Judge says Elon Musk's claims of harm from OpenAI are a 'stretch' but welcomes possible trial

OAKLAND, Calif. — Elon Musk's lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire's request for a court order that would block the ChatGPT maker from converting itself to a for-profit company.

U.S. District Judge Yvonne Gonzalez Rogers said it was a ''stretch'' for Musk to claim he will be irreparably harmed if she doesn't intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation.

But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn't stop the case from moving to trial as soon as next year so a jury can decide.

''It is plausible that what Mr. Musk is saying is true. We'll find out. He'll sit on the stand,'' she said.

Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year, first in a California state court and later in federal court, alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good. Musk had invested about $45 million in the startup from its founding until 2018, his lawyer said Tuesday.

Musk escalated the legal dispute late last year, adding new claims and defendants and asking for a court order that would stop OpenAI's plans to convert itself into a for-profit business more fully. Musk also added his own AI company, xAI, as a plaintiff.

Also targeted by Musk's lawsuit is OpenAI's close business partner Microsoft and tech entrepreneur Reid Hoffman, a former OpenAI board member who also sits on Microsoft's board.

Gonzalez Rogers said she has a high bar for approving the kind of preliminary injunction that Musk wants but hasn't yet ruled on the request.

She has handled a number of tech industry cases including Apple's fight with Epic Games, though she said Tuesday that Musk's case is ''nothing like'' that one. Then-President Barack Obama appointed her to the federal bench in 2011.

Tuesday's hearing was originally set for January but was postponed after Musk's attorney Marc Toberoff said his house was destroyed in the Pacific Palisades wildfire.

Musk, who did not attend the hearing, has alleged in the lawsuit that the companies are violating the terms of his foundational contributions to the charity.

OpenAI has said Musk's requested court order would ''debilitate OpenAI's business'' and mission to the advantage of Musk and his own AI company and is based on ''far-fetched'' legal claims.

At the heart of the dispute is a 2017 internal power struggle at the fledgling startup that led to Altman becoming OpenAI's CEO.

Emails disclosed by OpenAI show Musk had also sought to be CEO and grew frustrated after two other OpenAI co-founders said he would hold too much power as a major shareholder and chief executive if the startup succeeded in its goal to achieve better-than-human AI known as artificial general intelligence, or AGI. Musk has long voiced concerns about how advanced forms of AI could threaten humanity.

Altman eventually succeeded in becoming CEO and has remained so except for a period in 2023 when he was fired and then reinstated days later after the board that ousted him was replaced.

OpenAI has sought to demonstrate Musk's early support for the idea of making OpenAI a for-profit business so it could raise money for the hardware and computer power that AI needs.

Musk is not the only one challenging OpenAI's for-profit transition. Facebook and Instagram parent Meta Platforms has asked California's attorney general to block it, and the office of Delaware's attorney general has said it is reviewing the conversion.

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O'Brien reported from Providence, Rhode Island.

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