OpenAI and Microsoft were unable to avoid a trial regarding Elon Musk’s allegations that Sam Altman’s startup strayed from its original mission as a public charity by accepting billions in funding from the software giant and planning to operate as a for-profit entity.
A federal judge in Oakland, California, ruled on Thursday against motions by OpenAI and Microsoft to dismiss Musk’s claims, allowing the case to move forward to a jury trial scheduled for late April. Musk was instrumental in launching OpenAI in 2015 and subsequently founded his own AI company in 2023.
“Mr. Musk’s lawsuit remains unfounded and forms part of his ongoing pattern of harassment, and we look forward to proving this at trial,” OpenAI stated. “Our focus remains on empowering the OpenAI Foundation, which is already one of the most well-resourced nonprofits in existence.”
In her decision, US District Judge Yvonne Gonzalez Rogers declined to dismiss Musk’s claim that OpenAI violated its promise to function as a charitable trust.
She noted that although the evidence is ambiguous, Musk argues that his contributions to OpenAI “were intended for a specific charitable purpose and that he imposed two fundamental conditions: that OpenAI remain open source and retain its nonprofit status — aims that align with OpenAI’s charter and mission.”
Rejecting OpenAI’s argument, the judge determined that Musk’s use of an intermediary to contribute $38 million in seed funding does not deprive him of legal standing to enforce these terms.
“To rule otherwise would significantly undermine the enforcement of a wide range of charitable trusts, contrary to contemporary trends,” she articulated.
The judge also opted not to dismiss Musk’s fraud allegations, referencing emails and private notes from OpenAI co-founder Greg Brockman in 2017. In an email that September, he informed Musk that he would “prefer to continue with the nonprofit structure” of OpenAI.
Two months later, in a private note, he expressed: “can’t say that we are committed to the nonprofit. don’t want to assert that we’re committed. if three months later we’re a b-corp then it was a lie.”
Gonzalez Rogers stated it will be the jury’s task to determine whether Microsoft aided OpenAI in violating its obligations to donors, including Musk.
“In this case, Musk presented substantial evidence suggesting that Microsoft had actual knowledge beyond vague suspicions of wrongdoing,” she wrote.
However, the judge dismissed Musk’s assertion that Microsoft “unjustly” benefited at his expense. For that claim to hold, Musk would have needed to establish at least a “quasi-contractual relationship” with Microsoft, she stated.
“Nor did Musk provide any evidence or assert any facts to substantiate that Microsoft’s retention of any benefit was unjust,” the judge concluded.
Musk’s attorney, Marc Toberoff, and representatives from Microsoft did not immediately respond to requests for comment.
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OpenAI, the creator of ChatGPT, recently valued at $500 billion, announced its restructuring in October. They noted at that time that a 27% ownership stake had been granted to their long-time supporter Microsoft in a transition that keeps the nonprofit arm overseeing its for-profit operations.
This transition to a public benefit corporation achieved Altman’s long-held goal as its CEO.
Musk and Altman, once business partners turned antagonists, have battled in court over OpenAI’s future since 2024. Musk’s xAI now stands as one of OpenAI’s main competitors. Last year, OpenAI turned down Musk’s unsolicited offer to acquire the nonprofit’s assets that govern the company for $97.4 billion.
Altman has criticized Musk’s lawsuit contesting the OpenAI restructuring as a misuse of the legal system to impede a rival.
