Judge dismisses xAI trade-secret suit against OpenAI
A federal judge dismissed xAI’s trade-secret suit against OpenAI, ruling xAI failed to show OpenAI induced a former engineer to disclose Grok secrets.
A federal judge dismissed xAI’s trade-secret lawsuit against OpenAI and granted OpenAI’s motion to dismiss without leave to amend in an order issued Monday in U.S. District Court.
The case focused on a presentation by Xuechen Li, a former xAI engineer, given while he was being recruited by OpenAI. xAI alleged OpenAI targeted Li for his work on Grok 4’s reinforcement learning and post-training systems and sought confidential details about those efforts.
U.S. District Judge Rita Lin wrote that the complaint failed to include nonconclusory facts allowing a reasonable inference that OpenAI told or encouraged Li to take confidential information. “Merely asking Li to discuss his previous work — a routine part of the hiring process — does not allow a plausible inference that OpenAI induced Li to reveal anything confidential or secret about that work,” the order said. The judge noted xAI did not allege Li actually displayed the slide deck used in the presentation and said it was unclear how much technical detail he shared even if slides were shown.
The order also found xAI did not plausibly allege that OpenAI knew or should have known Li disclosed trade secrets during the presentation. The complaint did not include specific factual allegations to support claims of inducement or knowledge of misappropriation, the judge wrote.
xAI, a company Elon Musk later folded into SpaceX, had sought to connect OpenAI’s recruitment interactions to the alleged improper acquisition of methods used to develop its Grok chatbot. OpenAI argued the complaint relied on speculation rather than concrete facts.
Last month, a federal jury rejected Musk’s $150 billion lawsuit alleging OpenAI’s leaders abandoned the organization’s founding nonprofit mission. With the complaint dismissed without leave to amend, xAI cannot refile the same claims in that court.
The order added that accepting xAI’s theory could “potentially expose employers to liability any time they inquire about a candidate’s past work.”
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