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The lawsuit filed by Elon Musk against OpenAI to prevent its transformation into a profit-oriented company may proceed to trial as per a federal judge's statement on Tuesday while ordering Musk to testify as a court witness.
This case requires a court trial according to the statements of U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California.
The court session revealed that Elon Musk needs to testify in front of a jury while presenting his evidence which will determine the outcome of his case.
During court proceedings Judge Yvonne Gonzalez Rogers examined Musk's bid for a preliminary injunction which aimed to prevent OpenAI from becoming a profit-driven organization because this case involved disputes between Elon Musk and OpenAI leader Sam Altman.
The legal proceedings surrounding the injunction determination continued without a final decision from Rogers because she expressed doubts about the evidence presentation from Musk's team although she hinted at holding an evidence evaluation session to present both sides with an opportunity to display their facts and witness information.
Rogers issued her last preliminary injunction in the May 2021 Epic Games v Apple legal dispute.
Musk and Altman started OpenAI together in 2015 but Musk withdrew before the company became successful so he created his competing startup xAI in 2023.
The artificial intelligence research organization OpenAI works toward becoming a profit-driven enterprise to raise required capital for developing its best model designs.
The lawsuit filed by Musk in 2022 targeted OpenAI and its founder team because he had previously received a nonprofit AI proposal from them yet the company currently focuses on generating profits instead.
In December he requested the presiding judge to prevent OpenAI from turning into a for-profit organization after he added federal antitrust allegations and other claims to his lawsuit.
OpenAI filed a legal motion to dismiss the claims that Elon Musk presented and emphasized that he should enter commercial competition rather than court battles.
OpenAI faces critically heightened risks regarding its corporate transformation because the company received $6.6 billion in previous funding along with ongoing talks for up to $25 billion from SoftBank that depend on removing nonprofit governance responsibilities.
Lawyers representing OpenAI explained at the hearing that becoming a profit-making organization will support the mission objectives of the nonprofit organization.
Executive director Rose Chan Loui of UCLA Law Center for Philanthropy and Nonprofits described such a transformation as an exceptional move. Nonprofit organizations have traditionally used for-profit conversions for healthcare institutions such as hospitals but VCs have never been part of this process according to her.
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