Judge Tells xAI: Asking About Old Work Isn't a Crime, Grok On With Your Life 🤖

A U.S. federal judge has dismissed xAI's trade secret lawsuit against OpenAI without leave to amend, handing Elon Musk his second courtroom defeat against the ChatGPT maker in two months. U.S. District Judge Rita Lin issued the order on Monday, ruling that xAI — which Musk has folded into SpaceX — failed to show that OpenAI improperly obtained confidential information tied to its Grok chatbot. The case centered on a presentation given by former xAI engineer Xuechen Li while being recruited by OpenAI, which xAI alleged focused on his work reinforcing Grok 4's reinforcement learning and post-training systems.

Lin concluded that xAI did not plausibly allege OpenAI induced Li to reveal trade secrets during the hiring process. "xAI insufficiently pled inducement in the prior complaint because it offered no nonconclusory allegations allowing a reasonable inference 'that OpenAI told or encouraged' xAI's former employees to exfiltrate its confidential information," the order stated. The judge also rejected the argument that OpenAI knew or should have known that Li disclosed trade secrets, writing, "These allegations are insufficient to support a reasonable inference that OpenAI knew or should have known that Li disclosed xAI trade secrets during his presentation." She added that xAI's theory could "potentially expose employers to liability any time they inquire about a candidate's past work."

The ruling comes a month after a California federal jury rejected Musk's separate $150 billion lawsuit accusing OpenAI, CEO Sam Altman, and co-founder Greg Brockman of abandoning the organization's founding nonprofit mission by shifting toward a commercial structure and deepening ties with Microsoft. Musk co-founded OpenAI in 2015 and departed in 2018. Lin dismissed the xAI case with prejudice, finding that further amendment would be "futile," according to Reuters, which reported the decision on June 16. Coverage noted that Dogecoin ($DOGE) dropped more than 2% on the news while broader crypto markets and the SPCX stock held recent gains, though the legal outcome itself was driven solely by deficiencies in xAI's pleadings rather than market events.