A federal judge has dismissed xAI‘s trade secrets lawsuit against OpenAI, finding the complaint failed to sufficiently link the company itself to any alleged theft by former employees. Judge Rita F. Lin ruled that xAI, owned by Elon Musk, did not allege enough facts showing OpenAI induced the theft or used stolen material. The dismissal was granted with leave to amend, giving xAI until March 17 to file a revised complaint.
A federal judge has thrown out xAI‘s trade-secrets lawsuit against rival OpenAI. U.S. District Judge Rita F. Lin granted OpenAI‘s motion to dismiss, finding the complaint did not tie the company itself to misconduct.
The court found no evidence that OpenAI induced former xAI engineers to steal trade secrets or used the stolen material. “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,” Judge Lin noted.
The lawsuit alleged a coordinated campaign where OpenAI recruiter Tifa Chen offered multi-million dollar packages to engineers who then misappropriated files. However, the judge ruled that even if individuals engaged in misconduct, xAI failed to allege facts showing OpenAI directed or knew of the theft.
Legal expert Ishita Sharma stated the ruling “is reinforcing the high bar for claiming corporate trade-secret liability when employee movement is involved.” She said a revised complaint would need far more detailed and specific allegations to proceed.
A parallel case against former engineer Xuechen Li remains active, with his response deadline extended to March 6. This dismissal is the latest development in the ongoing legal rivalry between Elon Musk and his former venture OpenAI.
