OpenAI and Microsoft will face a jury trial after a U.S. judge rejected their efforts to dismiss Elon Musk’s lawsuit accusing the artificial intelligence startup of betraying its founding principles as a public charity. The ruling, issued Thursday by a federal judge in Oakland, California, clears the way for a trial scheduled for late April, escalating a high-profile legal battle between former allies at the center of the global AI race.
Musk, who co-founded OpenAI in 2015 alongside Sam Altman and others, argues that the organization violated its original mission by accepting massive investments from Microsoft and restructuring its operations to function as a for-profit business. He claims his early financial backing was conditioned on OpenAI remaining open source and operating as a nonprofit dedicated to advancing artificial intelligence for the public good.
U.S. District Judge Yvonne Gonzalez Rogers declined to dismiss Musk’s core allegation that OpenAI breached its obligations as a charitable trust. In her ruling, she said Musk had plausibly argued that his contributions were made for a specific charitable purpose aligned with OpenAI’s original charter, and that those conditions may have been undermined by the company’s later actions. The judge also rejected OpenAI’s argument that Musk lacked standing because he used an intermediary to donate $38 million in seed funding, warning that such a view would weaken enforcement of charitable trusts more broadly.
The court also allowed Musk’s fraud claims to proceed, citing internal communications from OpenAI leadership that appeared to show uncertainty about the organization’s long-term nonprofit status. In a 2017 email referenced in the ruling, OpenAI co-founder Greg Brockman told Musk he wanted to continue with a nonprofit structure. Yet a private note written two months later suggested hesitation, warning that publicly committing to nonprofit status could be misleading if the organization later shifted to a for-profit model.
OpenAI strongly rejected Musk’s allegations, calling the lawsuit baseless and part of a broader pattern of harassment. The company said it remained focused on supporting the OpenAI Foundation, which it described as one of the best-resourced nonprofits in the world. Microsoft, OpenAI’s largest backer, did not immediately comment on the ruling.
The case comes as OpenAI undergoes a major corporate transformation. In October, the maker of ChatGPT, recently valued at around $500 billion, announced a restructuring that granted Microsoft a 27% ownership stake while preserving control by the nonprofit entity overseeing its for-profit operations. The shift to a public benefit corporation marked the fulfillment of a long-standing objective for Altman, OpenAI’s chief executive.
Relations between Musk and Altman have deteriorated sharply in recent years, with the two now leading rival AI ventures. Musk founded xAI in 2023, positioning it as a direct competitor to OpenAI. Their dispute has spilled into multiple legal battles since 2024, including OpenAI’s rejection last year of Musk’s unsolicited $97.4 billion bid to acquire the nonprofit assets that control the company.
Altman has accused Musk of using the courts to weaponize the legal system in an effort to slow down a competitor. With the judge’s decision sending the case to trial, the conflict now moves into a critical phase that could have far-reaching implications for the governance, funding and mission of one of the world’s most influential artificial intelligence companies.
