Jury to Decide Landmark Case Between Elon Musk and Sam Altman

Nine jurors in California are now deciding the fate of OpenAI, the world's leading artificial intelligence laboratory.

The trial examining Elon Musk's lawsuit against OpenAI's other co-founders and Microsoft has traversed a wide range of topics, from the founders' 2018 split to Sam Altman's 2023 firing and reinstatement. However, the jury's deliberations will center on a specific set of legal questions.

Breach of charitable trust — Did OpenAI and co-founders Sam Altman and Greg Brockman violate an agreement with Musk by using his donations for purposes beyond the specific charitable goals of the non-profit?Unjust enrichment — Did the defendants use Musk's contributions to personally benefit through OpenAI's for-profit entity, rather than for its stated charitable mission?Aiding and abetting breach of charitable trust — Was Microsoft aware of any conditions attached to Musk's donations and did it play a substantial role in causing harm to Musk through its dealings with OpenAI?

OpenAI has presented three key defenses for the jury to consider:

Statute of limitations — This legal deadline requires lawsuits to be filed within a set time. If OpenAI can demonstrate that the alleged harms occurred before August 5, 2021 (for the first claim), August 5, 2022 (for the second), or November 14, 2021 (for the third), then Musk's claims would be invalid.Unreasonable delay — By filing his lawsuit in 2024, Musk waited an unreasonable amount of time, which undermines his request for damages.Unclean hands — This legal principle argues that Musk's own conduct related to his claims against OpenAI was improper and should prevent him from seeking relief.

A victory for Musk could potentially end OpenAI's for-profit structure, though the exact outcome remains uncertain. Next week, the judge will hold hearings where attorneys from both sides will debate the potential consequences of a plaintiff-friendly verdict. This process, however, would be unnecessary if the jury rules against Musk.

Breach of charitable trust

Musk's legal team argues the defendants clearly understood his intent: to support a non-profit dedicated to ensuring AI benefits humanity broadly and remains free from single-entity control. They contend that Microsoft's $10 billion investment in OpenAI's for-profit affiliate in 2023—the first major deal after the relevant legal deadlines—was the turning point that confirmed Musk's suspicions.

According to Musk's lawyers, this deal differed from prior investments and resulted in OpenAI's investors profiting from commercial products, contradicting the AI safety mission Musk aimed to fund.

OpenAI's attorneys have questioned every witness about specific restrictions on Musk's donations, including his financial advisor Jared Birchall, chief of staff Sam Teller, and special advisor Shivon Zilis. None could identify any. They assert all parties agreed private fundraising was necessary to achieve OpenAI's ambitious goals. They also note Musk himself attempted to launch a personally controlled, OpenAI-affiliated for-profit and later proposed merging OpenAI into Tesla. Furthermore, they point out that no other donors have claimed their charitable trust was violated.

Critically, a forensic accountant hired by OpenAI testified that all of Musk's donations were expended by OpenAI well before the key date of August 5, 2021. This suggests the funds were used for their intended purpose long before the lawsuit, negating any potential breach of trust.

OpenAI maintains that its for-profit affiliate, which handles most operations, continues to advance the organization's core mission and has generated nearly $200 billion in equity value to support the non-profit foundation. Sam Altman has notably argued that offering ChatGPT for free aligns with the goal of broadly sharing AI's benefits.

Unjust enrichment

The plaintiffs cite the multi-billion-dollar valuations of stakes held by founders like Greg Brockman and Ilya Sutskever, as well as Microsoft, as evidence that Musk's donations were ultimately used for private gain rather than charitable work. They argue OpenAI's for-profit arm pursued commercial objectives while the foundation became largely inactive, lacking full-time staff and ultimately losing control over the for-profit entity.

OpenAI counters that all of Musk's contributions were used by the foundation by 2020, and equity distributions occurred well after his departure in 2018. Evidence indicates that key figures, including Musk initially, agreed that compensating top researchers with stock was essential to developing Artificial General Intelligence (AGI). Executives state the for-profit's work significantly advanced the foundation's mission, including safety research. They assert the non-profit board still governs the for-profit and implemented new oversight measures following "the blip"—the 2023 episode where Altman was briefly fired by the board for lack of transparency before being reinstated.

Aiding and abetting

Musk's case highlights events during "the blip," when Microsoft CEO Satya Nadella—whose company relies on OpenAI's technology—personally intervened to reinstate Altman and help form a new board. Plaintiffs note Microsoft executives internally questioned whether their commercial agreement might conflict with OpenAI's non-profit goals, suggesting Microsoft's priorities diverted OpenAI from its mission. They focus on a clause in the agreement granting Microsoft veto power over major decisions at OpenAI.

Microsoft's witnesses testified that despite thorough due diligence, company executives were unaware of any specific conditions on Musk's donations and never exercised any veto. They emphasize that Microsoft's investments and computing resources were instrumental in OpenAI's greatest achievements.

Statute of Limitations

Musk has stated his distrust of his co-founders grew gradually until late 2022, when he learned of Microsoft's plans for a new $10 billion investment (finalized in 2023) and felt betrayed. He did not file suit until mid-2024.

OpenAI's lawyers argue the terms of that deal were outlined in a term sheet for a 2018 funding round, which Musk received and his advisors reviewed, though Musk claims he did not read it in detail. They also cite numerous public blog posts and communications over the years that could have informed Musk of OpenAI's direction long before the lawsuit, including his own critical tweets years prior. They note that Shivon Zilis, Musk's adviser, voted to approve these transactions as an OpenAI board member.

Ultimately, OpenAI's legal team stresses that Musk's formal involvement ended in 2018 and his final donations were made in 2020.

Unreasonable delay

OpenAI's attorneys contend Musk filed suit only after realizing his predictions about OpenAI were wrong, following ChatGPT's revolutionary success. They argue OpenAI has operated under its current hybrid structure since its first Microsoft investment in 2018, and forcing a restructuring eight years later is unreasonable.

Unclean hands

Evidence suggests Musk was planning competing AI ventures while still OpenAI's chairman and hired OpenAI employees for AI work at Tesla. OpenAI's lawyers argue these actions undermined OpenAI while it was using his donations. They noted that Shivon Zilis, the mother of three of Musk's children, did not disclose her relationship to other board members for years. They also allege Musk withheld donations in 2017 in an attempt to gain control of a planned for-profit affiliate. "Mr. Musk abandoned OpenAI for dead in 2018," OpenAI's lead attorney, Bill Savitt, told the jury.

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