A federal judge in San Francisco has thrown out a trade secrets lawsuit filed by Elon Musk's artificial intelligence company xAI against OpenAI, ruling that the complaint did not show the rival company improperly obtained confidential information.
U.S. District Judge Rita Lin said xAI failed to establish that OpenAI induced former xAI senior engineer Xuechen Li to reveal secrets tied to the Grok chatbot. The judge also said there was no showing that OpenAI engineers knew Li might have disclosed confidential material.
The decision, issued Monday, dismisses the case with prejudice, meaning xAI cannot refile the same claims. Lin said further amendment would be futile, and she had already rejected an earlier version of the lawsuit in February.
The case centered on allegations that OpenAI sought information about xAI's technology as it recruited Li. xAI claimed the company wanted details related to the July 2025 launch of Grok 4 and was interested in techniques the engineer understood, including reinforcement learning and post-training methods. The lawsuit also said the dispute involved broader claims of confidential information, including source code, after xAI employees left for OpenAI.
Lin rejected that theory, saying questions about a candidate's past work are a normal part of hiring and do not, by themselves, show that a company is trying to obtain trade secrets. She wrote that accepting xAI's argument could expose employers to liability whenever they ask applicants about prior projects.
OpenAI has denied that it ever received xAI secrets and said Li never worked for the company. In asking the court to dismiss the case, OpenAI's lawyers argued that the company does not need or want anyone's trade secrets, especially not from xAI.
OpenAI responded to Monday's ruling by calling the lawsuit baseless and describing it as part of Musk's broader campaign against the company. xAI and its lawyers did not immediately respond to requests for comment.
Li is also being sued separately by xAI and has denied wrongdoing.
The ruling marks another legal setback for Musk in his ongoing fight with OpenAI. In May, a federal jury ruled against him in a separate case in which he accused OpenAI and chief executive Sam Altman of abandoning the company's nonprofit mission to enrich themselves.
Monday's dismissal is Musk's second loss against OpenAI in less than a month, underscoring the continuing legal and commercial tensions between the two artificial intelligence companies. Musk was an early OpenAI co-founder before later breaking away and launching xAI as a competitor in the race to build advanced chatbots.
The decision also leaves OpenAI free of one of the more serious accusations brought by xAI as rivalry among major AI developers continues to spill into court. For now, the judge's ruling narrows the dispute to a separate case against Li, while closing the door on xAI's claim against OpenAI itself.