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After a recent court ruling, parts of Elon Musk's lawsuit against OpenAI is said to go to trial. The presiding US District Judge Yvonne Gonzalez Rogers decided that Musk, the co-founder of OpenAI, who left in 2015, will testify in front of the proceedings. The issue is revolves around how Musk alleges that OpenAI’s transition to for-profit organsation poses a threat to the group’s original nonprofit and founding agreement.
“Something is going to trial in this case,” Rogers stated during February 04 session. “(Elon Musk will) sit on the stand, present it to a jury, and a jury will decide who is right.”
Musk filed the lawsuit in 2024, asserting that OpenAI’s shift into a for profit entity did not go along with the principle on which OpenAI was founded. According to him, the company was formed as a nonprofit to use artificial intelligence to help humanity. In December, Musk expanded his legal claims to include federal antitrust violations and other problems, and asked for preliminary injunction that would halt the corporate transition.
Musk, who left OpenAI before its meteroric as as a top platform, has since launched xAI, an AI startup in 2023. The action is a broader front in a high profile public and legal dispute between him and OpenAI CEO, Sam Altman.
OpenAI argues that in order to develop advanced AI technologies, there is a need to transition to a for-profit company to raise the huge capital required. Both corporate and fundraising financings are contingent on the organization’s corporate restructuring, which recently raised US$6.6 billion and is negotiating to raise another US$25 billion.
In response to the lawsuit, OpenAI argued that Musk’s claim ‘lacks merit,’ and stated that he should instead be investing his efforts on joining the marketplace. The court has also been approached by the company to dismiss the case filed by US.
Experts have raised eyebrows over proposed transition from nonprofit to for profit. Such conversions are 'very unusual' in the market place outside the healthcare sector, according to 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 organizations like hospitals, not venture capital-backed companies,” Loui explained.
As the outcome of the case could pave the way for other corporate restructuring in the tech sector, interest in the case has been keen across both legal and business communities.
As Musk’s suit advances to trial, lawyers expect to probe OpenAI’s budgetary tactics and fulfillment of its founding mission. This is a crucial test of what nonprofit commitments can be expected to allow competitive business operations to demand, and both sides will present evidence before a jury.
