A US federal judge has dismissed xAI’s trade secret lawsuit against OpenAI, ruling that the company failed to present enough evidence to show OpenAI improperly induced a former xAI employee to disclose confidential information tied to the Grok chatbot. The case was dismissed without leave to amend, bringing the matter to an end in court.
The order was signed on June 15 by Judge Rita Lin of the US District Court for the Northern District of California. The decision came about a month after a federal jury rejected Elon Musk’s separate $150 billion claim against OpenAI over its alleged departure from its nonprofit mission. Two losses in a matter of weeks have added to the legal strain between Musk and OpenAI co-founder Sam Altman.
Hiring presentation became the center of the dispute
The lawsuit focused on former xAI engineer Xuechen Li. In its complaint, xAI alleged that OpenAI targeted Li’s knowledge of Grok 4 reinforcement learning and post-training systems during recruitment, then used an interview presentation to elicit xAI trade secrets.
Judge Lin rejected that argument, saying xAI did not provide concrete facts showing OpenAI instructed or encouraged Li to reveal confidential material. The order stated that asking a job candidate to discuss prior work is a routine part of hiring, and that alone does not support a reasonable inference that OpenAI pushed Li to disclose secret information from his former employer.
Court found the evidence too thin
The ruling also said xAI failed to show that OpenAI knew, or should have known, that Li disclosed trade secrets in the presentation. According to the court, it remains unclear how much detail Li actually shared about xAI’s reinforcement learning work. Even if slides were shown, the order said, the record does not clearly establish the level of detail they contained.
That point cut into a key element of the case. In trade secret litigation, the plaintiff generally needs to show the defendant knowingly and intentionally obtained protected information, not that technical discussion happened during a standard hiring process. Judge Lin added that accepting xAI’s theory could expose employers to legal risk whenever they ask applicants about previous work experience.
Musk’s broader fight with OpenAI continues
Musk was one of OpenAI’s co-founders in 2015, but left in 2018 after disagreements with Altman over the company’s direction. OpenAI later moved toward a capped-profit structure and deepened its relationship with Microsoft, setting the stage for a series of disputes that followed.
In May, a federal jury rejected Musk’s separate claim accusing OpenAI of abandoning its founding nonprofit mission. With this latest dismissal, Musk has now suffered back-to-back courtroom setbacks in major cases involving OpenAI. As of publication, Musk, xAI and OpenAI had not publicly commented on the latest ruling.