Tesla and X (formerly Twitter) platform owner Elon Musk attends a symposium to combat anti-Semitism titled ‘Never Again: Lip Service or Deep Conversation’ in Krakow, Poland on January 22, 2024.
Beata Zawrzel | Nurphoto | Getty Images
When it comes to legal disputes, Elon Musk’s definition of victory may not always be winning in court.
Last week, Musk sued OpenAI and co-founders Sam Altman and Greg Brockman for breach of contract and fiduciary duty. Experts say the case rests on questionable legal ground because the contract at the center of the lawsuit is not a formal written agreement signed by all parties involved.
Instead, Musk claims that the early OpenAI team set out to grow artificial general intelligenceor AGI, “for the benefit of humanity”, but that the project has turned into a for-profit entity largely controlled by the major shareholder Microsoft.
Musk used much of the 35-page complaint (plus attached exhibits) on Friday to tell his side and remind the world of his centrality in building a company that has since become one of the hottest startups on the planet. (OpenAI topped CNBC’s 2023 Disruptor 50 list) thanks in large part to the viral spread of ChatGPT.
“It’s definitely a good advertisement for Elon Musk,” Kevin O’Brien, a partner at Ford O’Brien Landy LLP and a former assistant U.S. attorney, told CNBC. “I’m not sure about the legal part though.”
O’Brien, who is not involved in any business with Musk, added: “One thing that jumped out at me right away is that there is no contract.”
In the lawsuit, Musk’s lawyers say they want OpenAI to return to its work as a research lab and no longer exist for Microsoft’s “financial benefit.” Musk, whose fortune exceeds $200 billion, is unconcerned about the legal costs of an outfit that has no clear personal financial benefit and is of questionable value.
Shannon Capone Kirk, global head of e-discovery and AI for Ropes & Gray LLP, told CNBC that Musk may simply be seeking to push more information into the public sphere about how OpenAI works and how business has changed. his goals in recent years. .
Sam Altman, CEO of OpenAI, during an interview at Bloomberg House on the opening day of the World Economic Forum in Davos, Switzerland, on January 16, 2024.
Chris Ratliff | Bloomberg | Getty Images
It’s a “high-profile case with a lot of public interest, the consequence of which could lead to OpenAI being available to everyone,” said Kirk, who is not working on any case involving Musk. “Is that the real goal?”
In their complaint, Musk’s lawyers claim that OpenAI “has become a closed-source de facto subsidiary of the world’s largest technology company: Microsoft.” They also say the deal conflicts with a 2015 founding agreement and certification of incorporation that OpenAI created with Musk, who was a key donor to OpenAI in its early years.
Musk’s lawyers said their client contributed more than $15 million to OpenAI in 2016, which was “more than any other donor” and helped the startup build a team of “top talent.” Over the next year, Musk gave nearly $20 million to OpenAI, which lawyers said was more than other backers. In total, Musk invested more than $44 million in OpenAI from 2016 to September 2020, according to the lawsuit.
The lawsuit fits a pattern for Musk, who frequently posts on X and comments in public forums about its importance to the creation of OpenAI.
In November, Musk told an audience at the New York Times’ DealBook conference that OpenAI had strayed from its original mission.
“OpenAI should be renamed ‘super closed source for maximum AI gain,’ because that’s what it really is,” Musk said on stage at the event. He noted that it has gone from an “open-source foundation” to a multibillion-dollar “closed-source, for-profit company.”
Is there an injury?
In the lawsuit, Musk’s lawyers claim that the inner workings of OpenAI’s GPT-4 AI model are “a complete secret except to OpenAI — and, on information and belief, Microsoft,” and that the secrecy is driven by commercial gain and not from security. Musk has publicly worked with Microsoft for a while, and in May 2023, Musk’s lawyers accused the company of using X (formerly Twitter) data in unauthorized ways.
Even if OpenAI’s mission has changed, that doesn’t mean Musk has a solid legal case.
“If he has any hope of recovery, he will have to prove that there was that agreement – that the company is open and not for profit and all that other stuff, and that the failure to do that has caused him injury, which is a separate issue. O’Brien said. “It’s hard to see where the injury is here.”
Musk’s lawyers did not respond to a request for comment.
Musk has his own artificial intelligence company, X.AI, which introduced a competing chatbot called Grok in November after two months of training. In December, H.A.I filed with the SEC to raise up to $1 billion in an equity offering. And Musk is also developing autonomous vehicle and humanoid robotics technology, which require advances in artificial intelligence, in Tesla.
He is known to have hired OpenAI bigwigs, poaching Andrej Karpathy, a former OpenAI software engineer, to Tesla in 2017. More recently, Musk hired Kyle Kosic from OpenAI to join X.AI.
One of Musk’s goals with this case, the lawyers said, may be to shed light on the details of OpenAI’s GPT-4 in the discovery process, if it gets that far. O’Brien said it can be difficult to keep intellectual property and other internal details private when a lawsuit is filed.
Kirk agreed, saying that in discovery, there could be “a lot of document requests for all kinds of communications,” including internal conversations, text messages and more. Some of the documents produced may come with protective orders keeping them from the public.
Part of Musk’s pitch is based on the idea that OpenAI has already reached AGI, which is typically defined as AI that can perform at the same level — or higher — than humans when completing a wide range of cognitive tasks. The lawsuit alleges that since the GPT-4 is “better at reasoning than average people” based on test scores on the Uniform Bar Exam, the GRE Verbal Assessment and even the Advanced Sommelier exam.
As part of its contract with OpenAI, Microsoft only has rights to OpenAI’s “pre-AGI” technology, and it’s up to OpenAI’s board of directors to determine whether the company has reached that milestone.
In a memo to employees Friday after the lawsuit, OpenAI said “GPT-4 is not AGI.”
“Importantly, an AGI will be a highly autonomous system capable enough to devise new solutions to long-standing challenges,” Chief Strategy Officer Jason Kwon wrote. “GPT-4 cannot do this.”
Much of the AI community agrees with Kwon.
Kirk said that “part of what they’re going to argue about” is the question of what AGI is.
Read the full complaint here: