There it was, posted on a printed calendar outside the San Francisco courtroom door: OpenAI was all set Wednesday to make its case that Elon Musk’s “frivolous” lawsuit against the company should be thrown out.
Except that it wasn’t set. The calendar was wrong. Instead, because the court agreed with OpenAI’s demand that Musk’s suit be designated a “complex” case, the hearing will be kicked down the road to this summer.
Ordinarily, the “complex” designation, meaning the suit “requires exceptional judicial management,” and resulting delay are legal technicalities not worth noting. But much like the artificial intelligence at issue in the dispute, little if anything about Musk’s case is ordinary, and there’s more to the ruling than what meets the eye.
The lawsuit has attracted outsize attention because it pits the mercurial billionaire Tesla CEO and X owner against the controversial giant behind ChatGPT. An early investor in OpenAI, Musk believes the company’s artificial general intelligence has surpassed human capabilities, posing what he argues is an “acute and noxious danger to humanity.”
Last year, Musk argues, OpenAI sold out by licensing its most advanced technology exclusively to Microsoft. The deal, along with a subversive corporate restructuring following OpenAI CEO Sam Altman’s surprise temporary ouster, amounted to a contract violation, Musk says.
Altman betrayed a 2015 founding agreement defining the company as a non-profit, dedicated to building artificial intelligence to benefit humans, not private corporations, the suit says.
Musk’s suit has been widely derided by critics and media who say he filed a breach of contract suit against OpenAI without a contract to point to. The contradiction makes the suit both frivolous, OpenAI says, and at the same time, complex – requiring a judge with experience handling messy litigation.
The lawsuit is based on “convoluted, often incoherent, factual premises,” OpenAI says in a legal filing. “Musk says his founding agreement was ‘memorialized,’ but any actual agreement is conspicuously missing from the pleading.”
OpenAI and Musk – through Tesla, X, and his lawyer (and possible “social justice warrior”?) Morgan Chu – didn't respond to requests for comment from Gazetteer SF.
Jason Lohr, a San Francisco lawyer at Lohr Ripamonti & Segarich, says the importance of Musk’s case is being underestimated. The billionaire raises important questions about how startups are funded, he says. Musk wants to present a “relatively straightforward case, basically that OpenAI didn't do what it said it was going to do,” so he objected to it being designated complex, Lohr says.
“In other words, Musk would like to argue the broad themes and stay out of the weeds,” Lohr adds. “OpenAI, on the other hand, wants to get into the details, and wants to demonstrate that this case is more complicated than Elon argues.”
While Musk lost the argument over the case being designated complex, Lohr thinks he’s likely to defeat OpenAI’s attempt to get it thrown out. The lawsuit has now been assigned to San Francisco Superior Court Judge Ethan P. Schulman, who is “sharp, pragmatic, and thorough,” Lohr says. “He is going to take this case very seriously because he understands what's at stake.”
Musk’s extraordinary demands also make it complex, according to OpenAI. He wants the court to order OpenAI to make its research and technology openly available to the public, and to prohibit the company from benefitting Microsoft. Musk also wants OpenAI to return investments in the company, including his more than $44 million stake.
OpenAI says there’s a deeper, self-serving goal behind Musk’s suit.
Having launched a competing artificial intelligence company, xAI, he’s using the case to “leverage the success OpenAI has achieved and to direct OpenAI’s affairs for his own commercial benefit,” OpenAI says in a filing.
Mark Lemley, a professor at Stanford Law School, says he has no inside knowledge of Musk’s strategy but agrees the lawsuit may have an ulterior motive: raising money for xAI.
“He's behind, and OpenAI is the 800-pound gorilla in this space,” Lemley says. “If he can hobble them, it will be easier for his own company to thrive.”
