Elon Musk’s xAI Sues OpenAI Again, This Time Over Alleged Trade Secret Theft

Elon Musk’s synthetic intelligence firm xAI filed a federal lawsuit on Wednesday towards OpenAI, accusing its rival of orchestrating a “coordinated, unfair, and illegal marketing campaign” to steal proprietary know-how via focused worker poaching.

The grievance, filed in California, alleges OpenAI “one way or the other” induced former xAI workers to misappropriate the corporate’s complete supply code, coaching strategies, and knowledge heart deployment methods.

Musk, a co-founder of OpenAI alongside Sam Altman, Greg Brockman, Illya Sutskever, and others in 2015, stepped down from the board in 2018, citing conflicts of curiosity together with his firm, Tesla, and its self-driving vehicles. Since then, the tech billionaire has assumed a combative stance towards OpenAI, together with submitting a separate lawsuit final month.



OpenAI recruiter Tifa Chen concurrently focused a number of xAI workers, providing multi-million greenback packages to engineers who then stole supply code and uploaded it to non-public gadgets inside hours of their communications, the lawsuit alleges.

Xuechen Li, an early xAI engineer, allegedly “uploaded your entire xAI supply code base to a private cloud account” in July 2025, and later “admitted in a handwritten confession” that he misappropriated xAI’s code and presentation supplies on coaching methods.

The lawsuit particulars timestamps exhibiting Li’s code theft occurred inside hours of encrypted Sign messages with Chen, who allegedly responded “no manner!” after Li copied the recordsdata, earlier than OpenAI prolonged its multi-million greenback supply.

Jimmy Fraiture, one other early xAI engineer, allegedly “used the AirDrop function to switch” confidential supply code “no less than 5 occasions” after signing with OpenAI, stealing “the vast majority of xAI’s code” he oversaw, plus experimental folders from 4 co-founders.

An unnamed senior finance government who left for OpenAI allegedly known as these operations xAI’s “secret sauce,” saying, “The info heart group. Their pace and precision blew me away. I’d NEVER wish to compete towards them.”

The chief then took a lesser position at OpenAI, centered on knowledge heart spending technique despite the fact that he had no prior AI expertise, and when confronted about confidentiality obligations, allegedly “responded with crude sexual expletives” and refused to signal termination paperwork.

Navodaya Singh Rajpurohit, authorized companion at Coinque Consulting, instructed Decrypt  the case “leans closely on worker poaching,” noting that whether or not it crosses from aggressive recruiting to illegal misappropriation “will rely on proof not included within the submitting,” and that “hiring alone is never sufficient to show trade-secret misuse.”

Ishita Sharma, managing companion at Fathom Authorized, instructed Decrypt that xAI should outline its “secret sauce” broadly, grouping GPU racking, vendor contracts, pricing curves, and orchestration playbooks, which, she famous, may be described “by the outcomes they ship — like sooner deployment or cheaper scaling,  with out placing the precise technical diagrams or formulation on the file.”

Sharma mentioned “the recruiter angle is trickier,” since legal responsibility depends upon whether or not recruiters acted as brokers of OpenAI with the corporate’s data. 

For OpenAI’s protection, she defined, the strongest method can be to point out impartial creation via “time-stamped data: inside Git commits, R&D notes, provider invoices, and emails,” with earlier documentation offering essentially the most credibility.

xAI seeks damages, restitution, and injunctions requiring OpenAI to purge xAI materials from its programs and even destroy fashions constructed with it.

The lawsuit provides to Musk’s ongoing authorized battle with OpenAI, as final month, his corporations filed an antitrust swimsuit towards Apple and OpenAI, claiming their unique iPhone integration creates unfair market dominance.