Musk takes legal action against to block OpenAI's conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move needed for capital

Nonprofit to for-profit conversion unusual, specialist says

(Adds judge did not decide whether or not to provide the injunction in paragraph 5, OpenAi's attorneys' comment in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk's claim against OpenAI to stop its conversion to a for-profit entity might go to trial, adding that the Tesla CEO will need to appear in court and affirm.

"Something is going to trial in this case," U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

"(Elon Musk will) rest on the stand, present it to a jury, and a jury will decide who is right." Rogers was thinking about Musk's recent ask for an initial injunction to block OpenAI's conversion before going to trial, the most recent relocation in an animosity match in between the world's richest individual and OpenAI CEO Sam Altman that is playing out openly in court.

Rogers did not decide whether or not to issue the injunction Tuesday, however at one point suggested that Musk's legal team had not presented sufficient proof for engel-und-waisen.de her to issue the injunction, smfsimple.com and suggested she might hold an evidentiary hearing, where both sides could present witnesses and proof. The last time Rogers provided a preliminary injunction remained in Epic Games' case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, however left before the business took off and consequently established the contending AI start-up xAI in 2023. OpenAI is now trying to shift from a not-for-profit into a for-profit entity, which it states it needs to do to secure the capital required to develop the finest synthetic intelligence models. In 2015, Musk submitted a claim against OpenAI and pipewiki.org Altman, stating that OpenAI ´ s creators originally approached him to fund a nonprofit focused on establishing AI to benefit mankind, mariskamast.net however that it is now concentrated on making money. He later on broadened the claim to add federal antitrust and other claims, and in December asked the judge administering over the case to stop OpenAI from transitioning to a for-profit.

In reaction to Musk ´ s claim, OpenAI has said it will transfer to dismiss Musk ´ s claims and that Musk "must be competing in the market instead of the courtroom." The stakes on OpenAI's corporate transition have now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of as much as $25 billion under conversation with SoftBank are conditioned on the company reorganizing to eliminate the nonprofit ´ s control.

During the hearing, OpenAI's legal representatives said the reason to permit OpenAI to end up being a for-profit entity is due to the fact that it would be essential to facilitate the mission of the not-for-profit.

Such a restructuring would be extremely unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually historically been for health care companies like health centers, it-viking.ch not venture capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)