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 relocation needed for capital

Nonprofit to for-profit conversion rare, professional states

(Adds judge did not choose whether to issue the injunction in paragraph 5, OpenAi’s attorneys’ remark in paragraph 13)

By Anna Tong and Akash Sriram

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

«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) sit on the stand, present it to a jury, and a jury will choose who is right.» Rogers was thinking about Musk’s recent ask for an initial injunction to obstruct OpenAI’s conversion before going to trial, the most recent relocation in an animosity match between the world’s richest person and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not choose whether to release the injunction Tuesday, but at one point suggested that Musk’s legal team had not presented enough evidence for her to provide the injunction, and suggested she may hold an evidentiary hearing, where both sides could 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 company removed and subsequently established the contending AI start-up xAI in 2023. OpenAI is now attempting to transition from a not-for-profit into a for-profit entity, which it states it needs to do to protect the capital needed to establish the very best expert system designs. Last year, Musk filed a claim against OpenAI and Altman, stating that OpenAI ´ s founders initially approached him to money a not-for-profit focused on establishing AI to benefit mankind, but that it is now focused on generating income. He later on broadened the claim to add federal antitrust and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In action to Musk ´ s claim, morphomics.science OpenAI has said it will relocate to dismiss Musk ´ s claims and that Musk «must be competing in the marketplace rather than the courtroom.» The stakes on OpenAI’s business transition have now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of as much as $25 billion under discussion with SoftBank are conditioned on the company reorganizing to eliminate the nonprofit ´ s manage.

During the hearing, OpenAI’s legal representatives said the factor to allow OpenAI to end up being a for-profit entity is since it would be necessary to facilitate the objective of the not-for-profit.

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