Musk takes legal action against to obstruct OpenAI's conversion to a for-profit structure
Musk cofounded OpenAI with Altman in 2015
OpenAI argues for-profit relocation needed for capital
Nonprofit to for-profit conversion unusual, professional states
(Adds judge did not decide whether or not to release the injunction in paragraph 5, OpenAi's lawyers' remark in paragraph 13)
By Anna Tong and Akash Sriram
OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk's claim against OpenAI to stop its conversion to a for-profit entity may go to trial, adding that the Tesla CEO will have to appear in court and testify.
"Something is going to trial in this case," U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.
"(Elon Musk will) rest on the stand, present it to a jury, and a jury will choose who is right." Rogers was thinking about Musk's current ask for a preliminary injunction to block OpenAI's conversion before going to trial, the latest relocation in an animosity match in between the world's richest person and OpenAI CEO Sam Altman that is playing out openly in court.
Rogers did not decide whether to provide the injunction Tuesday, but at one point suggested that Musk's legal team had actually not provided adequate proof for her to provide the injunction, and indicated she may hold an evidentiary hearing, where both sides might present witnesses and proof. The last time Rogers offered a preliminary injunction remained in Epic Games' case against Apple in May 2021.
Musk cofounded OpenAI with Altman in 2015, however left before the business took off and consequently established the competing AI startup xAI in 2023. OpenAI is now attempting to shift from a not-for-profit into a for-profit entity, which it states it requires to do to protect the capital required to establish the finest expert system models. In 2015, Musk submitted a claim against OpenAI and Altman, stating that OpenAI ´ s creators initially approached him to money a not-for-profit focused on developing AI to benefit humanity, but that it is now focused on earning money. He later broadened the claim to add federal antitrust and other claims, and in December asked the judge administering over the case to stop OpenAI from transitioning to a for-profit.
In action to Musk ´ s claim, OpenAI has said it will move to dismiss Musk ´ s claims which Musk "need to be completing in the marketplace instead of the courtroom." The stakes on OpenAI's corporate shift have actually now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of approximately $25 billion under discussion with SoftBank are conditioned on the business reorganizing to eliminate the nonprofit ´ s manage.
During the hearing, OpenAI's attorneys said the factor to allow OpenAI to become a for-profit entity is since it would be essential to assist in the mission of the nonprofit.
Such a restructuring would be extremely uncommon, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have traditionally been for healthcare companies like healthcare facilities, asteroidsathome.net not endeavor capital-backed business, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Choy)
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