A United States federal judge has dismissed a lawsuit filed by Elon Musk's artificial intelligence company xAI, which accused rival Sam Altman's OpenAI of stealing trade secrets for its chatbots. The ruling came on Monday from US District Judge Rita Lin in San Francisco.

This legal setback marks the second significant court loss for Musk against OpenAI in recent weeks. The original lawsuit, filed in September, centered on allegations of broader misappropriation of confidential information, including source code, by former xAI employees who had moved to OpenAI.

Judge Lin stated that xAI had not provided sufficient evidence to demonstrate that OpenAI had induced former xAI senior engineer Xuechen Li to divulge confidential information related to xAI's Grok chatbot. Furthermore, the judge found no indication that OpenAI engineers were aware that Li might have disclosed any such information.

The dismissal was made with prejudice, meaning the case cannot be refiled, as the judge deemed further proceedings would be "futile." This follows an earlier dismissal of a previous version of the lawsuit in February.

The amended complaint specifically focused on a presentation given by Li while OpenAI was in the process of recruiting him. xAI's legal team contended that OpenAI sought secrets concerning the planned release of Grok 4 in July 2025, believing its upcoming ChatGPT update could not match Grok's capabilities in complex reasoning. They also suggested OpenAI was seeking an advantage in reinforcement learning and post-training techniques where Li possessed expertise.

However, Judge Lin countered that it is common practice for companies to ask job candidates about their prior work. She wrote that inferring OpenAI pressured Li to leak confidential material would be an overreach, stating, "To hold otherwise would potentially expose employers to liability any time they inquire about a candidate’s past work."

OpenAI has consistently denied the allegations, asserting that Li never worked for their company and that they never obtained any trade secrets from xAI. In their arguments for dismissal, OpenAI's lawyers stated, "OpenAI does not need or want anyone’s trade secrets, especially not from xAI, which is failing in the marketplace and hemorrhaging talent."

This latest ruling comes after a federal jury ruled against Musk on May 18 in his separate $150 billion lawsuit. In that case, Musk accused OpenAI and Altman of betraying the company's original nonprofit mission for personal enrichment. The xAI business is integrated within Musk's broader tech ventures, including SpaceX.