OpenAI and Microsoft Fail to Avoid Trial in Elon Musk Lawsuit

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OpenAI and Microsoft Fail to Avoid Trial in Elon Musk Lawsuit

20.01.2026 News

OpenAI and Microsoft have lost their final attempt to have Elon Musk’s lawsuit dismissed, Bloomberg reports. A federal judge in Oakland, California, rejected the companies’ motion to terminate the case and ruled that it should proceed to a jury trial. The trial is scheduled to begin in late April.

Musk alleges that OpenAI’s leadership, headed by Sam Altman, violated the startup’s founding mission as a public charity when it accepted billions of dollars in investment from Microsoft and began transforming into a commercial entity. Musk was one of OpenAI’s co-founders in 2015 and later founded his own artificial intelligence company, xAI, in 2023.

OpenAI has called Musk’s lawsuit baseless, saying it is part of a “long-running campaign of harassment.” The company emphasized that it remains focused on supporting the OpenAI Foundation, which it says is among the best-funded nonprofit organizations.

However, Judge Yvonne Gonzalez Rogers declined to dismiss Musk’s central claim that OpenAI breached its obligation to operate as a charitable organization. In her ruling, the judge noted that while the evidence is not definitive, Musk argues that his financial contribution was clearly intended as a charitable donation and was subject to two fundamental conditions: open-source development and the preservation of OpenAI’s nonprofit status. According to the judge, these conditions were consistent with OpenAI’s original charter and mission.

The court also ruled that the fact Musk donated $38 million through an intermediary does not deprive him of the right to demand compliance with those conditions. A different conclusion, the judge said, would significantly weaken oversight mechanisms for enforcing obligations of charitable trusts.

In addition, the judge allowed fraud claims to proceed. She cited internal correspondence from 2017 in which OpenAI co-founder Greg Brockman initially reaffirmed the company’s commitment to a nonprofit model but later acknowledged in a private note that public statements about such commitment may have been untrue.

Musk’s attorney, Marc Toberoff, said the ruling confirms the existence of substantial evidence that OpenAI’s leadership knowingly misled Musk about the company’s charitable mission in favor of personal enrichment.

The judge also stated that it is up to the jury to determine whether Microsoft helped OpenAI breach its obligations to donors, including Musk. At the same time, she dismissed claims of Microsoft’s “unjust enrichment,” noting the absence of any quasi-contractual relationship between Musk and the corporation.

The conflict between Musk and Altman, once partners, has continued since 2024. Musk’s xAI has become one of OpenAI’s main competitors, and last year Altman’s company rejected Musk’s surprise offer to acquire the nonprofit’s assets for $97.4 billion. Altman has described the lawsuit as an attempt to use the legal system to slow down a rival’s development.

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