2 Musk's Claim against OpenAI May go to Trial In Part, Judge Says

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Musk takes legal action against to obstruct 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 uncommon, specialist states

(Adds judge did not decide whether to provide the injunction in paragraph 5, OpenAi's attorneys' remark 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, adding 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) sit on the stand, present it to a jury, and a jury will choose who is right." Rogers was thinking about Musk's recent ask for an initial injunction to obstruct OpenAI's conversion before going to trial, the current relocation in an animosity match in between the world's richest person and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not decide whether to release the injunction Tuesday, but at one point suggested that Musk's legal group had actually not presented sufficient proof for her to issue the injunction, and indicated she may hold an evidentiary hearing, where both sides could present witnesses and proof. The last time Rogers supplied an initial injunction remained in Epic Games' case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, but left before the and consequently established the competing AI startup xAI in 2023. OpenAI is now attempting to transition from a nonprofit into a for-profit entity, which it says it needs to do to protect the capital needed to develop the best synthetic intelligence designs. In 2015, Musk filed a claim against OpenAI and Altman, stating that OpenAI ´ s founders originally approached him to fund a nonprofit concentrated on establishing AI to benefit humankind, but that it is now concentrated on earning money. He later on broadened the claim to add federal antitrust and other claims, visualchemy.gallery and in December asked the judge administering over the case to stop OpenAI from transitioning to a for-profit.

In action to Musk ´ s claim, OpenAI has said it will move to dismiss Musk ´ s claims which Musk "need to be contending in the marketplace instead of the courtroom." The stakes on OpenAI's business shift have now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of as much as $25 billion under conversation with SoftBank are conditioned on the business restructuring to eliminate the not-for-profit ´ s control.

During the hearing, OpenAI's lawyers said the reason to enable OpenAI to become a for-profit entity is due to the fact that it would be essential to facilitate the mission of the not-for-profit.

Such a restructuring would be highly uncommon, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care companies like healthcare facilities, not venture capital-backed business, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)