What did the jury have to consider to decide the case.
Elon Musk’s $150 billion lawsuit against OpenAI and Sam Altman was quickly dismissed by a federal jury on Monday, a major blow to Mr. Musk’s credibility and his bid to become a serious competitor in the artificial intelligence race.
The nine-member jury, which deliberated for less than two hours in US District Court in Oakland, California, found that Mr. Musk did not file his lawsuit within the time required by law. Presiding Judge Yvonne Gonzalez Rogers dismissed Mr. Musk’s claims after the jury’s decision.
Mr. Musk’s top lawyer immediately said the tech mogul would appeal the decision, while OpenAI’s lawyers celebrated with slaps on the back in the hallway outside the courtroom. Neither Mr. Musk nor Mr. Altman were in the courtroom when the verdict was read.
In a social media post hours later, Mr. Musk attacked Judge Gonzalez Rogers, calling her “an activist judge from Oakland who simply used the jury as a fig leaf” for a decision that “sets such a terrible precedent.”
The result maintains the status quo in Silicon Valley’s AI race, with OpenAI maintaining its role as one of the tech industry’s most important companies. And that thwarted Mr. Musk’s efforts to collapse the organization he helped create in 2015.
Mr. Musk blamed OpenAI; its CEO, Mr. Altman; and its president, Greg Brockman, for “stealing charity” by attaching a commercial company to OpenAI, which was founded as a non-profit, and taking away billions of dollars in investment from Microsoft. He also accused them of unjustly enriching themselves through the non-profit.
OpenAI’s president, Greg Brockman, right, was also named in Mr. Musk’s lawsuit. Credit…Jason Henry for The New York Times
But Mr. Musk’s lawsuit faced a high legal bar in the three-week trial. A jury had to decide whether he sued within several statutes of limitations. In the end, jurors could not decide whether OpenAI and its executives were liable for Mr. Musk’s specific claims because they said he filed the suit too late.
The lawsuit exposed years of behind-the-scenes maneuvering and animosity between Mr. Musk and Mr. Altman, who founded OpenAI with Mr. Brockman and a group of AI researchers.
OpenAI, which started the artificial intelligence boom in 2022 with the launch of its ChatGPT chatbot, has become one of the world’s most influential tech companies, raising billions of dollars to build data centers and create technology that many in Silicon Valley believe could change the global economy.
The failure of Mr. Musk’s lawsuit removes one of the last hurdles for OpenAI to an initial public offering that could happen this year and could be one of the biggest ever. It also cements OpenAI, like its closest competitor, Anthropic, as one of the most important companies in the AI boom.
But OpenAI still faces a lot of threats. Anthropic has aggressively challenged it for business customers interested in using artificial intelligence in their computing systems, and Google is closing the gap in consumer use of the technology. It’s also unclear whether Mr. Altman’s credibility has been damaged by days of testimony claiming he is untrustworthy.
Mr. Musk sought $150 billion in damages and wanted Mr. Altman fired from OpenAI’s board. He also wanted OpenAI to take the step it did to become a profitable company before its initial public offering. He added Microsoft to the lawsuit because of its investments in OpenAI.
Microsoft said in a statement that “the facts and timeline in this case have long been clear, and we welcome the jury’s decision to dismiss these claims as premature.”
This decision was not the last word in the unusual process; the jury was only an “advisor” to Judge Gonzalez Rogers, who could still rule against OpenAI. While the jurors deliberated, she heard arguments from trial lawyers on the issues of damages and remedies.
But after the jury’s quick verdict, the judge quickly agreed. Marc Toberoff, one of Mr. Musk’s lawyers, described the decision in one word: “An appeal.”
Marc Toberoff, one of Mr Musk’s lawyers, said his client would appeal the decision.Credit…Jason Henry for The New York Times
In another social media post on Monday, Mr. Musk repeated a claim he made on the witness stand: that OpenAI “stole charity” and was trying to get away with it because of the timing of his suit.
“In the case of OpenAI, the judge and jury never really decided the merits of the case, only the technical side of the calendar,” Musk wrote. “There is no doubt to anyone following the case closely that Altman & Brockman did, in fact, enrich themselves by stealing from charity. The only question is WHEN they did it!”
Outside the courthouse, William Savitt, OpenAI’s lead attorney, said he was “delighted” with the verdict and thanked the jury. The snap verdict was “unusual”, Mr Savitt said, but he thought OpenAI had a strong case.
While Mr. Altman and Mr. Brockman attended most of the trial, Mr. Musk appeared at the beginning only for his own testimony. Last week, as the testimony ended, Mr. Musk traveled to China with President Trump, even though he could have been called to the witness stand.
Many legal experts were surprised that Mr. Musk’s lawsuit even made it to court. Last year, the attorneys general of California (where OpenAI is headquartered) and Delaware (where it was incorporated) approved the restructuring of OpenAI into a more traditional for-profit company.
Mr Musk was OpenAI’s biggest early investor but left less than three years later, in 2018, after a power struggle with Mr Altman. Because he left the AI organization many years ago, legal experts questioned whether he had legal standing to sue.
After Mr. Musk left, Mr. Altman attached a for-profit company to OpenAI and began raising money from Microsoft and other investors. Between 2019 and 2023, Microsoft has invested more than $13 billion in the company.
Through the start-up’s commercial partnership with Microsoft, Mr. Musk’s lawsuit argued, OpenAI abandoned its original mission to build AI for the benefit of humanity.
“At first, most people said it wouldn’t go to trial,” said Dorothy Lund, a Columbia University law professor who specializes in corporate law. “I was surprised we got there.
Ms. Lund said the case would not go to court in Delaware, where corporate law is typically more strict.
Mr. Musk’s lawyers said he first learned of the breach in the fall of 2022 when he read a newspaper article that Microsoft was investing $10 billion in OpenAI. After reading the article, Mr. Musk texted Mr. Altman, calling the deal a “bait and switch.”
But lawyers for OpenAI showed that while Mr. Musk was still at OpenAI in 2017, he repeatedly tried to turn the lab into a profitable company, including trying to turn OpenAI into his electric car company, Tesla. They argued that Mr. Musk filed the lawsuit only after OpenAI achieved huge success with the release of ChatGPT.
OpenAI lead attorney William Savitt after the sentencing in federal court in Oakland, California. Credit…Jason Henry for The New York Times
OpenAI’s lawyer, Mr. Savitt, called Mr. Musk’s lawsuit a case of “sour grapes” in his opening statement. He said the nonprofit OpenAI still exists, that it controls a for-profit company, and that it now has assets totaling more than $200 billion.
Legal experts doubted whether a judge would order a change in OpenAI’s corporate structure even if Mr. Musk won, given that the attorneys general of California and Delaware had approved it.
“The court doesn’t really get into the middle of corporate governance,” said Tre Lovell, a media and business attorney in Los Angeles. “I don’t see a judge firing the CEO and restructuring this company, especially because of the precipice of them going public and possibly becoming one of the most valuable companies in history.”
As of Monday, the final part of the process had not been resolved. Mr. Musk has also raised antitrust claims against OpenAI and Microsoft. Judge Gonzalez Rogers said she was skeptical of the claims given the aggressive competition in the artificial intelligence market, but had yet to rule on them.
(The New York Times has sued OpenAI and Microsoft, alleging copyright infringement of news content related to AI systems. Both companies have denied the suit’s claims.)