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Musk sues to block OpenAI's conversion to a for-profit

structure

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Musk cofounded OpenAI with Altman in 2015

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OpenAI argues for-profit move needed for capital

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Nonprofit to for-profit conversion rare, expert says

(Rewrites paragraph 1, adds comments by judge in paragraphs and

background in paragraphs 2-5)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) -

A federal judge said on Tuesday that parts of Elon Musk's

lawsuit

against OpenAI to halt its conversion to a for-profit

entity might go to trial, adding that the Tesla CEO will have to

appear in court and testify.

"Something is going to trial in this case," U.S.

District Judge Yvonne Gonzalez Rogers in Oakland, California,

said early in the court session.

"(Elon Musk will) sit on the stand, present it to a

jury, and a jury will decide who is right."

Rogers was considering Musk's recent request for a

preliminary injunction to block OpenAI's conversion before going

to trial, the latest move in a

grudge match

between the world's richest person and OpenAI CEO Sam

Altman that is playing out publicly in court.

The last time Rogers provided a preliminary

injunction

was in Epic Games' case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, but left before

the company took off and subsequently founded the competing AI

startup xAI in 2023.

OpenAI is now trying to transition from a nonprofit into a

for-profit entity, which it says it needs to do to secure the

capital required to develop the best artificial intelligence

models.

Last year, Musk filed a lawsuit against OpenAI and Altman,

saying that OpenAI's founders originally approached him to fund

a nonprofit focused on developing AI to benefit humanity, but

that it is now focused on making money.

He later expanded the lawsuit to add federal antitrust and

other claims, and in December asked the judge presiding over the

case to stop OpenAI from transitioning to a for-profit.

In response to Musk's lawsuit, OpenAI has said it will move

to dismiss Musk's claims and that Musk "should be competing in

the marketplace rather than the courtroom."

The stakes on OpenAI's corporate transition have now

escalated, as OpenAI's last fundraising round of $6.6 billion

and a new round of up to $25 billion under discussion with

SoftBank are conditioned on the company restructuring

to remove the nonprofit's control.

Such a restructuring would be highly unusual, said Rose Chan

Loui, executive director of the UCLA Law Center for Philanthropy

and Nonprofits. Nonprofit conversions to for-profits have

historically been for health care organizations like hospitals,

not venture capital-backed companies, she said.