Elon Musk’s artificial intelligence startup xAI has filed a federal lawsuit against a former engineer, accusing him of stealing trade secrets related to its Grok chatbot and sharing them with rival OpenAI after accepting a job there.
The complaint, lodged in the US District Court for the Northern District of California on August 28, names Xuechen Li, a Stanford-trained researcher, as the defendant. It alleges that Li “willfully and maliciously” copied confidential documents and code to his personal devices on July 25, just days before resigning from xAI on July 28. Li had reportedly accepted an offer from OpenAI with a start date of August 19 and sold approximately $7 million in xAI stock in the months leading up to his departure.
According to the suit, Li admitted during an August 14 meeting to taking the files and attempting to cover his tracks by deleting browser history, system logs, and renaming documents. xAI claims the stolen information includes “cutting-edge AI technologies with features superior to those offered by ChatGPT and other competing products,” potentially saving competitors billions in research costs and years of development time.
Musk, who co-founded OpenAI but left in 2018 amid disputes over its direction, publicly commented on the allegations via his X account. In one post, he stated: “He accepted an offer at OpenAI and then uploaded our entire codebase!” In another, responding to a user’s claim of alleged theft, Musk wrote: “Not allegedly. He downloaded the entire xAI code repo, the logs prove he did it and he admitted he did it!”
xAI is seeking monetary damages, a temporary restraining order to prevent Li from joining OpenAI or any competitor, and forensic inspection of his devices and accounts. The company described the breach as a “significant legal move” in the escalating AI talent wars.
Li, a Chinese national and US permanent resident based in Mountain View, California, holds a doctorate in computer science from Stanford University and joined xAI in early 2024 as part of a small team of about 20 engineers working on Grok’s advanced models. Neither Li nor OpenAI has publicly responded to the lawsuit as of this report.
The case highlights ongoing tensions in the AI industry, where rapid talent mobility and intellectual property disputes are common amid fierce competition between startups like xAI and established players like OpenAI.b72a88 Musk has previously sued OpenAI, accusing it of abandoning its nonprofit mission in favor of profit-driven motives.
xAI, launched by Musk in 2023, aims to develop AI that seeks “maximum truth” and has raised billions in funding. OpenAI, valued at over $80 billion, is backed by Microsoft and leads the market with its ChatGPT tool.
