Rita Lin Dismisses xAI Trade-Secret Lawsuit Against OpenAI Over Grok Engineer Xuechen Li

A federal judge dismissed xAI’s trade-secret lawsuit against OpenAI, ruling that xAI failed to show OpenAI induced a former xAI engineer to disclose confidential information tied to its Grok chatbot.

U.S. District Judge Rita Lin dismissed the case “with prejudice,” meaning the claims cannot be refiled, and she concluded that further amendments would be “futile.”

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The dispute centered on Xuechen Li, whom xAI accused of downloading source code while being recruited by OpenAI and disclosing trade secrets during an interview presentation.

Lin rejected xAI’s theory that asking a prospective employee about prior work amounts to encouraging trade-secret disclosure, writing that “Merely asking Li to discuss his previous work—a routine part of the hiring process—does not allow a plausible inference that OpenAI induced Li to reveal anything confidential or secret about that work.”

In the court’s reasoning, Lin said OpenAI’s continued interest in Li would only be unlawful if the company knew he exposed trade secrets, and she noted that OpenAI denies that it knew.

Courthouse News reported Lin also found that even if OpenAI knew the information contained trade secrets, xAI still failed to state a misappropriation claim because “mere possession of trade secrets is not sufficient to constitute misappropriation.”

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The Washington Examiner described how Lin rejected xAI’s argument that OpenAI sought information about Grok 4 because ChatGPT updates were struggling to compete, saying discussions about prior work are routine recruiting and do not, by themselves, suggest an effort to obtain trade secrets.

OpenAI maintained throughout the litigation that Li never worked for the company and that it never obtained xAI trade secrets, and the Washington Examiner quoted OpenAI saying, “This baseless lawsuit was never anything more than yet another front in Mr. Musk’s ongoing campaign of harassment.”

The dismissal adds to a sequence of setbacks in Elon Musk’s broader feud with OpenAI and CEO Sam Altman, with the Washington Examiner noting that last month a federal jury rejected Musk’s $150 billion lawsuit alleging OpenAI, Altman, and co-founder Greg Brockman abandoned the organization’s original nonprofit mission.

In that separate case, the Washington Examiner said jurors unanimously concluded Musk’s claims were filed too late and fell outside the applicable statute of limitations, preserving Altman’s leadership of OpenAI and allowing the company to continue operating under its current corporate structure.

Capital.fr reported that a separate trial is scheduled to oppose Musk and Sam Altman “dès le 27 avril prochain,” after Musk accused OpenAI of not respecting its initial mission by abandoning its nonprofit status.

Capital.fr also said Musk could seek between 79 and 134 milliards de dollars de dommages et intérêts, and it quoted xAI’s founder’s dispute with OpenAI as part of a wider legal war that includes a complaint rejected by a judge who found xAI “n’a livré aucune preuve” to support its allegations.