OpenAI counterclaims against Musk clear first hurdle

OAKLAND, Calif. (CN) — Elon Musk’s attempts to buy OpenAI this February may have put him in hot water, legally speaking.

A federal judge ruled that OpenAI’s counterclaims against Musk will survive as part of the billionaire’s lawsuit to stop OpenAI’s conversion into a for-profit company.

OpenAI accuses Musk of unlawfully disrupting the ChatGPT developer’s business relationships during the lawsuit by orchestrating a “sham bid” to buy the company for about $97.4 billion in February.

“At this stage, the allegations are sufficient,” U.S. District Judge Yvonne Gonzalez Rogers wrote in her 13-page decision on Tuesday.

OpenAI argued that Musk’s offer letter, which was also provided to the Wall Street Journal around the time of sending, was merely a “commercial tactic” designed to interfere in OpenAI’s business, generate maximum buzz and consume the company’s time and resources in responding to it.

The AI developer called Musk’s offer a “naked effort to disrupt the board’s consideration of a potential restructuring and sow confusion among employees and potential investors,” according to court documents.

As a result, OpenAI is asking the court for damages, as well as an injunction barring any further interference by Musk in its “economic relationships.”

“Should his campaign persist, greater harm is threatened — to OpenAI’s ability to govern in service of its mission, to the relationships that are essential to furthering that mission and to the public interest,” OpenAI said in court documents.

Musk previously asked to dismiss the counterclaims, arguing that his communications were protected by the First Amendment and California’s litigation privilege and that the claims were not sufficiently pleaded.

However, the court disagreed, finding that although California’s litigation privilege shielded the delivery of his offer letter to OpenAI, it didn’t protect the letter’s publication in the Wall Street Journal or other news outlets.

“The motion on this ground fails,” Rogers found.

The Barack Obama appointee also shot down Musk’s efforts to revive racketeering claims and breach of implied covenant claims, which were previously dismissed in May.

The case is currently scheduled for trial in March 2026.

Attorneys for Musk did not immediately respond to a request for comment, nor did a spokesperson for OpenAI.

Musk and Altman, who co-founded OpenAI in 2015 and later clashed over who should lead it, have had a long-running feud over the startup’s direction ever since Musk stepped down from the company board in 2018.

Musk, an early investor and cofounder of OpenAI, sued OpenAI CEO Sam Altman and his company in 2024, seeking a court order to prevent it from going through with for-profit restructuring. Musk claimed that the move violates OpenAI’s nonprofit mission and breaches the terms of his previous donations to the company, approximately $45 million.

Musk also accused OpenAI of violating multiple antitrust laws, including the Sherman Act, through its close partnership with Microsoft, as well as other noncompetitive behaviors such as exclusivity agreements with investors that prevent them from funding other competitors in the AI market. The billionaire argued that to deprive companies of investors — like his own xAI — was “obviously harmful” in the still-emerging AI market.

In February, a Musk-led group of investors offered to buy OpenAI for about $97.4 billion to stop its conversion into a for-profit company.

Altman quickly rejected the deal on Musk’s social platform X, saying, “no thank you, but we will buy Twitter for $9.74 billion if you want.”

The court denied Musk’s bid for an order that would block OpenAI’s conversion from a nonprofit into a completely for-profit business in March. It also further thinned Musk’s claims against OpenAI in May, dismissing numerous claims but allowing fraud claims to survive.

This case was filed in the Northern District of California.