The jury’s quick decision to reject Elon Musk’s lawsuit against the other founders of OpenAI and Microsoft confirmed what we saw in the courtroom: Musk’s case was weak, in part because he waited so long to present it.
Watching closing arguments last week, OpenAI’s lawyers detailed point by point how the law was on their client’s side, while the plaintiff team focused on Sam Altman’s apparent lack of credibility and expressed disbelief that anyone could disagree with Musk’s allegations.
The end effect was that, after the verdict, some found it difficult to believe that Musk had lost, including the man himself. In a since-deleted post, Musk called Judge Yvonne González Rogers a “terrible Oakland activist judge,” then announced his plans to appeal and declared that “there is no doubt to anyone who follows the case in detail that Altman & Brockman did, in fact, get rich by stealing from a charity.”
But Altman and Brockman weren’t the only figures to benefit from OpenAI’s nonprofit investments. As much as Musk and his legal team tried to make the case about Altman, the process revealed the same thing about Musk himself.
An incident that came to light in court showed Musk profiting from OpenAI in an uncomfortably familiar way. Greg Brockman testified that in 2017, Musk asked him to bring a team of OpenAI researchers to Tesla headquarters to help with the Autopilot team for a few weeks. “It was pretty clear that it wasn’t something we could say no to,” Brockman said.
Brockman described bringing in a team of top scientists, including Andrej Karpathy, Ilya Sutskever and Scott Grey, to consult with “demoralized” Tesla workers. They helped generate ideas to improve the vehicle’s self-driving technology, and Sutskever told the team that if they could find 10,000 images of a complicated case, they could fix their software. Musk even asked Brockman to recommend employees be laid off, which he refused.
Another person familiar with the episode confirmed Brockman’s account and said Tesla did not reimburse OpenAI for its employees’ time and effort. Musk’s family office, Excession, did not respond to a request for comment.
The crux of Musk’s case is that Altman, Brockman and OpenAI committed a “breach of charitable trust”: that Musk donated funds for a specific charitable purpose and his co-founders used them for something else. It also accuses them of “unjust enrichment” due to shares and other benefits of OpenAI’s for-profit companies.
In the case of the OpenAI scientists parachuting into Tesla, Musk’s charitable donations were aimed at hiring scientists focused on securing the benefits of AGI. Instead, he made them work for free at his for-profit company.
Dorothy Lund, professor at Columbia Law School and co-host of the show Beyond the unprecedented podcasttold TechCrunch that this deal would not be legal, calling it “a bit rich for Musk to sue for breach of a charitable trust, when he appears to have been redirecting assets in a way that was inconsistent with that mission.”
It’s true that the self-driving work involved artificial intelligence, but Musk’s witnesses emphasized that Tesla’s self-driving project was very different from OpenAI’s research agenda. This is partly because Karpathy left OpenAI for Tesla shortly after this incident. OpenAI’s lawyers described the departure as Musk breaching his duty to the lab, where he was co-chairman of the board, by recruiting one of its key researchers to his own company.
The other fact that certainly swayed the jury was the amount of time Musk spent trying to gain sole control of a potential for-profit subsidiary of OpenAI in 2017. Musk used good cop, bad cop tactics in an attempt to convince his co-founders to allow him full control of the for-profit subsidiary of OpenAI, giving them free Teslas and threatening to withhold their donations.
His efforts put his lawyers in a difficult situation, facing the need to convince the jury that there was a significant difference between what Musk envisioned and the for-profit organization that was ultimately created. They suggested that a for-profit “small add-on” would be permissible, although OpenAI witnesses demonstrated that nonprofits with large commercial arms are common.
In fact, there is a very plausible counterfactual in which Musk accepted one of the offers made by his co-founders to divide his capital more equitably and today finds himself as one of the largest shareholders of OpenAI, but not the majority. But several times during the trial, Musk’s associates testified that he refuses to invest in any business over which he might have exclusive control.
The failure of Musk’s claims because he filed them too late has been cited as a technicality, but the statute of limitations has substance behind it: People and companies make important decisions and spend resources based on their understanding that what they are doing is permissible. If someone like Musk waits too long to sue, then the cost of undoing all those decisions may outweigh a fair refund.
No jurors have spoken about how they reached their verdict. However, they were asked to consider whether, before August 5, 2021, Musk ought I knew OpenAI was spending resources outside of its mission or launching for-profit affiliates. The answer is clear: Musk himself was doing those things.
When you buy through links in our articles, we may earn a small commission. This does not affect our editorial independence.
