After nearly three weeks of testimony, the federal trial pitting Elon Musk and artificial intelligence company OpenAI is coming to two questions with seismic implications for the artificial intelligence race.
Did OpenAI CEO Sam Altman and company president Greg Brockman steal “charity” when they took investment from Microsoft and began turning a small nonprofit lab into a for-profit tech industry powerhouse?
Or does Mr Musk – who co-founded and funded OpenAI before leaving in 2018 – have a giant “case of sour grapes” because he didn’t stick around long enough to see his creation become a success?
Lawyers for Mr. Musk and OpenAI made closing arguments in federal court in Oakland, California, on Thursday. A nine-member jury is expected to deliberate on Monday in what could prove to be a complex hearing. Their decision could cripple OpenAI and permanently change the landscape of the tech industry.
Mr Musk sued OpenAI two years ago, claiming it had deviated from its founding agreement to be a non-profit laboratory dedicated to creating safe artificial intelligence for the benefit of humanity. He is seeking $150 billion in damages and wants Mr. Altman fired from OpenAI’s board.
It also wants to reverse the move OpenAI made to become a profitable company ahead of an initial public offering as early as this year. He added Microsoft as a defendant because of the $13 billion it invested in OpenAI.
Mr. Altman spent most of the day in court Thursday. Mr. Brockman was there for it all, and some of the jurors looked tired as arguments stretched into the seventh hour. But Mr Musk has not been seen in the courthouse since he testified at the start of the trial. He was one of several billionaire executives who joined President Trump on his trip to China this week.
As throughout the trial, Steve Molo, Mr. Musk’s lead lawyer, used his closing argument to play down the credibility of Mr. Altman, who was briefly fired by OpenAI’s board in 2023 because it didn’t believe he always told the truth.
“Imagine you’re hiking and you come across one of those wooden bridges you see on the trail and it’s over a ravine,” Mr. Molo told the judges. “There’s a river that’s 100 feet below and it looks a little scary, but a woman standing at the entrance to the bridge says, ‘Don’t worry, the bridge is built on Sam Altman’s version of the truth.’ Would you cross that bridge? I don’t think many people would.”
After Mr. Molo spent two hours disparaging Mr. Altman and Mr. Brockman, accusing them of “stealing from a charity,” Sarah Eddy, a lawyer for OpenAI, made an equally blunt remark. Mr. Musk “was never interested in a nonprofit structure,” she said. “What mattered to him was winning.
In fact, she argued, Mr. Musk tried to plug OpenAI into big profits when he tried to spin off the AI lab at Tesla, his electric car company. On several occasions in 2017, she said, Mr. Musk tried other ways to turn OpenAI into a profitable business. Ms Eddy showed a proposal for a profitable OpenAI that would give Mr Musk 50 per cent of the company. Mr. Altman and Mr. Brockman would each have a 7.5 percent stake.
Mr. Musk made three claims: that OpenAI violated its founding agreement as a non-profit organization, that Mr. Altman and Mr. Brockman illegally enriched themselves, and that Microsoft aided and abetted the scheme through its investments in the AI start-up.
His claims face a high legal burden. The jury must first decide whether Mr. Musk filed the lawsuit within several statutes of limitations. His lawyers had to prove that he had no way of knowing that OpenAI breached its founding agreement before August 5, 2021. As for the claim that the two executives enriched themselves, that date is August 5, 2022.
The statute of limitations on his claim against Microsoft is four months after that because Mr. Musk added the tech giant to his lawsuit four months after it was originally filed.
That key data helps explain why Mr. Musk’s lawyers focused so much of their case on the 2023 event, shortly after OpenAI released its hit chatbot, ChatGPT. In January 2023, Microsoft followed up its initial $1 billion investment in OpenAI from 2019 with an additional $10 billion. Toward the end of the year, OpenAI’s board removed Mr. Altman as executive director, saying he could not be trusted to build AI for the benefit of humanity, before reinstating him five days later.
If the jury decides that Mr. Musk has met the statute of limitations on the claims, they will consider the merits of his allegations.
But it doesn’t end there. The jury essentially has an advisory role for Judge Yvonne Gonzalez Rogers, who is presiding over the case. Whatever the jury decides, it will be up to the jury to decide what to do with it.
When the jury convenes Monday, Judge Gonzalez Rogers will hold a separate hearing with attorneys from both sides to determine potential sentences. He will have a number of options. The most extreme would be what Mr. Musk is demanding in his suit. It could also set damages well below $150 billion, or even throw out the jury’s verdict and decide that OpenAI did nothing wrong.
OpenAI’s legal team called the lawsuit “a case of sour grapes.” During the trial, OpenAI’s lawyers repeatedly argued that Mr. Musk only filed suit after OpenAI was hit by ChatGPT. He left OpenAI in 2018, after a power struggle with Mr. Altman.
Mr. Musk’s lawsuit did not cite a single contract or other founding document of OpenAI. No such document is believed to exist. Because of this, his legal team had to argue through various conversations, emails, text messages and other documents from the years he and others founded and built the AI lab.
Mr Molo concluded by listing the ways he claimed OpenAI had breached the terms of the charitable trust. Among the reasons he gave was the “failure to open source” the underlying technology of his AI
Open-source technology, which means freely sharing the research and code that powers AI, is a long-standing practice in the computer industry. It is also often at odds with how for-profit companies operate, as it gives competitors a glimpse into the company’s technology.
OpenAI has open-sourced some of its technology, but certainly not the most important parts. Mr. Molo failed to mention that Mr. Musk’s own AI lab, xAI, also does not open-source much of its AI research.
Mr. Molo ended with an email that was directly related to the statute of limitations. On October 20, 2022, Mr. Musk sent an email to Mr. Altman that included a link to a news article reporting that Microsoft was investing an additional $10 billion in OpenAI. He said that was when Mr Musk realized that OpenAI had breached a charitable trust – within a three-year legal statute.
But William Savitt, OpenAI’s general counsel, said the charity is still very much alive. And thanks to OpenAI’s growth, its assets are worth more than $200 billion.
“Mr. Musk looks at all this and screams, ‘They stole charity,'” Mr. Savitt said. “That’s kind of all he does: scream.
Ms. Eddy, OpenAI’s second lawyer, continued to argue that the battle for control of OpenAI years ago and the lawsuits today were about Mr. Musk’s quest for power. It is particularly focused on creating artificial general intelligence, a powerful type of artificial intelligence that could be as intelligent as humans, and which OpenAI has been working on for years.
“He wanted dominance over the AGI,” she said. And when he dies, Ms. Eddy added, Mr. Musk wants to pass control of OpenAI technology to his children.
(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.)
Natallie Rocha contributed reporting.
