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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 unusual, specialist says

(Adds judge did not choose whether to provide the injunction in paragraph 5, OpenAi's legal representatives' 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 stop its conversion to a for-profit entity may go to trial, adding that the Tesla CEO will have to appear in court and affirm.

"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 decide who is right." Rogers was considering Musk's current ask for a preliminary injunction to obstruct OpenAI's conversion before going to trial, the most recent relocation in a grudge match between the world's wealthiest individual and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not choose whether to release the injunction Tuesday, however at one point recommended that Musk's legal group had not presented sufficient proof for her to release the injunction, and indicated she may hold an evidentiary hearing, where both sides might provide 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, however left before the business removed and subsequently founded the contending AI startup xAI in 2023. OpenAI is now trying to transition from a not-for-profit into a for-profit entity, which it states it needs to do to secure the capital needed to develop the very best expert system designs. In 2015, Musk submitted a claim against OpenAI and Altman, stating that OpenAI ´ s founders initially approached him to fund a not-for-profit focused on establishing AI to benefit humankind, however that it is now focused on generating income. He later on expanded the claim to add and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In action to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims and that Musk "need to be contending in the market instead of the courtroom." The stakes on OpenAI's business transition have now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of approximately $25 billion under discussion with SoftBank are conditioned on the company restructuring to get rid of the not-for-profit ´ s manage.

During the hearing, OpenAI's lawyers said the factor to permit OpenAI to become a for-profit entity is since it would be needed to facilitate the objective of the not-for-profit.

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