Musk takes legal action against to block OpenAI's conversion to a for-profit structure
Musk cofounded OpenAI with Altman in 2015
OpenAI argues for-profit move needed for capital
Nonprofit to for-profit conversion unusual, specialist says
(Adds judge did not choose whether or not to release 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 stop its conversion to a for-profit entity may go to trial, adding 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 considering Musk's current ask for a preliminary injunction to block OpenAI's conversion before going to trial, the current move in an animosity match in between the world's wealthiest individual and OpenAI CEO Sam Altman that is playing out publicly in court.
Rogers did not choose whether to issue the injunction Tuesday, but at one point recommended that Musk's legal team had actually not provided adequate proof for her to release the injunction, and indicated she might hold an evidentiary hearing, where both sides might provide 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, higgledy-piggledy.xyz but left before the business removed and subsequently established the competing AI start-up xAI in 2023. OpenAI is now attempting to transition from a not-for-profit into a for-profit entity, which it states it requires to do to protect the capital required to develop the finest synthetic intelligence designs. In 2015, Musk filed a claim against OpenAI and Altman, saying that OpenAI ´ s founders originally approached him to fund a nonprofit concentrated on developing AI to benefit humanity, however that it is now focused on generating income. He later expanded the claim to include 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 response to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims and that Musk "ought to be contending in the market instead of the courtroom." The stakes on OpenAI's business transition have actually now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of approximately $25 billion under discussion with SoftBank are conditioned on the company restructuring to eliminate the nonprofit ´ s control.
During the hearing, OpenAI's legal representatives said the reason to permit OpenAI to become a for-profit entity is because it would be essential to help with the objective of the nonprofit.
Such a restructuring would be highly unusual, junkerhq.net said Rose Chan Loui, of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually historically been for healthcare companies like health centers, not venture capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)