happymatch

1 Musk's Claim against OpenAI May go to Trial In Part, Judge Says

Musk takes legal action against to obstruct OpenAI's conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues move needed for capital

Nonprofit to for-profit conversion uncommon, expert states

(Adds judge did not choose whether or not to release the injunction in paragraph 5, OpenAi's legal representatives' comment in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk's claim against OpenAI to stop its conversion to a for-profit entity may go to trial, including that the Tesla CEO will need to appear in court and affirm.

"Something is going to trial in this case," U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

"(Elon Musk will) rest on the stand, present it to a jury, and a jury will decide who is right." Rogers was thinking about Musk's recent ask for a preliminary injunction to block OpenAI's conversion before going to trial, the most recent relocation in an animosity match in between the world's wealthiest individual and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not decide whether or not to issue the injunction Tuesday, however at one point suggested that Musk's legal team had not presented enough proof for her to issue the injunction, and indicated she may hold an evidentiary hearing, where both sides could provide witnesses and evidence. The last time Rogers offered a preliminary injunction remained in Epic Games' case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, but left before the company removed and consequently established the competing AI start-up xAI in 2023. OpenAI is now attempting to transition from a nonprofit into a for-profit entity, which it says it needs to do to protect the capital needed to establish the finest expert system models. In 2015, Musk filed a claim against OpenAI and garagesale.es Altman, stating that OpenAI ´ s creators originally approached him to fund a not-for-profit focused on establishing AI to benefit humankind, however that it is now focused on generating income. He later on expanded the claim to include federal antitrust and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In action to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims which Musk "should be competing in the marketplace instead of the courtroom." The stakes on OpenAI's business shift have actually now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of up to $25 billion under discussion with SoftBank are conditioned on the company restructuring to remove the nonprofit ´ s control.

During the hearing, OpenAI's lawyers said the reason to permit OpenAI to become a for-profit entity is since it would be essential to assist in the objective of the not-for-profit.

Such a restructuring would be highly uncommon, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually traditionally been for healthcare companies like health centers, not endeavor capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)