What will the jury actually decide in Elon Musk v. Sam Altman?

Nine jurors in California are now deliberating on the future of OpenAI, the world’s leading artificial intelligence laboratory.

While the trial exploring Elon Musk’s case against the other OpenAI founders and Microsoft has covered areas ranging from the founders’ breakup in 2018 to Altman’s firing and rehiring in 2023, jurors will consider a fairly narrow set of questions.

• Breach of Charitable Trust – Essentially, did OpenAI and co-founders Sam Altman and Greg Brockman breach a specific agreement with Musk to use his donations to OpenAI for a specific charitable purpose and not for general use by the nonprofit?
• Unjust enrichment – Did the defendants use Musk’s donations to enrich themselves through OpenAI’s for-profit arm, rather than for charitable purposes?
• Aiding and abetting a breach of charitable trust – Did Microsoft know, through its interactions with OpenAI, that Musk had specific conditions on his donations, playing a significant role in harming Musk?

OpenAI also presented three arguments in its defense that the jury will consider:

• Statute of Limitations – The legal deadline before which a lawsuit must be filed. Here, if OpenAI can prove that any harm to Musk occurred before August 5, 2021 for the first count; August 5, 2022 for the second count; And November 14, 2021 for the first count, so his claims become moot.
• Unreasonable Delay – Musk, by filing his lawsuit in 2024, delayed his claim in a way that made his request for damages unreasonable.
• Unclean Hands – A legal doctrine that holds that Musk’s conduct related to his claims against OpenAI was unreasonable and invalid.

If Musk wins, it could mean the end of OpenAI as a for-profit company, but it’s not entirely clear what that would entail. Next week, the judge will begin a set of new hearings where attorneys on both sides will discuss the consequences of ruling in favor of the plaintiffs. However, this process could become moot if a negative ruling is issued.

Charitable breach of trust

Musk’s lawyers say the defendants clearly understood that Musk wanted to support a nonprofit that would ensure the benefits of artificial intelligence to the world, and prevent it from being controlled by any single organization. In particular, they say a $10 billion investment from Microsoft in 2023 in its for-profit subsidiary OpenAI – the first to occur after the statute of limitations – was the event that turned Musk’s fears into conviction.

Musk’s lawyers say this deal was different from previous investments and led to OpenAI investors being enriched through the company’s commercial products, at the expense of the philanthropic mission for AI safety that Musk has promoted.

OpenAI’s lawyers asked each witness to describe specific restrictions on Musk’s donations, and none did so, including his financial advisor Jared Birchall, his chief of staff Sam Tiller, or his special advisor Shevon Zillis. They say all participants agreed that private fundraising would be required to achieve its goals, and note that Musk himself tried to launch a for-profit OpenAI foundation that he would personally control, and later integrated OpenAI into his company Tesla. They also noted that other donors to the organization did not report that their charitable trust had been violated.

Most importantly, a forensic accountant hired by OpenAI testified that all of Musk’s donations were used by OpenAI before the key date of August 5, 2021. This is evidence that Musk’s donations had already been used for their purpose long before the lawsuit was filed, invalidating any charitable trust that may have existed.

Essentially, they insist that the for-profit subsidiary that conducts most of OpenAI’s actual activity continues to fulfill the organization’s mission, and has generated nearly $200 billion in equity value to support the nonprofit. It is worth noting that Sam Altman said that providing ChatGPT for free helps achieve the mission of sharing the benefits of AI with the world.

Unjust enrichment

Prosecutors point to the multi-billion-dollar valuations for stakes held by OpenAI founders like Brockman and Ilya Sutskever, as well as Microsoft itself, as a sign that Musk’s donations were ultimately used for personal benefit, rather than to support the charity’s mission. They claim that the work at the for-profit OpenAI was commercially focused, while the organization itself was left essentially dormant, without full-time employees and, ultimately, not even in control of the for-profit.

OpenAI says that all of Musk’s contributions were used by the organization by 2020, and that the stock distributions came long after he left the organization in 2018. Even before that, evidence shows that major players agreed that the ability to compensate researchers with stock was key to the development of artificial general intelligence, the hypothetical form of artificial intelligence capable of performing any intellectual task a human can perform. OpenAI executives assert that the for-profit business has meaningfully contributed to advancing the organization’s mission, including safety activities. They say the nonprofit board continues to take control of the for-profit, putting in place new governance controls after the “shock,” when Altman was fired by the nonprofit OpenAI’s board in 2023 for a lack of candor and then rehired just days later.

Aiding and abetting

Musk’s case focused on the events that occurred when Microsoft CEO Satya Nadella, whose company relied on OpenAI’s technology, was personally involved in helping to bring back Altman and create a new board to run OpenAI. They noted that Microsoft executives questioned whether their business agreement might conflict with the nonprofit’s goals, and suggested that Microsoft’s business priorities led OpenAI to stray from its mission. They focused attention on a clause in Microsoft’s agreement with OpenAI that gave Microsoft veto rights over major company decisions on OpenAI.

Microsoft’s witnesses insisted that company executives were not aware of any specific terms on Musk’s donations despite extensive due diligence, and never objected to any decision by OpenAI. They point out that the company’s investments and computing power allowed OpenAI to achieve its biggest victories.

Statute of limitations

Musk suggested his suspicions of his founders grew over time, until he finally decided in the fall of 2022 that they had betrayed him when he discovered Microsoft’s plans for a new $10 billion investment in 2023. He won’t file his lawsuit until mid-2024.

OpenAI’s lawyers argue that the terms of this deal were spelled out in a term sheet for the previous fundraising round in 2018, which Musk received and his advisers reviewed, but Musk said he did not read in detail. They also noted numerous blog posts and other communications over the years that show Musk could have known what OpenAI was doing well before they took them to court, including tweets in which Musk criticized the company years before the lawsuit was filed. Zelis, an advisor to Musk, even voted to approve these transactions as a member of OpenAI’s board of directors.

Ultimately, OpenAI’s lawyers maintain that Musk’s official role in the organization ended in 2018 and that his last donations were in 2020.

Unreasonable delay

OpenAI’s lawyers say the real reason Musk filed his lawsuit is because he realized he was wrong about OpenAI, after the launch of ChatGPT revolutionized the field of artificial intelligence. They argue that OpenAI has operated under its current structure since its first investment in Microsoft in 2018, and that forcing the organization to restructure after eight years is unreasonable.

Unclean hands

There is evidence that Musk was planning his competitive AI efforts while he was still the head of OpenAI, and hired OpenAI employees to work on AI at Tesla. OpenAI’s lawyers argue that these efforts undermined OpenAI at a time when it was using Musk’s donations to pursue its mission. They noted that Zelis, the mother of three of Musk’s children, had not disclosed her personal relationship with other OpenAI board members for years. They argue that Musk withheld donations in 2017 in an attempt to gain control of a planned, for-profit subsidiary of OpenAI. Finally, OpenAI’s lead attorney, Bill Savitt, told the jury: “Mr. Musk abandoned OpenAI due to his death in 2018.”