A federal judge dismissed Elon Musk’s artificial intelligence company xAI’s trade secret lawsuit against OpenAI on June 15, with U.S. District Judge Rita Lin in San Francisco ruling that the case had no merit. The dismissal was issued with prejudice, meaning xAI cannot refile the same claims.
The lawsuit, originally filed in September 2025, alleged that former xAI employees took confidential information to OpenAI, including source code related to the Grok chatbot. The central figure in the case was Xuechen Li, a former xAI engineer who later joined OpenAI.
Judge Lin found that xAI failed to demonstrate that OpenAI had induced Li to misappropriate trade secrets. The court also found no evidence that Li disclosed any confidential xAI information during a presentation he gave while OpenAI was recruiting him. The judge concluded that continuing to pursue the matter would be futile.
An earlier version of the lawsuit had already been dismissed in February 2026. The June 15 ruling was on xAI’s amended complaint, which the company had filed after the February dismissal. With the case now closed with prejudice, legal options are exhausted.
The ruling is the latest in a series of legal setbacks for Musk in his dispute with OpenAI and its CEO Sam Altman. A California jury dismissed Musk’s separate lawsuit against OpenAI and Altman in May, finding that Musk had missed the statute of limitations for filing his claims. That case also did not reach a ruling on its merits.
Musk co-founded OpenAI in 2015 and departed from its board in 2018. He has since argued publicly that the organization abandoned its founding mission of developing artificial intelligence for the benefit of humanity when it added a for-profit structure.
OpenAI is preparing for an IPO and filed confidential paperwork with the Securities and Exchange Commission in June 2026. The company is currently valued at over a trillion dollars. The dismissal of the xAI lawsuit removes a legal cloud that had lingered over OpenAI during its IPO preparations.
xAI, which Musk founded in 2023, continues to develop the Grok chatbot and compete in the AI market. The company has not commented publicly on whether it plans to pursue any further legal action against OpenAI on different grounds.
According to court records cited by Engadget, Judge Lin’s ruling cited insufficient pleading in both the original and amended complaints.
