News
xAI Sues OpenAI in California Over Alleged trade Secret Theft
- By John K. Waters
- 09/26/2025
Elon Musk's artificial intelligence company xAI has filed a lawsuit against OpenAI in a California federal court, accusing the rival of stealing trade secrets and recruiting its employees to gain access to proprietary information.
The complaint, submitted on Wednesday in the U.S. District Court for the Northern District of California, alleges that OpenAI targeted engineers and executives with knowledge of xAI's chatbot Grok, its source code, and data center operations. xAI claims that OpenAI induced those employees to breach confidentiality agreements and other obligations.
"The desire to win the artificial intelligence (“AI”) race has driven OpenAI to cross the line of fair play," the complaint states.
The case follows an earlier lawsuit in which xAI accused former engineer Xuechen Li of taking confidential materials to OpenAI. In that matter, U.S. District Judge Rita Lin issued a temporary restraining order on September 4, preventing Li from working on generative AI at OpenAI until Musk’s company confirms its information has been deleted. A hearing on whether to extend the order is scheduled for October 7.
Court filings state that Li admitted to copying company files before joining OpenAI and that investigators later found additional undisclosed material on his devices. The complaint also names former xAI engineer Jimmy Fraiture and a senior finance executive among those allegedly targeted for recruitment.
xAI is seeking monetary damages and a restraining order blocking the use of its trade secrets. OpenAI has denied wrongdoing, describing the lawsuit as part of what it called an ongoing campaign of harassment by Musk.
The dispute highlights the growing competition in the artificial intelligence sector and marks the latest in a series of legal clashes between Musk and OpenAI. Musk co-founded OpenAI in 2015 but left the company in 2018. Earlier this year, OpenAI countersued Musk, alleging he attempted to damage its business through public attacks and a failed takeover bid.
The new filing comes a month after xAI sued Apple in a Texas court, alleging that the company colluded with OpenAI to monopolize the market for AI chatbots by favoring ChatGPT in its App Store. Apple has denied the claims.
About the Author
John K. Waters is the editor in chief of a number of Converge360.com sites, with a focus on high-end development, AI and future tech. He's been writing about cutting-edge technologies and culture of Silicon Valley for more than two decades, and he's written more than a dozen books. He also co-scripted the documentary film Silicon Valley: A 100 Year Renaissance, which aired on PBS. He can be reached at [email protected].