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

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move required for capital

Nonprofit to for-profit conversion uncommon, expert says

(Adds judge did not choose whether to provide the injunction in paragraph 5, OpenAi’s attorneys’ 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 might go to trial, including that the Tesla CEO will have 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 choose who is right.” Rogers was thinking about Musk’s current ask for a preliminary injunction to block OpenAI’s conversion before going to trial, the most recent relocation in an animosity match between the world’s richest person and OpenAI CEO Sam Altman that is playing out openly in court.

Rogers did not decide whether or not to provide the injunction Tuesday, wiki.dulovic.tech but at one point recommended that Musk’s legal team had not provided adequate proof for her to release the injunction, and indicated she might hold an evidentiary hearing, where both sides might present witnesses and proof. The last time Rogers provided a preliminary injunction remained in Epic Games’ case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, however left before the company removed and consequently founded the completing AI in 2023. OpenAI is now trying to shift from a nonprofit into a for-profit entity, which it states it needs to do to secure the capital required to develop the very best expert system models. In 2015, Musk submitted a claim against OpenAI and Altman, saying that OpenAI ´ s creators originally approached him to money a not-for-profit concentrated on developing AI to benefit mankind, however that it is now concentrated on earning money. He later on expanded the claim to add federal antitrust and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In response to Musk ´ s claim, OpenAI has said it will move to dismiss Musk ´ s claims and that Musk “should be contending in the market instead of the courtroom.” The stakes on OpenAI’s corporate transition have now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of up to $25 billion under conversation with SoftBank are conditioned on the company restructuring to get rid of the nonprofit ´ s manage.

During the hearing, OpenAI’s legal representatives said the factor to enable OpenAI to become a for-profit entity is because it would be necessary to assist in the mission 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 health care organizations like hospitals, not endeavor capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)