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Home Technology & Startups

When their courtroom showdown should start

March 17, 2025
in Technology & Startups
Reading Time: 6 mins read
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Elon Musk and Sam Altman finally found a common area of agreement — that a trial to settle their differences over the future of ChatGPT creator OpenAI should begin in December.

The proposal came in a joint court filing on Friday from Musk, Altman, OpenAI, and other named defendants, including Microsoft (MSFT). They asked for a two-week trial beginning Dec. 8.

A judge has ultimate discretion over whether to grant the joint request, though the California federal district court judge overseeing this case, Yvonne Gonzalez Rogers, is likely to agree on a date that both sides want.

The expedited battle is intended to weigh Musk’s claims that Altman and OpenAI breached various agreements by planning to convert the artificial intelligence startup into a for-profit enterprise. He tried and failed to get a judge to approve an immediate injunction stopping the conversion.

Musk helped co-found OpenAI with Altman in 2015 by donating $45 million to the startup, which Musk claims was contingent on OpenAI remaining a nonprofit organization.

Musk parted ways over disagreements regarding how to move forward with the venture. He started a competing AI company called xAI. Musk alleges that allowing OpenAI to continue pursuing for-profit status would cause “irreparable harm” to Musk, xAI, investors, and the public.

SAN FRANCISCO, CA - OCTOBER 06:  (L-R) Tesla Motors CEO and Product Architect Elon Musk and Y Combinator President Sam Altman speak onstage during
Elon Musk and Sam Altman appearing together in 2015. (Photo by Michael Kovac/Getty Images for Vanity Fair) · Michael Kovac via Getty Images

Gonzalez Rogers, the judge overseeing this case, has made it clear she wants at least part of the dispute to go to trial.

“Something is going to trial in this case,” she told lawyers for Musk, OpenAI, and Microsoft in January.

On March 4, she even proposed an expedited trial for the “fall of 2025.” The judge carved out some claims in Musk’s lawsuit that likely won’t go to trial until 2027 or 2028, including allegations that the defendants violated antitrust laws and that Altman violated laws prohibiting self-dealing.

Musk and Altman both told the judge they were in favor of a trial on the expedited claims in December. But that’s where their agreement ends.

The parties disputed which of Musk’s claims should go forward in the expedited trial and asked the judge to clarify. OpenAI also asked the judge to specify which claims remained open to defendant challenges.

According to Musk, the court should include his claim that OpenAI breached its duties as a charitable trust and its duty to operate in good faith, along with three claims alleging OpenAI entered into and violated a contract with Musk to remain a nonprofit.

According to Musk, Altman also breached laws against unfair competition by communicating a “fund no competitors” edict to OpenAI’s current and prospective investors and permitting interlocking board positions between OpenAI and Microsoft.

OpenAI and the defendants deny those claims.

SAN FRANCISCO, CALIFORNIA - NOVEMBER 06: Microsoft CEO Satya Nadella (R) speaks as OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. Altman delivered the keynote address at the first ever Open AI DevDay conference. (Photo by Justin Sullivan/Getty Images)
Microsoft CEO Satya Nadella, right, and OpenAI CEO Sam Altman, left, on stage together in 2023. (Photo by Justin Sullivan/Getty Images) · Justin Sullivan via Getty Images

OpenAI asked the judge to include a broader set of Musk’s claims, requesting that the trial also address his allegations of fraud, false advertising, breach of fiduciary duty, and civil racketeering violations.

Microsoft said it took no position on the scope of the expedited proceedings or the proposed case schedule but that it would ask to participate if claims against it were included in the December trial.

Microsoft also noted that the company requested a dismissal of all Musk’s claims against it and that the court had yet to resolve its request.

The defendants have called Musk’s allegations “false” and claimed he has no legal basis for blocking OpenAI’s for-profit conversion.

Altman claims Musk wanted to fold OpenAI into his for-profit electric vehicle company, Tesla (TSLA), so that Tesla could provide it with additional funding.

Musk and a group of investors have since offered to purchase OpenAI for $97 billion. Gonzalez Rogers said in her ruling that the offer cut against Musk’s claim that OpenAI’s conversion to a for-profit business would cause Musk irreparable harm.

Musk named LinkedIn co-founder Reid Hoffman and Microsoft executive Dee Templeton as defendants, claiming they illegally served as directors of both OpenAI and Microsoft at a time when the two companies were competing in the AI market.

Hoffman has since resigned from the nonprofit’s board. Templeton is a nonvoting observer.

“I have significant concerns with Microsoft having put two members or two people on the board,” Gonzales Rogers has said. “Whether or not they were voting — they were still information-sharing.”

While Gonzales Rogers said some of Musk’s claims would be fast-tracked for trial, she denied his request for an injunction that would have temporarily blocked the defendants from carrying out plans to turn the artificial intelligence charity into a for-profit business — and from transferring any material assets owned by OpenAI or its subsidiaries, including intellectual property.

As of October 2024, Microsoft had poured $13.75 billion into OpenAI.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.

Click here for the latest technology news that will impact the stock market

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Tags: defendantsElon MuskGonzalez RogersMichael KovacMicrosoftSam AltmanYvonne Gonzalez Rogers
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