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Elon Musk’s lawsuit claiming that OpenAI violated its mission as a nonprofit organization moves to trial on Monday as jury selection gets underway in a federal court in Oakland, California.
Musk was a co-founder of OpenAI in 2015, but left the artificial intelligence (AI) startup in 2018 after he was unable to persuade its other leaders to have OpenAI merge with Tesla or create a for-profit entity led by him to attract the investment needed to meet the company’s technological needs.
Musk’s lawsuit against OpenAI claims that the company violated its founding mission as a nonprofit to develop AI for the benefit of humanity by creating a for-profit entity in 2019.
His suit seeks the removal of OpenAI CEO Sam Altman and President Greg Brockman, as well as more than $150 billion in damages from OpenAI and Microsoft, which Musk has said he would provide to OpenAI’s nonprofit entity. Altman and Brockman were among OpenAI’s co-founders.
OpenAI is countering Musk’s claims by noting that the Tesla CEO pursued a merger with OpenAI and was involved with discussions about creating a for-profit entity for the company before his departure from its board of directors. They also view the suit as a tactic to boost his own AI startup, xAI, as a competitor to OpenAI.
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The company’s 2019 creation of a for-profit entity governed by OpenAI’s nonprofit arm allowed the company to raise money from investors to scale up its computing capacity to facilitate AI research, which helped spur the launch of ChatGPT in late 2022.
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OpenAI restructured again last fall, transitioning into a public benefit corporation in which its nonprofit arm as well as its other investors, including Microsoft, hold stakes. The nonprofit arm has a 26% stake with additional warrants if OpenAI’s valuation hits certain targets.
Musk’s legal team arrived at its estimate of damages owed to him by OpenAI by multiplying its valuation and a portion of the nonprofit’s stake that could be attributed to his contributions, claiming that between 50% and 75% of the OpenAI nonprofit’s stake can be attributed to him.
“Never before has a corporation gone from tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon – and in just eight years. Never before has it happened, because doing so violates almost every principle of law governing economic activity,” Musk’s suit claims.
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Court documents show that Musk gave about $38 million of seed money to OpenAI between 2016 and 2020, mostly before he left the board.
Microsoft is also a defendant in the lawsuit and denies colluding with OpenAI, arguing that its partnership with OpenAI began after Musk’s departure.
OpenAI has insisted that Musk is motivated by revenge and competitive concerns, with the company writing on X that, “His lawsuit remains nothing more than a harassment campaign that’s driven by ego, jealousy and a desire to slow down a competitor.”
Both Musk and Altman signaled their eagerness for the trial to proceed earlier this year.
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“Can’t wait to start the trial. The discovery and testimony will blow your mind,” Musk said in a January post on X.
Altman countered in a February post on the X platform that he is, “Really excited to get Elon under oath in a few months, Christmas in April!”
The jury selection pool is about three times larger than a typical civil case due to concerns about possible difficulties in finding impartial jurors, given that Musk and Altman have become celebrities.
The judge determined that the jury won’t decide the specific repercussions in the case, and will instead work in an “advisory” role to determine how much OpenAI would need to pay in disgorgement if it loses the case.
FOX Business’ Kelly Saberi and Reuters contributed to this report.
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