A California federal judge has dismissed the trade secret lawsuit filed by Elon Musk’s artificial intelligence startup, xAI, accusing Sam Altman’s OpenAI of theft.
Court dismisses xAI’s claims of targeted hiring patterns
Musk accused his rival OpenAI of stealing trade secrets in September 2025, engaging in a “deeply troubling pattern” of hiring former employees of xAI, which includes engineers Xuechen Li, Jimmy Fraiture, and a redacted ex-executive (possibly ex-CFO Mike Liberatore), giving them access to trade secrets related to Grok, their AI chatbot.
“OpenAI is targeting those individuals with knowledge of xAI’s key technologies and business plans, including xAI’s source code and its operational advantages in launching data centers, then inducing those employees to breach their confidentiality and other obligations to xAI through unlawful means,” the lawsuit said.
However, OpenAI denied all the allegations, calling it all “the latest chapter in Mr. Musk’s ongoing harassment” against the company.
According to U.S. District Judge Rita Lin in San Francisco, the following claims have been in favor of OpenAI, however, xAI could refile the case.
“xAI does not allege any facts indicating that OpenAI induced xAI’s former employees to steal xAI’s trade secrets or that these former xAI employees used any stolen trade secrets once employed by OpenAI,” Lin added.
Court sides with OpenAI, for now
According to Lin, xAI alleged that two of their former employees stole its source code during their departure at a time when they were communicating with an OpenAI recruiter. However, there is no evidence to prove that the recruiters at OpenAI had given such instructions.
Musk also held claims of two other former employees retaining work chats on their devices even after their exit from the company.
