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 relocation required for capital
Nonprofit to for-profit conversion rare, expert states
(Adds judge did not choose whether 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 halt its conversion to a for-profit entity might go to trial, including 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) rest on the stand, present it to a jury, and a jury will choose who is right." Rogers was thinking about Musk's current request for an initial injunction to block OpenAI's conversion before going to trial, the latest move in an animosity match in between the world's wealthiest person and OpenAI CEO Sam Altman that is playing out openly in court.
Rogers did not decide whether or not to issue the injunction Tuesday, but at one point recommended that Musk's legal team had not provided adequate proof for her to issue the injunction, and showed she might hold an evidentiary hearing, where both sides could 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, however left before the and consequently founded the contending AI startup xAI in 2023. OpenAI is now attempting to transition from a nonprofit into a for-profit entity, which it says it requires to do to secure the capital required to establish the very best expert system models. In 2015, Musk filed a claim against OpenAI and Altman, stating that OpenAI ´ s creators initially approached him to money a not-for-profit concentrated on developing AI to benefit humanity, addsub.wiki however that it is now focused on earning money. He later expanded the claim to include federal antitrust and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.
In response to Musk ´ s claim, OpenAI has said it will transfer to dismiss Musk ´ s claims and that Musk "ought to be contending in the marketplace rather than the courtroom." The stakes on OpenAI's business transition have now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of approximately $25 billion under conversation with SoftBank are conditioned on the business restructuring to get rid of the not-for-profit ´ s manage.
During the hearing, OpenAI's attorneys said the factor to permit OpenAI to become a for-profit entity is because it would be necessary to facilitate the mission of the not-for-profit.
Such a restructuring would be extremely uncommon, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually historically been for health care companies like hospitals, not endeavor capital-backed companies, wavedream.wiki she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)