Economy

The Big Questions Raised by Elon Musk’s Lawsuit Against OpenAI

From Silicon Valley to Wall Street to Washington, the blockbuster case that Elon Musk filed against OpenAI and its C.E.O., Sam Altman, has become Topic A. It is the business world’s hottest soap opera.

But among lawyers, the case has become something of a fascination for a different reason: It poses a series of unique and unusual legal questions without clear precedent. And it remains unclear what would constitute “winning” in a case like this, given that it appears to have been brought out of Musk’s own personal frustration and philosophical differences with Open A.I, a company he helped found and then left.

The lawsuit — which pits one of the wealthiest men in the world against the most advanced A.I. company in the world, backed by Microsoft, one the world’s most valuable companies — argues that OpenAI, a nonprofit organization that created a for-profit subsidiary in 2019, breached a contract to operate in the public interest and violated its duties by diverting from its founding purpose of benefiting humanity.

Musk’s lawyers — led by Morgan Chu, a partner at Irell & Manella who is known as the “$5 billion man” for his win record — want the court to force OpenAI to open its technology to others and to stop licensing it to Microsoft, which has invested billions in its partnership with the start-up.

Among the questions that lawyers and scholars are asking after poring through Musk’s 35-page complaint:

Does Musk even have standing to sue? “One of the differences with nonprofits compared to other companies is that, generally, no one other than the state attorney general has standing to sue for the kind of stuff that he’s complaining about, like not following your mission,“ Peter Molk, a professor of law at the University of Florida, said of Musk’s lawsuit. That’s most likely why Musk’s lawyers are presenting the case as a breach of contract instead of attacking the company’s nonprofit status.

Musk also alleges that OpenAI has breached its fiduciary duty, but that charge has its own challenges, lawyers said, given that such claims are traditionally handled in Delaware, not California, where the lawsuit was filed. (Musk, of course, has an infamously rocky relationship with the state of Delaware.)

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