Musk takes legal action against to obstruct OpenAI’s conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move required for capital

Nonprofit to for-profit conversion unusual, professional says

(Adds judge did not decide whether or not to provide the injunction in paragraph 5, OpenAi’s legal representatives’ remark in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk’s claim against OpenAI to halt its conversion to a for-profit entity might go to trial, including that the Tesla CEO will have to appear in court and testify.

“Something is going to trial in this case,” U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

”(Elon Musk will) rest on the stand, present it to a jury, and a jury will choose who is right.” Rogers was thinking about Musk’s current demand for an initial injunction to obstruct OpenAI’s conversion before going to trial, the current move in a grudge match between the world’s richest individual and OpenAI CEO Sam Altman that is playing out openly in court.

Rogers did not choose whether to provide the injunction Tuesday, however at one point recommended that Musk’s legal team had actually not provided sufficient evidence for her to provide the injunction, and indicated she might hold an evidentiary hearing, where both sides might provide witnesses and proof. The last time Rogers offered a preliminary injunction remained in Epic Games’ case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, but left before the business took off and subsequently founded the contending AI startup xAI in 2023. OpenAI is now trying to transition from a nonprofit into a for-profit entity, which it states it requires to do to protect the capital required to establish the very best synthetic intelligence models. In 2015, Musk filed a claim against OpenAI and Altman, stating that OpenAI ´ s founders originally approached him to fund a nonprofit concentrated on establishing AI to benefit humankind, however that it is now focused on earning money. He later broadened the claim to include federal antitrust and other claims, and in December asked the judge administering over the case to stop OpenAI from transitioning to a for-profit.

In reaction to Musk ´ s claim, OpenAI has said it will transfer to dismiss Musk ´ s claims and that Musk “must be contending in the market instead of the courtroom.” The stakes on OpenAI’s business shift have actually now intensified, hb9lc.org as OpenAI ´ s last fundraising round of $6.6 billion and a new round of approximately $25 billion under conversation with SoftBank are conditioned on the business restructuring to get rid of the nonprofit ´ s control.

During the hearing, OpenAI’s attorneys said the factor to allow OpenAI to become a for-profit entity is due to the fact that it would be essential to assist in the objective of the nonprofit.

Such a restructuring would be extremely unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually historically been for healthcare organizations like medical facilities, not endeavor capital-backed business, she said. (Reporting by Anna Tong in and Akash Sriram in Bengaluru, Editing by Marguerita Choy)