“Judge concurs with jury’s ruling that the statute of limitations on Musk’s claims had expired”.
And the more detailed nuance:
“Jurors rejected Elon Musk’s claims against OpenAI, delivering a major victory to CEO Sam Altman in Silicon Valley’s biggest grudge match.”
“Judge Yvonne Gonzalez Rogers agreed with the jury’s decision on Monday that Musk waited too long to bring his lawsuit. The decision came after just two hours of deliberation following three weeks of testimony and legal arguments.”
“Musk, who co-founded OpenAI with Altman and President Greg Brockman in 2015, had accused them of violating a charitable trust and unjustly enriching themselves when they transformed the AI lab from a charity into a largely for-profit company. He accused Microsoft, an early backer, of aiding and abetting the breach of charitable trust.”
“The nine-member jury and Judge Gonzalez Rogers were persuaded by OpenAI’s lawyers’ arguments that Musk already knew—or could have found out—about the actions he claims were unjust by the time he posted on X in 2020 that “OpenAI is essentially captured by Microsoft.”
“The ruling is a defeat for Musk, though the case also has given him a forum to draw attention to criticisms of Altman and OpenAI that he has made for years on X, his social media platform.”
“Musk’s next moves remain unclear. Two people close to Musk were dismissive of the verdict, saying OpenAI was expected to win and that Musk lost nothing by trying.”
It was only a few tens of millions in lawyer fees. Couch cushion money…for the couch.
“Musk’s lawyer, Steven Molo, said on Monday following the jury’s decision that “our intention is to appeal.” He pointed out that the jury did not decide whether a breach occurred, and the appeals court can decide whether the jury received proper instructions about the statute of limitations.”
And the Musk side intends to continue to milk the cow:
“Lawyers for Musk are asking the court to allow them to pursue the appeal before resolving separate antitrust claims by Musk against OpenAI and Microsoft, which the court early on had delayed to a later trial to prioritize the charitable trust and unjust enrichment claims. OpenAI also has made counterclaims against Musk that the judge had previously stayed for later as well.”
“Musk alleges that OpenAI and Microsoft have used their shared market influence to restrain trade and have attempted to monopolize the AI industry—something those companies have denied. Judge Gonzalez Rogers on Monday cast doubt on those antitrust claims, saying that the law aims to protect competition and “there is a lot of competition” in the AI industry. “I thought that if there was anything that had legs, it was this half of the case,” she said, referring to the now resolved claims of breach of charitable trust and unjust enrichment.”
For the rest of the world, the decision provides some clarity for the path ahead for OpenAI:
“Monday’s decision reduces significant uncertainties that have clouded OpenAI’s future as it grapples with intensifying competition and prepares for an IPO that could come as soon as this year.”
“Musk had been asking the court to compel OpenAI to unwind a restructuring last year that paved the way for the possible IPO, transfer of billions of dollars from its for-profit arm to its nonprofit and remove Altman from the nonprofit’s board.”
“Musk’s lawyers had argued that the extent of OpenAI’s wrongdoing only became clear to Musk by degrees, and it was Microsoft’s deal to invest $10 billion in OpenAI in 2023 that constituted the main breach of charitable trust. That deal departed from earlier ones by taking on more investment and allowing the caps on investors’ potential returns to increase by 20% per year, the lawyers argued.”
“A Microsoft spokesperson welcomed the verdict and said it remains “committed to our work with OpenAI to advance and scale AI for people and organizations around the world.”
Now we go back to our regularly scheduled programming around AI Tech Wave. Stay tuned.
(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)
The AI drama continues in this young AI Tech Wave. We now know what OpenAI co-founder and LLM AI luminary Ilya Sutskever is going to be doing next. After...
Podcasts Michael Batnick talks with Dave Nadig about the impact AI will have on the business of advice. (youtube.com) Michael Kitces and Carl Richards on...
