A U.S. federal judge on Monday dismissed xAI's lawsuit against OpenAI, accusing the Sam Altman-led company of misappropriating trade secrets involving chatbot technology. U.S. District Judge Rita Lin in San Francisco ruled that xAI failed to show OpenAI had solicited former senior engineer Xuechen Li to disclose confidential information about the Grok chatbot, or that OpenAI engineers knew Li might reveal any secrets. The judge called further proceedings "futile" and dismissed the case with prejudice.
The original suit, filed in September, centered on allegations that xAI's confidential information, including source code, was taken by employees who left for OpenAI. An amended version focused on a presentation Li gave while being recruited by OpenAI. xAI argued OpenAI sought secrets about the Grok 4 version launched in July 2025, knowing its upcoming ChatGPT update "could not compete" on complex reasoning and that OpenAI was "falling behind" in reinforcement learning and post-training techniques that Li knew well.
Judge Lin, however, noted it is common to ask candidates to discuss past work and said that inferring OpenAI pressured Li to leak secrets was unwarranted. "The opposite ruling could make employers liable whenever they ask about a candidate's past work," she wrote. OpenAI maintained Li never worked for the company and that it never obtained xAI's secrets. "OpenAI does not need and does not want anyone's trade secrets, especially from xAI, a company that is failing in the market and losing talent," its lawyers argued.
This dismissal comes just weeks after a federal jury ruled against Musk on May 18 in a separate $150 billion lawsuit accusing OpenAI and Altman of "stealing a charity" by abandoning the company's original nonprofit mission for personal enrichment. Li, who is separately sued by xAI, denies any wrongdoing.
