AI secrets: SpaceX fails with lawsuit against OpenAI

SpaceX has definitively failed with its lawsuit against OpenAI for alleged trade secret violations. The US District Court has dismissed the lawsuit for the second time. Because the accusations in SpaceX's filing are inherently insufficient, it is not necessary to examine whether they are true. Furthermore, the court has rejected SpaceX's request to resubmit the lawsuit with revisions in six months.

The proceedings were initiated in September 2025 by AI operator xAI, which now belongs to SpaceX. CEO Elon Musk is bothered by the fact that competitor OpenAI has poached employees from him. AI expert Xuechen Li is said to have taken trade secrets from xAI to OpenAI. A lawsuit against Li and an FBI investigation are ongoing. In parallel, xAI sued OpenAI -- a first version of the lawsuit was dismissed in February, and now a second one as well.

During the job interview, OpenAI allegedly asked Li about his career to date. The court holds that such a routine question cannot be interpreted as inciting the man to betray trade secrets. (Whether Li actually took and betrayed trade secrets would have to be examined separately, note.)

In addition, SpaceX refers to a presentation created by Li, the first slide of which includes the words “confidential material,” and which, according to an xAI employee, contains trade secrets on other slides (which would also have to be examined independently). However, the improved lawsuit does not even allege that Li used the presentation slides during the application process at all.

Not all internal information is trade secret

Even if it were, the notation “confidential material” cannot be used to conclude that OpenAI knew or should have known that trade secrets would be disclosed on the following pages. This is because “confidential material” could refer, on the one hand, to the non-disclosure agreement (NDA) signed by Li during the application process at OpenAI and, on the other hand, to sensitive or internal information of xAI that does not reach the level of trade secrets.

Even assuming SpaceX could prove in further proceedings that OpenAI knew that Li had obtained xAI secrets unlawfully and was now making them available to OpenAI, there would be nothing to object to. Active acquisition, exploitation, or disclosure to third parties are prohibited -- accusations that the statement of claim does not make.

The court also makes short work of SpaceX's repeated request to be allowed to submit a further revised version of the lawsuit in six months. Until then, the parallel lawsuit against Li could reveal new evidence against OpenAI, the company speculates. However, it should have obtained its evidence before filing the lawsuit; the court decides and dismisses the case. SpaceX has legal remedies against this.

The case was called xAI v. OpenAI and was pending before the US District Court for Northern California (Case No. 3:25-cv-08133).

• Court decision in xAI v OpenAI in the original text

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