Musk’s xAI sues OpenAI, alleging theft of trade secrets
Following a recent lawsuit against a former employee over allegedly stealing trade secrets, Musk’s xAI is now suing the company that executive left to work for — OpenAI. The suit accuses OpenAI of “inducing” recruits that it poached to steal trade secrets from the company.
Elon Musk’s xAI has sued OpenAI in Northern California federal court, alleging the company stole trade secrets by means of hiring away key employees.
In August, xAI filed suit against Xuechen Li, a former employee who abruptly sold his equity and left for a role at rival OpenAI, though it is not clear if Li ever actually started working there. The engineer was accused of stealing company secrets that were key to the company’s Grok AI model.
In the new lawsuit’s complaint, Li is mentioned as well as “early xAI engineer” Jimmy Fraiture and a “senior finance executive.” xAI claims they were “induced” by OpenAI to steal trade secrets:
“The desire to win the artificial intelligence (‘AI’) race has driven OpenAI to cross the line of fair play. OpenAI violated California and federal law by inducing former xAI employees, including Xuechen Li, Jimmy Fraiture, and a senior finance executive, to steal and share xAI’s trade secrets. By hook or by crook, OpenAI clearly will do anything when threatened by a better innovator, including plundering and misappropriating the technical advancements, source code, and business plans of xAI.”
The story that xAI lays out in the complaint portrays OpenAI as being “threatened by the innovativeness and creativity of xAI’s code,” adding that Grok “offers features more innovative and imaginative than those offered by its competitors, including OpenAI.” xAI also cited Grok’s leading scores on industry benchmarks.
xAI is alleging that OpenAI — which it says “quickly rose to dominance among generative AI companies simply by being the ‘first mover’” — was engaging in a “coordinated, unfair, and unlawful campaign” to target key xAI employees for recruiting, then “inducing” them to bring trade secrets over to OpenAI.
An OpenAI spokesperson told Sherwood in an email:
"This new lawsuit is the latest chapter in Mr Musk’s ongoing harassment. We have no tolerance for any breaches of confidentiality, nor any interest in trade secrets from other labs."
xAI’s “secret sauce”
One of the top accusations lodged against OpenAI is that it was seeking to get access to xAI’s “secret sauce,” which it described as “the unprecedented rapidity with which xAI is able to deploy data centers with the massive computational resources to train and run AI.”
Indeed, xAI did make waves in the industry when it built its South Memphis, Tennessee, “Colossus” data center — completed in a staggering 122 days.
The unnamed “senior finance executive” had knowledge of the processes used to rapidly build and scale up data centers and brought it to OpenAI, according to the complaint. When confronted via email about his alleged breaches of confidentiality at the time of his resignation, the executive responded, “Suck my d---.” xAI included a screenshot of the email, positioning it as evidence “leaving little doubt as to his intentions.”
Read the complaint below:
Update (September 25 3:00 p.m. ET): Added response from OpenAI spokesperson and additional context around Xuechen Li, as Sherwood has been unable to verify if Li began working at OpenAI.
