US judge signals Musk's xAI may lose lawsuit accusing Altman's OpenAI of stealing trade secrets

By Jonathan Stempel Jan 30 (Reuters) – A federal judge signaled on Friday she may dismiss a lawsuit by Elon Musk's artificial intelligence startup xAI accusing Sam Altman's rival OpenAI of stealing trade secrets to gain an unfair advantage in developing AI technology. U.S. District Judge Rita Lin in San Francisco said her "tentative view" is to grant OpenAI's motion to dismiss xAI's lawsuit, pending oral arguments on February 3. She also said tentatively that xAI could amend its claims if she dismissed its case. Lawyers for xAI and OpenAI did not immediately respond to requests for comment. Musk's startup sued OpenAI in September, accusing it of hiring xAI employees away to obtain confidential information related to the AI chatbot Grok. OpenAI, known for its ChatGPT chatbot, countered by accusing Musk of conducting a "campaign to harass a competitor with unfounded legal claims" because xAI could not keep up with ChatGPT. In a four-page filing outlining her thoughts, Lin said Musk's startup did not plausibly allege that OpenAI acquired or encouraged the theft of trade secrets, despite allegations that some former xAI employees downloaded source code before leaving. Lin also said it was not plausible to infer from xAI's complaint that OpenAI used xAI's trade secrets, or the former xAI employees used them on the job after joining OpenAI. The judge may also dismiss an unfair competition claim, saying xAI's poaching allegations "all focus on poaching in service of acquiring xAI’s trade secrets and do not identify any other reason why the hiring of those employees was anticompetitive." Lin asked xAI and OpenAI to address her tentative reasoning at the hearing. The lawsuit is part of a broader legal battle between Musk and OpenAI, which he co-founded and is also suing over its conversion to a for-profit company. Musk, the world's richest person, is seeking as much as $134.5 billion in damages from OpenAI and Microsoft in that case. Jury selection is scheduled for April 27. (Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)

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