Musk takes legal action against to block 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 unusual, professional says

(Adds judge did not decide whether or not to release 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, adding 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) rest on the stand, present it to a jury, and a jury will decide who is right." Rogers was thinking about Musk's current demand for a preliminary injunction to block OpenAI's conversion before going to trial, the newest move in an animosity match between the world's wealthiest person and OpenAI CEO Sam Altman that is playing out openly in court.

Rogers did not choose whether or not to release the injunction Tuesday, but at one point suggested that Musk's legal group had actually not presented adequate proof for historydb.date her to release the injunction, and indicated she might hold an evidentiary hearing, where both sides could present witnesses and proof. The last time Rogers offered 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 subsequently founded the completing AI startup xAI in 2023. OpenAI is now attempting to transition from a nonprofit into a for-profit entity, which it says it requires to do to secure the capital needed to establish the best synthetic intelligence designs. In 2015, Musk filed a claim against OpenAI and Altman, saying that OpenAI ´ s creators initially approached him to fund a not-for-profit focused on developing AI to benefit mankind, however that it is now concentrated on making cash. He later on broadened 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 move to dismiss Musk ´ s claims and that Musk "must be contending in the market instead of the courtroom." The stakes on OpenAI's corporate shift have now escalated, as OpenAI ´ s last fundraising round of $6.6 billion and a new round of up to $25 billion under conversation with SoftBank are conditioned on the business restructuring to eliminate the not-for-profit ´ s control.

During the hearing, said the factor to allow OpenAI to become a for-profit entity is due to the fact that it would be needed to assist in the mission of the nonprofit.

Such a restructuring would be highly unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have traditionally been for health care companies like medical facilities, not venture capital-backed business, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)