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 required for capital
Nonprofit to for-profit conversion rare, professional states
(Adds judge did not decide whether to issue 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 might go to trial, adding that the Tesla CEO will have to appear in court and testify.
"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) sit on the stand, present it to a jury, and a jury will decide who is right." Rogers was considering Musk's recent demand for a preliminary injunction to obstruct OpenAI's conversion before going to trial, the current relocation in a grudge match in between the world's wealthiest individual and OpenAI CEO Sam Altman that is playing out openly in court.
Rogers did not choose whether to release the injunction Tuesday, however at one point suggested that Musk's legal team had actually not provided adequate proof for her to release the injunction, and showed she might hold an evidentiary hearing, where both sides might provide witnesses and proof. The last time Rogers offered an initial injunction remained in Epic Games' case against Apple in May 2021.
Musk cofounded OpenAI with Altman in 2015, however left before the business removed and subsequently established the completing AI startup xAI in 2023. OpenAI is now trying to transition from a not-for-profit into a for-profit entity, which it states it requires to do to secure the capital required to establish the very best synthetic intelligence designs. Last year, Musk filed a claim against OpenAI and forum.batman.gainedge.org Altman, saying that OpenAI ´ s creators initially approached him to fund a nonprofit focused on developing AI to benefit humankind, however that it is now focused on earning money. He later on broadened the claim to add federal antitrust and other claims, and in December asked the judge presiding 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 "should be contending in the market instead of the courtroom." The stakes on OpenAI's business transition have actually now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and forum.batman.gainedge.org a brand-new round of approximately $25 billion under discussion with SoftBank are conditioned on the business reorganizing to eliminate the nonprofit ´ s manage.
During the hearing, OpenAI's lawyers said the factor to allow OpenAI to become a for-profit entity is since it would be needed to facilitate the mission of the not-for-profit.
Such a restructuring would be extremely uncommon, said Rose Chan Loui, executive director galgbtqhistoryproject.org of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually historically been for healthcare companies like healthcare facilities, not endeavor capital-backed business, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)
