Judge Dismisses xAI Trade Secrets Lawsuit Against OpenAI, Allows Refiling
A federal judge dismissed xAI’s trade secrets lawsuit against OpenAI, ruling that xAI failed to plead sufficient facts linking OpenAI directly to any theft or misuse of proprietary information. The judge found xAI’s allegations centered mostly on former employees’ conduct—not on actions by OpenAI itself—and noted xAI did not provide evidence that OpenAI induced employees to steal trade secrets or that such secrets were used by OpenAI. xAI's complaint had accused OpenAI of targeting employees for recruitment, resulting in engineers allegedly taking proprietary code and information. However, the judge stated mere employee hiring and possession of trade secrets do not constitute liability without evidence of misconduct by the employer. The court gave xAI until March 17 to file a revised, more detailed complaint and barred adding new claims or parties without approval. OpenAI welcomed the decision, calling the suit baseless. Legal experts noted the ruling reinforces the need for clear, fact-based allegations tying a company directly to trade secret misuse, and that simple poaching of staff is insufficient for a claim. A related case against a former xAI engineer is ongoing.
