Judge Dismisses xAI's Trade Secret Lawsuit Against OpenAI

A federal judge has dismissed a lawsuit filed by Elon Musk’s artificial intelligence company, xAI, against rival OpenAI, ruling that xAI did not demonstrate that OpenAI improperly obtained trade secrets. U.S. District Judge Rita Lin issued the order on Monday in San Francisco, dismissing the case with prejudice, meaning xAI cannot refile the complaint based on the same arguments. The lawsuit, originally filed in September 2025, alleged that OpenAI misappropriated trade secrets related to xAI’s Grok chatbot, including source code and proprietary details. The case centered on former xAI senior engineer Xuechen Li, who was recruited by OpenAI. Judge Lin found that xAI did not prove OpenAI induced Li to reveal trade secrets or that OpenAI engineers had knowledge of any improper disclosures. The judge noted that discussions about prior work experience during recruitment are standard practice and do not inherently suggest misappropriation. OpenAI maintained that Li never worked for the company and never provided it with xAI trade secrets. This dismissal marks xAI’s second legal loss against OpenAI in less than a month, following a separate $150 billion lawsuit filed by Musk that was also dismissed. xAI and OpenAI did not immediately respond to requests for comment.