Elon Musk Fails Against OpenAI: The Verdict That Changes Everything

A Legal Setback for Elon Musk

On Monday, a jury delivered an advisory verdict in the case of Elon Musk versus OpenAI, marking a significant setback for the renowned entrepreneur. The jury unanimously concluded that Musk had filed his lawsuit against OpenAI too late, leading to the exclusion of his claims due to statutes of limitations. U.S. District Judge Yvonne Gonzalez Rogers immediately upheld this verdict. In response, Musk announced on X his intention to appeal, emphasizing that the judge and jury had not ruled on the merits of the case, but solely on a timing issue.

The Beginnings of OpenAI and Musk's Commitment

OpenAI was founded in 2015, co-founded by Elon Musk and a group of researchers, with the goal of developing artificial intelligence for the benefit of humanity. The organization was established as a non-profit entity, free from the pressures of financial profitability. Musk contributed $38 million, convinced by the promises of Sam Altman, CEO of OpenAI, and Greg Brockman, president, to maintain this non-profit orientation.

Musk's Claims Against OpenAI

Elon Musk made two main claims against OpenAI. First, he accused Altman and Brockman of violating the charitable trust he had established through his donations by transforming the company into a for-profit entity. Second, he alleged that they had unjustly enriched themselves at his expense. Musk filed his lawsuit in 2024, seeking to annul a 2025 restructuring that converted OpenAI's for-profit subsidiary into a public benefit corporation, as well as the removal of Altman and Brockman.

The Statutes of Limitations in Question

OpenAI argued that Musk had exceeded the legal timeframe to file a lawsuit. The statute of limitations for a violation of charitable trust is three years, while for unjust enrichment, it is two years. This means Musk should have discovered or had reason to discover these violations by 2021 at the latest for the charitable trust and by 2022 for unjust enrichment.

Musk's Phases of Disillusionment

Musk testified that he went through three phases in his perception of OpenAI. Initially, he was enthusiastic and supportive of the company. Then, he began to doubt the truthfulness of Altman and Brockman's statements. Finally, he became convinced that they were exploiting the organization's non-profit status for their own benefit.

2017: Musk's Proposal for a For-Profit Subsidiary

In 2017, Musk and the co-founders of OpenAI considered creating a for-profit subsidiary to raise funds necessary for developing artificial general intelligence. Musk even proposed merging OpenAI with Tesla. During the trial, OpenAI's lawyers pointed out that Musk was aware of Altman and Brockman's intentions as early as 2017 and could have pursued legal action at that time. Musk stated that he was not opposed to the idea of a small for-profit subsidiary, as long as it did not compromise the organization's primary mission.

2019: The Creation of a For-Profit Subsidiary

In 2019, OpenAI launched a for-profit subsidiary with capped profits, while securing a $1 billion investment from Microsoft. Musk stated that he did not see this as a violation of the organization's original mission, as profits were limited. He claimed he had no reason to file a complaint at that time.

2020: The Exclusive Agreement with Microsoft

In 2020, Microsoft acquired an exclusive license for OpenAI's GPT-3 model. Musk expressed his concerns on X, but Altman reassured him that OpenAI remained committed to its mission. Musk claimed he was skeptical but still had no reason to pursue the company at that time.

2022: The Turning Point

It was not until 2022 that Musk claimed to have discovered that OpenAI had deviated from its non-profit mission, as Microsoft was preparing to invest $10 billion in the company. Musk then realized that the company had become a for-profit entity, with a valuation of $20 billion, prompting him to take action. He expressed his concerns to Altman, stating that this investment meant Microsoft expected a substantial financial return.

The Jury's Verdict

The jury was tasked with determining whether Musk had reason to believe he had been deceived before 2021. Their verdict concluded that Musk indeed had reasons to suspect deception before that date, without ruling on the truthfulness of the deception itself. Courts often prefer to rule on procedural issues, such as statutes of limitations, to avoid addressing the complex merits of cases.

The Next Step for Musk

Elon Musk announced his intention to appeal this decision to the Ninth Circuit Court of Appeals, which handles appeals from district courts in California and other states. One of Musk's attorneys, Steven Molo, emphasized that the 2023 agreement with Microsoft was different, insisting that this agreement marked a significant change in the structure and mission of OpenAI.