Background of the Dispute

xAI has accused OpenAI of stealing its trade secrets by allegedly inducing former employees to share confidential information. The lawsuit contends that OpenAI violated the federal Defend Trade Secrets Act, which prohibits unlawful acquisition, disclosure, or use of trade secrets.

Judge’s Findings on Evidence

The presiding judge found that xAI has not offered any nonconclusive allegations showing that OpenAI itself acquired, disclosed, or used xAI’s trade secrets. According to the court, the claim hinges entirely on xAI’s ability to prove that former employees transferred proprietary information to OpenAI, a burden that has not been met.

Rejected Theories

The court also rejected an xAI theory that OpenAI should be responsible for what its new hires did before they arrived at the company. The judge explained that without evidence that OpenAI directed the theft or actually put the stolen information to use, the company cannot be held liable.

Specific Allegations Involving a Former Engineer

The strongest evidence presented by xAI centers on the departure of an early engineer, Xuechen Li. xAI alleged that Li gave a presentation to OpenAI that included confidential details and that he uploaded the entire xAI source code to a personal cloud account linked to ChatGPT. The lawsuit also highlighted a Signal message from an OpenAI recruiter to Li "four hours after" Li downloaded the source code, interpreting the abbreviation "nw!" as shorthand for "no way!" indicating excitement about the code. However, the judge noted that OpenAI contends the abbreviation means "no worries," and therefore does not demonstrate intent to acquire the source code.

Implications for xAI’s Case

Given the court’s assessment, xAI must strengthen its evidentiary base to revive its claims. The judge indicated that without clear proof of OpenAI’s direct involvement in acquiring or using the alleged trade secrets, the lawsuit cannot proceed.

Conclusion

The ruling highlights the high evidentiary standard required in trade‑secret litigation, especially when allegations involve employee movement between competing AI firms. xAI faces the task of gathering more concrete evidence if it wishes to pursue further legal action against OpenAI.

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