Musk takes legal action against to obstruct OpenAI's conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move needed for capital

Nonprofit to for-profit conversion uncommon, specialist states

(Adds judge did not choose whether or not to provide the injunction in paragraph 5, OpenAi's lawyers' comment in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk's claim against OpenAI to halt its conversion to a for-profit entity might go to trial, including that the Tesla CEO will need to appear in court and testify.

"Something is going to trial in this case," U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

"(Elon Musk will) sit on the stand, present it to a jury, and a jury will decide who is right." Rogers was thinking about Musk's current ask for a preliminary injunction to block OpenAI's conversion before going to trial, the current move in an animosity match in between the world's wealthiest person and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not choose whether to provide the injunction Tuesday, however at one point recommended that Musk's legal group had actually not presented enough evidence for her to provide the injunction, and indicated she might hold an evidentiary hearing, where both sides might present witnesses and proof. The last time Rogers provided a preliminary injunction remained in Epic Games' case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, however left before the company removed and consequently founded the contending AI start-up xAI in 2023. OpenAI is now attempting to shift from a not-for-profit into a for-profit entity, which it states it needs to do to protect the capital needed to develop the very best expert system models. In 2015, Musk filed a claim against OpenAI and Altman, stating that OpenAI ´ s founders initially approached him to money a not-for-profit concentrated on developing AI to benefit humankind, but that it is now focused on making cash. He later expanded the claim to add federal antitrust and other claims, and in December asked the judge administering over the case to stop OpenAI from transitioning to a for-profit.

In response to Musk ´ s claim, OpenAI has said it will relocate to dismiss Musk ´ s claims which Musk "must be completing in the marketplace rather than the courtroom." The stakes on OpenAI's corporate transition have actually now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of as much as $25 billion under conversation with SoftBank are conditioned on the business reorganizing to remove the nonprofit ´ s control.

During the hearing, OpenAI's attorneys said the reason to enable OpenAI to end up being a for-profit entity is because it would be essential to assist in the mission of the nonprofit.

Such a restructuring would be extremely unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually traditionally been for valetinowiki.racing healthcare companies like hospitals, not endeavor capital-backed companies, she said. (Reporting by in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)