OpenAI and Microsoft to face jury trial in Musk lawsuit

A federal judge has rejected dismissal requests from OpenAI and Microsoft, scheduling a jury trial for late April in an Oakland courtroom. The decision, delivered on Thursday, means both OpenAI and Microsoft must prepare for a trial rather than avoiding a trial with Elon Musk. Both OpenAI and Microsoft had attempted to avoid a court trial with Musk, who is a co-founder of OpenAI and the plaintiff in the lawsuit. However, the judge’s ruling ensures that the legal battle will proceed. The scheduled trial drags Microsoft into the legal conflict alongside its business partner, OpenAI, with both entities facing the lawsuit as co-defendants. A jury will now hear the case in Oakland.

The dispute centers on the history of OpenAI, which was co-founded in 2015 by Elon Musk, Sam Altman, and others. At its launch, OpenAI was established as a nonprofit, a term that refers to the organization’s original structure. However, Musk left the organization and subsequently started his own AI company, xAI, in 2023. Musk now claims that his former partners betrayed their mission by accepting billions from Microsoft and restructuring OpenAI as a for-profit entity. In response, OpenAI, the defendant company, has characterized the lawsuit as “baseless” and as harassment intended to slow the company down.

With the dismissal requests rejected, a jury will now decide the legal dispute. Specifically, a jury will decide if OpenAI violated its nonprofit commitments and if Microsoft knowingly assisted in that violation. While the judge allowed these claims to proceed to a jury trial, she dismissed Musk’s claim that Microsoft unjustly enriched itself at his expense. Microsoft remains a co-defendant alongside OpenAI in the lawsuit, meaning both companies must defend their actions before a jury in the scheduled late April trial.

The legal battle comes as relationships between the involved parties have seemingly curdled. Although OpenAI and Microsoft remain business partners, they increasingly compete head-to-head in AI. Meanwhile, Musk and Altman have gone from collaborators to adversaries, with their relationship deteriorating as they head toward the scheduled trial in Oakland. A jury will ultimately decide whether the companies violated their commitments.

Why it matters

The trial will test the legal boundaries of nonprofit AI organizations and the extent of liability for their corporate partners, marking a significant escalation in the industry’s most high-profile legal conflict.