Elon Musk’s AI startup xAI has filed a lawsuit in California federal court against a former engineer, Xuechen Li, accusing him of stealing trade secrets related to its Grok chatbot. The complaint alleges he transferred these proprietary files to his new employer, OpenAI, just after accepting their job offer.Reuters
What the Lawsuit Alleges
- Li, who joined xAI last year, played a critical role in training and developing Grok.
- In July 2025, he sold approximately $7 million worth of xAI stock shortly after accepting a position at OpenAI and reportedly copied sensitive company files.
- On August 14, during a meeting with xAI representatives, Li allegedly admitted to stealing the files and attempting to cover his tracks. Further undisclosed data was found later on his devices.
- xAI asserts these trade secrets could allow OpenAI to enhance ChatGPT with Grok’s “innovative and imaginative” features.
xAI’s Legal Requests
xAI is seeking:
- Monetary damages (unspecified amount)
- A restraining order to prevent Li from joining or working at OpenAI
The Wider Context
- OpenAI is not named as a defendant, but the lawsuit highlights the escalating rivalry between xAI and OpenAI, especially over acquiring AI talent.
- This legal action builds on existing tensions. Musk has previously sued OpenAI’s CEO Sam Altman and the company itself over various issues, including alleged mission shift and antitrust concerns.
Why This Matters
This high-stakes lawsuit underscores the fierce competition in the AI industry, where intellectual property and proprietary innovations are fiercely guarded. The outcome could set important precedents around employee mobility, IP protection, and corporate governance in AI development.
