OAKLAND, Calif. (CN) — A federal judge Tuesday denied billionaire Elon Musk’s request for an injunction to block OpenAI’s conversion from a nonprofit into a completely for-profit business.
“The relief requested is extraordinary and rarely granted as it seeks the ultimate relief of the case on an expedited basis, with a cursory record and without the benefit of a trial,” U.S. District Judge Yvonne Gonzales Rogers wrote.
In her 16-page order, Rogers made good on her prediction at a motion hearing last month that an order stopping OpenAI’s conversion was unlikely.
“That said, given the public interest at stake and potential for harm if a conversion contrary to law occurred, the Court is prepared to expedite trial to the fall of 2025 solely on that claim and potentially the interrelated contract-based claims,” the Barack Obama appointee added.
Musk, an early investor and cofounder of OpenAI, is suing CEO Sam Altman and his company, seeking a court order to prevent it from going through with for-profit restructuring, Musk claims that move violates OpenAI’s nonprofit mission and breaches the terms of his previous donations to the company, approximately $45 million in total.
Musk also accuses OpenAI of violating multiple antitrust laws through its close partnership with Microsoft and other noncompetitive behaviors, including exclusivity agreements with investors to not fund other competitors in the AI market. The billionaire argued that to deprive companies of investors — like his own xAI — was “obviously harmful” in the still-emerging AI market.
Elon Musk is joined in his lawsuit by Neuralink Director Shivon Zilis, with whom he recently welcomed his 14th child, and his company xAI.
The judge was skeptical of Musk’s claims that OpenAI violated federal antitrust laws through what his attorney, Marc Toberoff of Toberoff & Associates, described as a “fund no competitors” mandate during last month’s motion hearing. Musk claims that Altman told investors that their involvement with OpenAI was contingent on an agreement not to invest in their competitors during a previous funding round.
Musk claims the agreement was confirmed by “reputable media outlets,” including the Wall Street Journal, Financial Times and Reuters.
The judge was unimpressed with Musk’s use of newspaper articles as evidence, noting they were “classic hearsay” and could not be relied upon for the truth in a court of law, with a few notable exceptions. And once the articles were taken care of, the judge was keen to address other evidentiary issues.
“Despite Musk’s influence, xAI admitted that it could not provide a single declaration from an investor to confirm its theory,” she stated.
Rogers also called attention to a declaration from Altman himself denying the accusations, submitted by OpenAI after Musk highlighted that specific point at the previous hearing.
“I did not tell any investor in the October 2024 funding round that their ability to invest in OpenAI was subject to that condition, nor to my knowledge did anyone else at OpenAI,” Altman said.
Rogers also questioned Musk’s assertion that OpenAI was effectively a puppet of Microsoft in obedient collusion with the company. The judge noted that Musk has not claimed nor provided evidence of an actual agreement between Microsoft and OpenAI to collude.
“That Microsoft is a major investor in OpenAI does not, by itself, support such a finding,” she said.
When it came to breach of charitable trust claims related to Musk’s $45 million donations, the judge noted that other than a series of emails detailed in the record, no contract or gifting document with terms and conditions exists.
However, she disagreed with OpenAI that there was “no evidence” at all that Altman, Brockman or their company solicited Musk’s donations subject to specific commitments.
Ultimately, the judge found that the emails were insufficient for the “high burden” required for a preliminary injunction and she called each side’s success on the merits of the matter to be a “toss-up.”
Even if the court is ready to expedite certain claims, Rogers said the full case would probably not be ready for trial until 2027 or 2028. As such, the judge has instructed both parties to meet and confer on the issue and file a joint statement by March 14, 2025.
The court has set a case management conference for Mar. 21, 2025, at the Ron V. Dellums Federal Courthouse in Oakland, California.