OpenAI filed a motion to dismiss Elon Musk’s high-profile lawsuit, which accused the firm of breaching contracts, engaging in fraud, and violating racketeering laws.
The motion, filed in the US District Court for the Northern District of California, argues that Musk’s claims are legally unfounded and are part of a broader strategy to gain a competitive advantage in the AI industry.
Musk, who co-founded OpenAI in 2015, filed the lawsuit in August after retracting an earlier lawsuit. The lawsuit accused the company of abandoning its non-profit mission in favor of commercial partnerships, including a deal with Microsoft.
Musk claims that OpenAI’s actions breached an agreement to open-source its technology for the public good and refrain from licensing it to for-profit entities. Musk further accuses OpenAI of engaging in fraud, unjust enrichment, and violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act.
OpenAI disputes existence of contract
OpenAI’s motion to dismiss centers on the argument that Musk’s breach of contract claims are baseless because no enforceable contract existed between Musk and OpenAI.
The firm argued that the 2015 correspondence Musk relied on to assert the existence of a “Founding Agreement” were informal discussions and not legally binding commitments.
Additionally, OpenAI claims the emails and statements Musk points to were part of early-stage talks about the firm’s mission but do not establish any contractual obligations to open-source its technology or avoid for-profit partnerships.
According to the filing:
“Musk cannot point to any specific promise made by OpenAI to support his claims.”
The defense emphasized that Musk’s donations to OpenAI, which began a year after the alleged agreement was formed, do not constitute bargained-for consideration, which is a necessary component of a valid contract.
Additionally, OpenAI asserts that the terms Musk claims were breached — such as the commitment to avoid licensing technology to companies like Microsoft — were never agreed upon by OpenAI or its executives.
The motion describes Musk’s narrative as speculative and unsupported by the evidence, arguing that his claims should be dismissed.
Allegations rejected as speculative
OpenAI also challenged Musk’s allegations of fraud and racketeering under the RICO Act, arguing that these claims lack the specificity required to proceed in court.
According to the defense, Musk has failed to provide concrete evidence that OpenAI executives engaged in fraudulent behavior or conspired to defraud him. The motion argued that Musk’s assertions are based on conjecture rather than any factual support.
The filing stated:
“Musk’s RICO claims rest on implausible theories that stretch beyond the facts.”
OpenAI’s defense contends that Musk’s allegations of wire fraud and self-dealing are part of an effort to inflate the lawsuit’s scope but do not meet the legal threshold for fraud or racketeering.
Musk’s standing questioned
In addition to the contract and fraud claims, OpenAI’s motion argued that Musk, as a donor, lacks the legal standing to bring forward fiduciary duty claims against the organization.
The company, which was originally established as a non-profit in Delaware, maintains that donors like Musk have no legal authority to challenge decisions made by the board or to control the organization’s strategic direction.
OpenAI’s attorneys further argued that Musk has no reversionary interest in OpenAI’s assets and that his status as a donor does not grant him the right to dictate the company’s business decisions. They added that OpenAI’s evolution into a hybrid for-profit and non-profit entity, as well as its partnership with Microsoft, is within the company’s rights and does not constitute a breach of any duty to Musk.
The hearing for the motion is scheduled for Nov. 12 before US District Judge Yvonne Gonzalez Rogers in Oakland, California. If the court grants OpenAI’s motion, it could end the lawsuit early.
However, if the motion is denied, the case could proceed to discovery, during which both sides would be required to produce additional evidence supporting their claims.
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