Here’s why Elon Musk lost his suit against OpenAI

Elon Musk’s lawsuit against OpenAI was dismissed after a jury determined he filed it too late. The unanimous advisory verdict stated that Musk’s claims were barred by the applicable statutes of limitations, a decision immediately accepted by US District Judge Yvonne Gonzalez Rogers. Musk has announced his intention to appeal, arguing the ruling focused on a "calendar technicality" rather than the case’s merits.

Musk co-founded OpenAI in 2015 as a nonprofit dedicated to developing AI for humanity's benefit. He donated $38 million, alleging promises from CEO Sam Altman and president Greg Brockman to maintain the nonprofit status. However, Musk sued OpenAI in 2024, claiming that Altman and Brockman breached this charitable trust by creating a for-profit subsidiary that grew significantly. He also accused them of unjust enrichment.

The core of the legal battle revolved around when Musk should have been aware of the alleged breaches. The statute of limitations for charitable trust claims is three years, and two years for unjust enrichment. OpenAI argued that Musk had reason to know of these issues well before 2021, despite his claim of discovery in 2022.

Evidence presented during the trial indicated Musk's early involvement in discussions about a for-profit subsidiary in 2017, intended to fund ambitious AI development. OpenAI's lawyers pressed Musk on his knowledge of and participation in these plans, suggesting he had reason to sue much earlier. Furthermore, the creation of a for-profit subsidiary in 2019 and Microsoft’s significant investments in 2019 and 2023 were highlighted by OpenAI as instances when Musk should have recognized a shift in the company's mission.

Musk, however, maintained that he initially viewed the for-profit subsidiary as compatible with the nonprofit’s goals, especially with a capped-profit structure. He testified that it wasn’t until Microsoft’s preparing to invest $10 billion in 2022, valuing OpenAI at $20 billion, that he unequivocally realized the company had shifted away from its original mission, describing it as "bait and switch."