Elon Musk’s high-stakes lawsuit against OpenAI and its CEO Sam Altman is officially heading toward trial, with a California judge allowing key fraud claims to proceed.
The lawsuit, originally filed by Musk in 2024, centers around his claim that OpenAI’s transition from a nonprofit to a for-profit company violated the spirit, and potentially the legal terms, of the support he offered to help launch the organization. Musk, one of OpenAI’s co-founders, reportedly donated approximately $45 million to the company in its early days, under the belief that it would remain a nonprofit dedicated to safe and open artificial intelligence development.
In a court ruling issued on May 1, 2025, Judge Yvonne Gonzalez Rogers dismissed Musk’s breach-of-contract claims but upheld fraud allegations, stating that Musk “adequately alleges” that OpenAI made promises about its nonprofit status in order to secure funding.
“Although there is no express contract, Musk adequately pleads in the alternative that there is an implied-in-fact contract,” Judge Rogers wrote in her decision. She found it plausible that the defendants sought Musk’s contributions by misrepresenting their long-term plans, specifically, their intent to shift OpenAI toward a for-profit venture with substantial backing from Microsoft.
This ruling represents a partial legal win for Musk, despite the judge denying his request for a preliminary injunction that would have frozen OpenAI’s corporate structure during the trial process. That request was blocked in March 2025, but the court agreed to fast-track the trial itself, now scheduled for March 2026.
OpenAI and Altman have not yet publicly commented on the latest developments. They still have the option to appeal the decision allowing the fraud claims to proceed. Musk, meanwhile, has remained vocal online, accusing OpenAI of abandoning its original mission and becoming too closely aligned with powerful corporate interests.
This case marks one of the most public clashes in the rapidly evolving artificial intelligence space. While Musk has warned about the dangers of unchecked AI development, going as far as founding xAI, his own rival AI firm, OpenAI has leaned further into commercializing its tech, particularly through partnerships with Microsoft.
As the trial moves forward, it could have serious implications not just for OpenAI’s future, but for how AI development is funded, governed, and held accountable.
