A California federal judge has said she's inclined to grant
OpenAI's motion to dismiss a trade secrets complaint from Elon Musk's xAI "in full," saying the plaintiffs have not provided enough facts to support claims that OpenAI poached employees and stole source code.
U.S. District Judge Rita F. Lin outlined her "tentative views" of the case in a Friday notice ahead of a hearing Tuesday on OpenAI's motion to dismiss the lawsuit xAI filed in
September. Judge Lin said xAI would have a chance to amend its pleadings if she grants OpenAI's motion, but that right now the complaint does not have sufficient facts to support allegations "that OpenAI itself directly acquired, disclosed, or used xAI's trade secrets."
"It also does not allege facts sufficient to support a plausible inference that OpenAI directed or induced xAI's former employees to do so," Judge Lin said. "Though a number of xAI's former employees allegedly downloaded source code or other confidential materials prior to their departure, there is no indication that OpenAI told them to do so or otherwise encouraged such actions."
XAI, which operates the large language model Grok, alleged in its suit last year that OpenAI went on a "hiring spree" of xAI staffers because of "their access to particular xAI confidential information." The employees worked on xAI data centers or the development of Grok, according to the complaint. XAI
separately sued an employee individually, also in California federal court.
OpenAI said in its
October motion to dismiss that employees were leaving Musk's company on their own accord, and that xAI's allegations stopped short of actually accusing OpenAI of obtaining confidential information from departing staff.
Judge Lin said Friday that xAI's complaint does not support claims that OpenAI misappropriated xAI's trade secrets or that the accused employees used xAI's trade secrets after joining OpenAI. One of xAI's allegations, for example, is that a former employee airdropped xAI's source code to a personal device shortly after accepting a job with OpenAI. But Judge Lin said those allegations alone are not enough to infer that the worker actually used that information at OpenAI.
"That is a hair's breadth away from imposing liability based on mere possession," Judge Lin said.
Judge Lin asked the parties to be ready to discuss her "tentative reasoning" during Tuesday's hearing.
Counsel for the parties did not immediately respond to requests for comment Monday.
XAI is represented by Kathi Vidal, Matthew McCullough, Carson Swope, Leelle Slifer, Jonathan Hung and Nathan Ryan Lee of
Winston & Strawn LLP.
OpenAI Inc. is represented by Carolyn Luedtke, Dane Shikman, Gabriel Bronshteyn, Jonathan Kravis and Joseph Glynn of
Munger Tolles & Olson LLP.
The case is xAI Corp. et al. v. OpenAI Inc. et al., case number
3:25-cv-08133, in the
U.S. District Court for the Northern District of California.
--Additional reporting by Elliot Weld and Hailey Konnath. Editing by Alanna Weissman.
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