What the jury will decide in the case of Elon Musk vs. Sam Altman

Nine California judges are now debating the future of OpenAI, the world’s leading artificial intelligence lab.

While the investigation of Elon Musk’s lawsuit against other founders of OpenAI and Microsoft has covered the sectors since. end of the founders in 2018 to Altman’s shooting and recovery work in 2023, judges will consider fewer questions.

• Breach of charitable trust – specifically, did OpenAI and its co-founders Sam Altman and Greg Brockman breach a special agreement with Musk to use his donations to OpenAI for specific, charitable purposes and not for non-profit use?
• Unjust enrichment – did the defendants use Musk’s donations to enrich themselves through the for-profit arm of OpenAI, rather than for charity?
• Aiding and abetting the breach of charitable trust – Did Microsoft, through its dealings with OpenAI, know that Musk had special conditions for its contributions, and played a significant role in harming Musk?

OpenAI has also offered three points in defense of the jury’s weight:

• Statute of limitations – the last legal date by which a lawsuit must be filed. Here, if OpenAI can prove that any harm to Musk occurred on August 5, 2021 in the first count; August 5, 2022 for second reading; and November 14, 2021 on the first count, then his claims will be challenged.
• Unnecessary delay – Musk, in filing his lawsuit in 2024, delayed his claim in a way that made his claim for damages moot.
• Unclean hands – the legal theory that Musk’s actions related to his claims against OpenAI were illegal and renders them unconscionable.

If Musk wins, it could mean the end of OpenAI as a profitable company, but it’s unclear what will happen. Next week, the judge will begin a new hearing where lawyers from both sides will discuss the outcome of the ruling in favor of the plaintiffs. This method can be challenged by a counterclaim, however.

Breach of good faith

Musk’s attorneys say the plaintiffs clearly understand that Musk wants to support non-profits that will ensure the benefits of AI to the world, and prevent it from being run by any organization. In particular, it is said that the investment of 10 billion dollars from Microsoft in 2023 to be associated with OpenAI for profit – the first to happen after the law of restrictions – was an event that turned Musk’s concern into concern.

The deal, Musk’s lawyers say, was different from previous investments and allowed OpenAI’s investors to be enriched by the company’s sales, thanks to the philanthropic AI security work that Musk has promoted.

OpenAI’s attorneys have asked every witness to explain the restrictions Musk provides, and none, including his financial adviser Jared Birchall, his chief of staff Sam Teller, or his special counsel Shivon Zilis. It is said that everyone involved agreed that private fundraising will be needed to achieve his goals, and note that Musk himself tried to start an OpenAI profit that he would oversee himself, and then integrate OpenAI into his company Tesla. He also noted that donors to the organization did not report that their trust had been breached.

Most importantly, a forensic accountant hired by OpenAI testified that all of Musk’s donations were used by OpenAI before the important date of August 5, 2021. That is proof that Musk’s donations were already used for their purposes well before he brought his lawsuit, undermining any charitable trust that may have existed.

In particular, he insists that the for-profit partner that runs most of OpenAI’s work continues to serve the organization’s mission, and has generated nearly $200 billion in joint venture capital to support non-profit foundations. In particular, Sam Altman said that providing ChatGPT for free helps achieve the goal of sharing the benefits of AI with the world.

Unjust wealth

The critics point to the calculation of billions of dollars worth of OpenAI founders such as Brockman and Ilya Sutskever, as well as Microsoft itself, as a sign that Musk’s donations were used for personal gain, as opposed to supporting a charity. They argue that OpenAI’s for-profit work was focused on commercialization, while the foundation was left without jobs, no full-time employees, and, ultimately, no profit management.

OpenAI claims that all of Musk’s contributions were used by the foundation by 2020, and that the distributions came well after he left the organization in 2018. Even before that, evidence shows that the players agreed that being able to pay researchers with goods was very important for the development of AGI, a fictional form of AI that can perform any intelligent task that a person can. OpenAI administrators maintain that the for-profit project furthers the foundation’s mission, including security. The nonprofit is said to be continuing to control profits, and implementing new controls following a “blip,” in which Altman was fired from the nonprofit OpenAI in 2023 for lack of a say and was replaced a few days later.

Help and support

Musk’s case focused on the blip, when Microsoft CEO Satya Nadella, whose company relied on OpenAI technology, was involved in helping bring Altman in and create a new OpenAI governing body. He notes that Microsoft executives wondered if their commercial partnership might conflict with the nonprofit’s goals, and suggests that Microsoft’s marketing priorities led OpenAI away from its goal. They will focus on the part of Microsoft’s partnership with OpenAI that gave Microsoft the right to decide on the company’s key decisions in OpenAI.

Microsoft’s witnesses have insisted that the company’s executives knew nothing about Musk’s offer despite their best efforts, and did not approve of OpenAI’s decision. He notes that the company’s investment and computational power allowed OpenAI to achieve its greatest successes.

The Law of Limitations

Musk also said that his suspicions of the co-founders grew over time, until the end of 2022 he thought that they betrayed him when he found out about Microsoft’s plans for a new 10 billion dollars that happened in 2023. He did not present his case until the middle of 2024.

OpenAI’s attorneys say the terms of the deal were written in an earlier funding document in 2018, which Musk received and his advisers reviewed, but Musk said he had not read the details. They also see numerous blog posts and other messages over the years that show Musk could have known what OpenAI was doing before bringing them to court, including tweets where Musk criticized the company years before it happened. Zilis, Musk’s mentor, voted to approve this as a member of OpenAI’s board.

In the end, OpenAI’s lawyers emphasize that Musk’s role in the organization ended in 2018 and his last contribution was made in 2020.

Unreasonable delay

OpenAI’s attorneys say the real reason Musk filed his suit is that he realized he made a mistake at OpenAI, after the launch of ChatGPT revolutionized the artificial intelligence business. He says that OpenAI has been operating in its current form since it was first sold to Microsoft in 2018, and that forcing the organization to reform eight years later is absurd.

Dirty hands

There is evidence that Musk is planning his own AI initiatives while still the chair of OpenAI, and has hired OpenAI employees to work on AI at Tesla. OpenAI’s attorneys say that this undermined OpenAI’s ability to use Musk’s contributions to achieve its goals. He also said that Zilis, the mother of Musk’s three children, had not disclosed her relationship with other OpenAI board members for years. And it is said that Musk withheld his contributions in 2017 in order to control the profit-making group OpenAI. Finally, “Mr. Musk left OpenAI due to death in 2018,” Bill Savitt, OpenAI’s chief representative, told the jury.