OpenAI Inc. and Microsoft have failed to halt a high-profile lawsuit brought by billionaire Elon Musk, after a US federal judge ruled that his claims merit a full jury trial. The case centres on allegations that OpenAI, co-founded by Musk in 2015, betrayed its original mission as a public charity by accepting billions of dollars from Microsoft and transitioning towards a for-profit structure.

On Thursday, US District Judge Yvonne Gonzalez Rogers rejected motions by OpenAI and Microsoft to dismiss the lawsuit and ordered that the matter proceed to trial, which is scheduled for late April. The ruling marks a significant legal setback for both companies and keeps alive Musk’s contention that OpenAI violated fundamental promises made to its early donors.

Musk’s core allegation against OpenAI

Elon Musk, who helped launch OpenAI alongside Sam Altman and others nearly a decade ago, argues that his financial and strategic support was given on the condition that OpenAI would remain a non-profit organisation and keep its technology open source. According to Musk, these commitments were central to OpenAI’s founding charter and mission to ensure that artificial intelligence benefits humanity as a whole.

In her ruling, Judge Gonzalez Rogers said Musk had plausibly alleged that his contributions to OpenAI “had a specific charitable purpose” and were tied to two essential terms: remaining a non-profit entity and operating on an open-source basis. She noted that these purposes were consistent with OpenAI’s original charter.

The judge rejected OpenAI’s argument that Musk lacked legal standing because he routed about USD 38 million (approximately ₹315 crore) in early funding through an intermediary. She held that such an interpretation would weaken the enforcement of charitable trusts more broadly.

“Holding otherwise would significantly reduce the enforcement of a large swath of charitable trusts, contrary to the modern trend,” Gonzalez Rogers wrote.

Fraud and misrepresentation claims allowed

In addition to the charitable trust claim, the court also allowed Musk’s fraud allegations to proceed. The judge cited internal communications from 2017 involving OpenAI co-founder Greg Brockman as evidence that could support Musk’s case.

According to the ruling, Brockman wrote in an email to Musk in September 2017 that he would “like to continue with the non-profit structure” of OpenAI. However, just two months later, Brockman allegedly wrote in a private note that OpenAI could not say it was committed to remaining a non-profit and warned that doing so might be misleading if the organisation later became a benefit corporation.

Judge Gonzalez Rogers said it would be up to a jury to determine whether these statements amounted to fraud or misrepresentation and whether Musk was misled about OpenAI’s long-term intentions.

Microsoft’s role under scrutiny

A key aspect of the trial will be Microsoft’s involvement in OpenAI’s transformation. Musk claims that Microsoft knowingly assisted OpenAI in breaching its obligations to donors by backing its shift towards a commercial model.

The judge ruled that Musk had identified “considerable evidence raising a triable issue of fact” that Microsoft may have had actual knowledge of alleged wrongdoing, beyond mere suspicion. As a result, the jury will be asked to decide whether Microsoft helped OpenAI violate its responsibilities as a charitable trust.

However, the court dismissed Musk’s claim that Microsoft unjustly enriched itself at his expense. Judge Gonzalez Rogers held that Musk did not have a quasi-contractual relationship with Microsoft and failed to show that Microsoft’s retention of any benefit was unjust.

OpenAI and Microsoft respond

Reacting to the ruling, OpenAI strongly criticised Musk’s lawsuit. In a statement, the company said, “Mr. Musk’s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial.”

OpenAI added that it remains focused on strengthening the OpenAI Foundation, describing it as “one of the best resourced nonprofits ever.”

Microsoft and Musk’s lawyer, Marc Toberoff, did not immediately respond to requests for comment.

OpenAI’s restructuring and valuation

The legal battle unfolds against the backdrop of OpenAI’s major corporate restructuring. In October, the ChatGPT-maker — recently valued at around USD 500 billion (over ₹41 lakh crore) — announced a transition that granted Microsoft a 27 per cent ownership stake in its for-profit arm. OpenAI stated that the restructuring would still leave its non-profit entity in control of the for-profit operations.

The move fulfilled a long-standing objective of CEO Sam Altman to turn OpenAI into a public benefit corporation, a structure designed to balance profit-making with broader social goals.

Rivalry between Musk and Altman

The lawsuit is the latest chapter in an increasingly bitter feud between Musk and Altman, once close collaborators who are now fierce rivals. Musk launched his own artificial intelligence company, xAI, in 2023, which has since emerged as a direct competitor to OpenAI.

Since 2024, the two sides have been locked in multiple legal disputes over OpenAI’s future. Last year, OpenAI rejected an unsolicited bid from Musk to acquire the assets of the non-profit that controls the company for USD 97.4 billion (about ₹8 lakh crore).

Altman has publicly accused Musk of weaponising the legal system to slow down a competitor in the rapidly evolving AI race.

Conclusion

With the judge allowing Musk’s key claims to proceed, the upcoming jury trial is set to become one of the most closely watched legal battles in the global technology sector. The outcome could have far-reaching implications not only for OpenAI and Microsoft, but also for how charitable tech organisations transition into commercial entities while remaining accountable to their original missions.