the generative AI space, where Musk’s xAI and its Grok chatbot are vying with OpenAI and other technology players.

Musk and OpenAI CEO Sam Altman have repeatedly clashed online over a range of issues, and OpenAI is also named as a defendant in a separate lawsuit from Musk that alleges anti-competitive AI market collusion by OpenAI and Apple.

Meanwhile, OpenAI’s legal troubles are mounting, with a steady dose of copyright complaints from publishers and authors. Stocktwits detailed the new lawsuits filed last year in a recent report. 

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