Elon Musk’s Fraud Lawsuit Against OpenAI Heads To Trial

Key takeaways

U.S. District Judge Yvonne Gonzalez Rogers made clear during a hearing Wednesday in Oakland, California, that she intends to reject OpenAI's motion to dismiss the 17-month-old case.

"This case is going to trial," Gonzalez Rogers said emphatically during the occasionally testy 90-minute hearing, according to multiple news reports.

Evidence points to jury consideration

The lawsuit alleges that OpenAI abandoned its founding mission as a nonprofit research organization dedicated to developing AI "for the benefit of humanity" and instead evolved into a profit-driven enterprise now valued at $500 billion.

Musk, who co-founded OpenAI in 2015 alongside Sam Altman and others, claims he provided approximately $38 million—roughly 60% of the company's early funding—based on assurances that it would remain a nonprofit.

Judge Gonzalez Rogers cited a 2017 diary entry by OpenAI president Greg Brockman as supporting evidence for allowing the case to proceed.

In the diary, Brockman wrote, "We've been thinking that maybe we should just flip to a for-profit. Making the money for us sounds great and all," according to court filings.

The judge emphasized that witness credibility would be central to the case. "Part of this is about whether a jury believes the people who will testify and whether they are credible," Gonzalez Rogers said.

Both Musk, whose fortune is estimated at $713 billion, and Altman, worth approximately $2 billion, would likely be summoned to testify under oath if the trial proceeds.

Counterclaims and corporate drama

The legal battle has spawned additional complications. In counterclaims upheld by the court in August, OpenAI accused Musk of orchestrating a "sham bid" to purchase the company for $97.4 billion in February 2025.

OpenAI argued the offer was designed to disrupt its business relationships and consume company resources rather than represent a genuine acquisition attempt.

OpenAI chairman Bret Taylor formally rejected the bid, stating, "OpenAI is not for sale, and the board has unanimously rejected Mr. Musk's latest attempt to disrupt his competition.

" Altman responded to the offer on X (formerly Twitter) by saying, "No thank you, but we will buy Twitter for $9.74 billion if you want."

Musk's attorney Marc Toberoff defended the bid, claiming, "Of course they're putting the charity's assets (control of the for-profit enterprise) up for sale. That's what their 'reorganization' is all about.

They're just selling it to themselves at a fraction of what Musk has offered."

Key legal challenges ahead

One critical issue the judge must resolve before trial is determining when the alleged fraud occurred, as Musk's fraud claims face a three-year statute of limitations.

Gonzalez Rogers indicated she would likely allow a jury to decide this timing question.

Microsoft, which has accumulated a $135 billion stake in OpenAI since investing $1 billion in the company's for-profit subsidiary in 2019, is also named as a defendant.

The lawsuit includes allegations of aiding and abetting, breach of fiduciary duty, and unjust enrichment against the tech giant. A Microsoft lawyer argued there is no evidence the company "aided and abetted" any alleged misconduct.

The trial is tentatively scheduled for March 30. The judge said she still needs to determine logistics for how the trial will be structured and whether to dismiss certain unjust enrichment allegations against Microsoft.

OpenAI, Altman, and Brockman have denied all claims, characterizing Musk as a commercial rival attempting to undermine a leading AI company.

Following Wednesday's hearing, OpenAI released a statement calling Musk's lawsuit "baseless" and part of a pattern of harassment.

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