OpenAI faced a major setback this week as US District Judge Jvonne Gonzalez Rogers allowed Elon Musk's lawsuit against the ChatGPT maker to move forward on charges of fraud. However, the judge did throw out charges of racketeering, false advertising and breach of fiduciary duty. Meanwhile, the judge also refused to dismiss unjust enrichment against OpenAI and Microsoft.
Musk had started OpenAI along with Sam Altman, Greg Brockman and other top executives by donating much of the money that got the AI startup off the ground and is now claiming in the lawsuit that ChatGPT maker's conversion from a non-profit constitutes a breach of contract and fraud.
“Musk adequately alleges that the defendants promised to maintain OpenAI’s non-profit status and structure in order to obtain his contributions, and that they intended to do so in order to obtain the capital needed to create a for-profit venture to enrich themselves,” the judge wrote in her ruling (via Financial Times).
Gonzalez Rogers also declined OpenAI's plea to dismiss Musk's claims that a contract existed between OpenAI and the Tesla CEO. “Although there is no express contract, Musk adequately pleads in the alternative that there is an implied-in-fact contract,”
Notably, Musk left in OpenAI in 2018 and has recently been running an OpenAI competitor company called xAI (now xAI holdings) that is responsible for running the Grok AI chatbot.
What's happening with Musk vs OpenAI lawsuit?
Earlier this month, 12 former OpenAI employees had also joined Elon Musk’s lawsuit against the company, claiming that it had abandoned its non-profit roots and betrayed the mission that originally attracted them to the AI startup.
“If the OpenAI nonprofit agreed to a change in the OpenAI corporate structure which took away its controlling role, that would fundamentally violate its mission,” the former employees said in their petition.
The conversion to a for-profit structure has also faced criticism from leading figures in the field, including Geoffrey Hinton, Margaret Mitchell and Stuart Russell.
