Elon Musk’s OpenAI Lawsuit: A PR Move or Legally Questionable?

In the realm of legal disputes, Elon Musk’s interpretation of success may not always align with courtroom victories.

Last week, Musk filed a lawsuit against OpenAI and its co-founders, Sam Altman and Greg Brockman, citing breach of contract and fiduciary duty. Legal analysts suggest the case rests on a shaky foundation, given that the core agreement in question isn’t a formal, signed contract involving all parties.

Instead, Musk contends that the original mission of the early OpenAI team, to develop artificial general intelligence (AGI) for the betterment of humanity, has been diverted into a for-profit venture largely under the control of principal shareholder Microsoft.

In a 35-page complaint filed on Friday, Musk presented his perspective, highlighting his pivotal role in the inception of a company that has risen to prominence, notably ranking first on CNBC’s Disruptor 50 list in 2023, largely due to the widespread adoption of ChatGPT. “It’s undoubtedly a compelling narrative for Elon Musk,” remarked Kevin O’Brien, partner at Ford O’Brien Landy LLP and former assistant U.S. attorney.

“However, the legal grounds are questionable.” O’Brien, who is not involved in any litigation with Musk, pointed out, “One glaring omission is the absence of a formal contract.” Musk’s legal team aims to steer OpenAI back to its roots as a research laboratory, free from the influence of Microsoft’s financial interests. With a net worth exceeding $200 billion, Musk appears undeterred by potential legal expenses associated with a lawsuit that lacks clear personal financial gain and raises doubts about its validity.

Shannon Capone Kirk, global head of e-discovery and AI for Ropes & Gray LLP suggested Musk may be leveraging the lawsuit to shed light on OpenAI’s operational shift and evolving business objectives.

“This high-profile case, drawing significant public attention, could potentially lead to OpenAI’s accessibility to a broader audience,” Kirk observed, emphasizing that she is not involved in any cases involving Musk. “Could that be the underlying objective?”

Elon Musk
Legal analysts doubt the solidity of Musk’s case due to missing evidence. (Credits: Vanity Fair)

Musk’s legal team alleges in the complaint that OpenAI “has evolved into a closed-source entity effectively under the umbrella of the world’s largest technology company: Microsoft.” They argue that this arrangement contradicts OpenAI’s founding principles and its 2015 certificate of incorporation, which had Musk as a pivotal donor during the startup’s nascent stages.

According to Musk’s attorneys, their client contributed more than $15 million to OpenAI in 2016, surpassing all other donors, and played a crucial role in assembling a team of top talent. The following year, Musk donated nearly $20 million to OpenAI, underscoring his significant financial backing. In total, Musk’s investment in OpenAI exceeded $44 million from 2016 to September 2020, as outlined in the lawsuit.

The lawsuit follows a familiar pattern for Musk, who has frequently voiced his views on various platforms about his integral role in the establishment of OpenAI. During the New York Times’ DealBook conference in November, Musk expressed dissatisfaction with OpenAI’s deviation from its original mission.

“OpenAI should be rebranded as ‘super closed source for maximum profit AI,’ because that’s essentially what it has become,” Musk asserted during the event, highlighting its transition from an open-source foundation to a multibillion-dollar, closed-source corporation focused on profitability.

In the realm of legal disputes, Elon Musk’s interpretation of success may not always align with courtroom victories.

Last week, Musk filed a lawsuit against OpenAI and its co-founders, Sam Altman and Greg Brockman, citing breach of contract and fiduciary duty. Legal analysts suggest the case rests on a shaky foundation, given that the core agreement in question isn’t a formal, signed contract involving all parties.

Instead, Musk contends that the original mission of the early OpenAI team, to develop artificial general intelligence (AGI) for the betterment of humanity, has been diverted into a for-profit venture largely under the control of principal shareholder Microsoft.

In the suit, Musk’s attorneys allege that the inner workings of OpenAI’s GPT-4 AI model are “a complete secret except to OpenAI—and, on information and belief, Microsoft,” and that the secrecy is driven by commercial gain rather than safety. Musk has publicly beefed with Microsoft for a while, and in May 2023, Musk’s attorneys accused the company of using X (formerly Twitter) data in unauthorized ways.

Even if OpenAI’s mission has changed, that doesn’t mean Musk has a solid legal case.

“If he has any hopes to recover, he’s going to have to prove that there was this agreement – that the company is open and not for profit and all these other things, and that the failure to do so has caused him injury, which is a separate problem,” O’Brien said. “It’s hard to see where the injury is here.”

Musk’s attorneys didn’t respond to a request for comment.

Musk has an AI company of his own, X.AI, which introduced a competing chatbot called Grok in November after two months of training. In December, X.AI filed with the SEC to raise $1 billion in an equity offering. And Musk is also developing autonomous vehicle tech and humanoid robotics, which require AI advances, at Tesla.

Open AI
The lawsuit may serve as a platform for Musk to expose OpenAI’s operations.

He’s been known to hire bigwigs from OpenAI, poaching Andrej Karpathy, a former OpenAI software engineer, over to Tesla in 2017. More recently, Musk hired Kyle Kosic from OpenAI to join X.AI.

One of Musk’s goals with this case, lawyers said, maybe to shed light on details of OpenAI’s GPT-4 in the discovery process, should it get that far. O’Brien said it can be tough to keep intellectual property and other internal details private when a lawsuit is brought.

Elon Musk could face an uphill battle regarding his standing in the case: UCLA Law’s Rose Chan Loui Kirk agreed, saying that in the discovery stage, there may be “lots of document requests for all kinds of communication,” such as internal conversations, text messages, and more. Some of the documents produced may come with protective orders that keep them out of the public.

A portion of Musk’s lawsuit rests on the idea that OpenAI has already reached AGI, typically defined as AI that can operate on the same level — or higher — than humans when completing a wide array of cognitive tasks. The suit claims that GPT-4 is “better at reasoning than average humans” based on test scores on the Uniform Bar Exam, GRE Verbal Assessment, and even the Advanced Sommelier exam.

As part of its contract with OpenAI, Microsoft only has rights to OpenAI’s “pre-AGI” technology, and it’s up to OpenAI’s board to determine whether the company has reached that milestone.

In a memo to employees on Friday following the lawsuit, OpenAI said that “GPT-4 is not an AGI.” “Importantly, an AGI will be a highly autonomous system capable enough to devise novel solutions to longstanding challenges,” Chief Strategy Officer Jason Kwon wrote. “GPT-4 can’t do that.” Much of the AI community is in agreement with Kwon. Kirk said “Part of what they’re going to be litigating” is the question of what is AGI.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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