However, that allegation depends entirely on xAI showing that OpenAI enticed away its staff to obtain its trade secrets. So, Lin said, for xAI’s lawsuit to advance it will have to bolster the evidentiary support for its separate contention that OpenAI violated the federal Defend Trade Secrets Act. To prevail on that claim, xAI must prove that OpenAI unlawfully acquired, disclosed, or used a trade secret with xAI’s consent.
That will likely be difficult because, at this stage, xAI has not offered “any nonconclusory allegations that OpenAI itself acquired, disclosed, or used xAI’s trade secrets,” Lin wrote.
xAI’s sole assertion is that OpenAI induced former employees to divulge secrets, and so far there is no evidence supporting that, Lin said. Tishler added that the court also rejected xAI’s argument that “OpenAI should be responsible for what its new hires did before they arrived” for “the same reason: without evidence that OpenAI directed the theft or actually put the stolen information to use, you cannot hold the company liable.”
The most persuasive proof xAI presented of employee misconduct, which it says enabled OpenAI to misappropriate its trade secrets, centers on the departure of one of xAI’s earliest engineers, Xuechen Li.
That proof wasn’t sufficient, Lin said. xAI alleged that Li gave a presentation to OpenAI that allegedly contained confidential information. xAI also claimed Li uploaded “the entire xAI source code base to a personal cloud account,” which he had connected to ChatGPT, Lin noted, after a recruiter sent a Signal message sharing a link with Li to a different cloud storage location.
xAI expected the Signal exchanges to alarm the court, reading into them the inferences xAI drew. As evidence that OpenAI purportedly obtained xAI’s source code, xAI pointed to a Signal message an OpenAI recruiter sent Li “four hours after” Li downloaded the code, saying “nw!” xAI has argued this shorthand means “no way!”—implying the recruiter was excited about accessing xAI’s source code. But in a footnote, Lin wrote that “OpenAI insists that ‘nw’ means ‘no worries,’” and therefore the message is unrelated to Li’s decision to upload the source code to a ChatGPT-linked cloud account.
