Elon Musk Loses OpenAI Lawsuit as Jury Rules His Claims Are Out of Time

A jury has decided that Elon Musk's claims against OpenAI are barred by the statute of limitations. The verdict, reached after just two hours of deliberation, ends a high-profile trial that had captivated America's tech scene for three weeks. Musk's lawyer said they would appeal.

The case was about the early years of OpenAI, the maker of ChatGPT. Musk had accused OpenAI and its CEO Sam Altman of fraud, arguing that the founders had personally enriched themselves at Musk's expense – and that Microsoft had helped them do it. He sought between 134 billion and 150 billion in damages, as well as the removal of Altman as CEO and the reversal of OpenAI's restructuring from the previous autumn.

OpenAI was founded in 2015 as a nonprofit organisation. Today, it stands at the forefront of the AI revolution, generating $2 billion in monthly revenue and planning to go public later this year. The trial put that entire future at risk. For three weeks, nine jurors and a presiding judge in a federal court in Oakland, California, heard testimony from Musk, OpenAI's leadership, Microsoft CEO Satya Nadella, and numerous experts in AI and corporate structures.

The core of Musk's argument was simple: he had supported OpenAI believing it would remain a nonprofit, researching artificial intelligence for the benefit of all humanity. By turning OpenAI into a for-profit company focused on generating returns for its owners, Musk claimed, Altman had violated the nonprofit's purpose and unjustly enriched OpenAI. An original concern of OpenAI's founders had been the consequences of a profit-driven company like Google controlling AI. The question was whether Musk genuinely believed in those altruistic motives and was defrauded – or whether he was partly self-interested and used the scare scenario of a Google-dominated world to generate sympathy for OpenAI.

For OpenAI, the stakes could not have been higher. Beyond the astronomical damages, Musk demanded that Altman be removed as CEO and that the restructuring from last autumn be reversed. That restructuring had freed OpenAI from much of its nonprofit status, which was necessary to attract new investors and for the planned IPO. Although Musk did not seek the damages for himself – he wanted the money awarded to OpenAI's nonprofit arm – the company would have been effectively ruined if his demands had succeeded. The race for generative AI is capital-intensive. Many investments in OpenAI are tied to its for-profit status. Without that, the startup would lack the funds to sustain its business.

Experts had considered it unlikely that Musk would win his demands. OpenAI did not unilaterally transform itself into a for-profit company; the restructuring was approved by US authorities. It is uncommon for a district judge to reverse such a decision. Nevertheless, Musk could have been awarded damages. The trial lasted three weeks. If the jury had found in his favour, the judge would have determined remedies in a second phase of the trial.

Sam Altman and OpenAI argued that Musk was neither lied to nor exploited – that he had participated in the company's transformation. In 2019, OpenAI created a for-profit subsidiary to attract investors like Microsoft with the promise of returns, thereby funding increasingly expensive research infrastructure. Altman portrayed Musk's lawsuit as a revenge campaign by a losing rival. Musk, after all, had since built his own AI company, xAI, which competes directly with OpenAI.

The nine jurors took only two hours to reach a consensus: Musk's claims are time-barred. They did not address the individual aspects of the lawsuit at all. Judge Yvonne Gonzalez, who had the final word, agreed with the jury's conclusion, ruling that the case was indeed barred by the statute of limitations. The second phase of the trial – which would have determined remedies for any wrongdoing – is now moot. According to US media, OpenAI's lawyers celebrated the result. Musk's legal team appeared dejected; the trial preparation had taken several years. Musk's lead attorney, Steven Molo, said they would appeal.

The verdict means OpenAI can proceed with its IPO plans as originally intended, and Altman and his leadership team will remain in place.

The trial did, however, offer a series of explosive insights into the private lives of tech entrepreneurs. Witnesses included several former confidants of Sam Altman. Ilya Sutskever and Mira Murati – who had led OpenAI's research and technology divisions and have since started their own companies – testified. Microsoft CEO Satya Nadella also appeared, as did several former OpenAI board members, including Helen Toner and Tasha McCauley. Those two had played a key role in Altman's temporary ousting as CEO more than two years ago, expressing doubts about whether Altman was suited to lead a company as socially significant as OpenAI.

Shivon Zilis, an AI investor who became involved with OpenAI in 2016 and became its youngest board member, was also a focus of attention. In subsequent years, she held leadership positions at Musk's companies Tesla and Neuralink. Altman accused her of passing internal information to Musk and hiding her close personal relationship with him. Zilis is the mother of four of Musk's children; the first two were born in 2021. In a 2018 text message, Zilis asked Musk directly whether she should maintain close ties to OpenAI "to preserve the flow of information" or distance herself. Musk advised "close and friendly" relationships. Zilis resigned from the OpenAI board in 2023 due to conflicts of interest.

The trial also examined Musk's state of mind during key discussions about OpenAI's nonprofit status in 2017. It emerged that Musk had attended the Burning Man festival in the Nevada desert at exactly that time – an event known for wild parties and drug use. Altman's lawyers were not permitted to discuss Musk's drug use, but the festival itself was fair game.

Behind the scenes, Mark Zuckerberg and Musk were cooperating. Publicly, the Meta CEO and Musk are rivals. Nevertheless, after Donald Trump's inauguration, Zuckerberg sent a friendly message to Musk, who was then leading the efficiency department DOGE. "Looks like DOGE is making progress. I've instructed our teams to remove content that exposes or threatens people on your team. Let me know if I can help in any other way," Zuckerberg wrote. Musk then suggested that they buy OpenAI together.

Sam Altman, for his part, was courting Musk in private messages. When Musk tweeted in 2023 about his frustration with OpenAI's for-profit direction, Altman wrote to him: "You are my hero," and "I am incredibly grateful for everything you have done to help – I don't think OpenAI would exist without you. And it really hurts when you attack OpenAI publicly."

A particularly important piece of evidence was the diary of Greg Brockman, formerly OpenAI's CTO and now its president. He made critical remarks about both Altman and Musk, considered how Musk could be sidelined, and speculated on how he personally could earn a billion dollars from OpenAI.

The trial offered a rare window into how the tech elite thought about artificial intelligence a decade ago – and how those thoughts have changed. In 2015, Google's DeepMind was the leading AI research lab. Altman and Musk's argument for attracting top researchers and funders was that AGI – artificial general intelligence with human-like capabilities – would change the world. Such technology, they argued, should not be in the hands of a for-profit company but of an independent research institution.

Today, language models have created a form of AI that feels human-like. It is changing the world. But it is not the case that whoever owns this technology can enslave the rest of the world because it is so overpowering. AI is a tool like many other technologies. Contrary to fears, a single institution does not lead AI research. Instead, American startups and tech giants compete among themselves and with their Chinese counterparts for dominance. Consumers benefit from the competition; many high-quality language models are openly accessible.

For now, OpenAI can go public. Altman remains CEO. Musk is heading to appeal. And the rest of the world has learned that even billionaires with armies of lawyers can lose – not on the merits, but on the clock. The statute of limitations, it turns out, is no respecter of grudges.