OpenAI seeks over $1 million from xAI as legal battle escalates

OpenAI has asked a US federal court to order Elon Musk's xAI to pay more than $1 million in legal expenses after the dismissal of a trade secrets lawsuit brought against the ChatGPT maker, Bloomberg reported.

The filing was made on Monday, the same day xAI notified the court that it plans to appeal the dismissal of its lawsuit. The latest developments mean the dispute between the two artificial intelligence (AI) companies is set to continue even as OpenAI begins defending itself against a separate trade secrets lawsuit filed by Apple, according to the report.

The dispute with xAI centres on allegations that OpenAI recruited employees from the company and encouraged them to disclose confidential information. Bloomberg also reported that OpenAI, in its latest court filing, argued that the lawsuit lacked evidentiary support and should never have been brought to court, adding that it incurred significant legal costs in defending the claims.


The case has already been dismissed twice by the US District Court for the Northern District of California. In February, the court ruled that xAI had failed to show misconduct by OpenAI, noting that the complaint primarily relied on the departure of eight xAI employees who later joined OpenAI. After xAI filed an amended complaint in March, Judge Rita Lin dismissed the revised lawsuit as well in June.

According to Bloomberg, the judge found that the additional allegations, including claims that OpenAI asked a newly hired employee about previous work, did not establish trade secret theft. Instead, the court concluded that the complaint attempted to portray routine hiring interactions as improper efforts to obtain confidential information.

While the xAI litigation moves toward the appeals process, the iPhone maker’s lawsuit alleges that OpenAI encouraged former Apple employees that it had hired to share confidential information, including details related to future products, engineering drawings, components, and other proprietary materials. Apple claims the information was sought as part of OpenAI's efforts to develop its own hardware devices.

Apple is seeking monetary damages, a court order directing OpenAI to stop the alleged conduct, and the destruction of any proprietary information that may have been obtained. Responding to Apple's complaint, OpenAI said it has "no interest in other companies' trade secrets" and remains focussed on building innovative technology.

The legal disputes come as OpenAI is reportedly preparing for a potential initial public offering (IPO), bringing additional attention to the company's legal and governance challenges.