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 states
(Adds judge did not decide whether or not to provide 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 halt 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 decide 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 latest relocation in an animosity match in between the world's richest individual and OpenAI CEO Sam Altman that is playing out openly in court.
Rogers did not choose whether or not to provide the injunction Tuesday, but at one point suggested that group had actually not provided enough proof for her to provide the injunction, and showed she might hold an evidentiary hearing, where both sides might present witnesses and proof. 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 business removed and consequently established the competing AI startup xAI in 2023. OpenAI is now trying to transition from a nonprofit into a for-profit entity, which it says it needs to do to secure the capital required to develop the finest artificial intelligence designs. Last year, Musk submitted a claim against OpenAI and Altman, stating that OpenAI ´ s creators originally approached him to fund a nonprofit focused on developing AI to benefit humankind, disgaeawiki.info however that it is now concentrated on earning money. He later expanded the claim to add federal antitrust and other claims, and in December asked the judge administering over the case to stop OpenAI from transitioning to a for-profit.
In reaction to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims which Musk "should be contending in the marketplace rather than the courtroom." The stakes on OpenAI's business transition have actually now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of as much as $25 billion under conversation with SoftBank are conditioned on the business restructuring to remove the not-for-profit ´ s manage.
During the hearing, OpenAI's legal representatives said the reason to enable OpenAI to become a for-profit entity is since it would be necessary to facilitate 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 organizations like hospitals, not venture capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)