Musk Seeks Injunction Against OpenAI(c)(3) Sale to PBC

We’ve followed OpenAI (c)(3) at least since it announced a joint venture with Microsoft.  Not just because the people involved are wealthy nerd celebrities.  There are just so many tax exemption and nonprofits lessons to be learned. For example, we previously reported that Elon Musk, an early supporter/investor in OpenAI (c)(3), has added 15 new counts to his original complaint against OpenAI (c)(3), including derivative actions against board members.  Now Musk has filed a motion for preliminary injunction.  Here are assertions made in Musk’s Motion, filed November 29, 2004:

Plaintiffs seek an order enjoining Defendants, as well as their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with Defendants, during the pendency of this litigation, from: (1) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, making, enforcing, or furthering agreements not to invest in OpenAI’s competitors, such as xAI; (2) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, interlocking directorates or benefitting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks; (3) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, furthering the conversion of OpenAI, Inc. to a for-profit enterprise or transferring any material assets, including intellectual property owned, held, or controlled by OpenAI, Inc., its subsidiaries, or affiliates; and/or (4) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, causing OpenAI, Inc. to contract or do business with any entity in which any Defendant has a material financial interest.

This Motion is made on the grounds that: (1) Plaintiffs will be irreparably harmed if Defendants are not so enjoined; (2) Plaintiffs are likely to succeed on the merits of their claims or their claims raise serious questions going to the merits; (3) the balance of hardships weighs strongly in Plaintiffs’ favor; and (4) the public interest supports the issuance of a preliminary injunction.

. . . 

Plaintiffs and the public need a pause. OpenAI’s path from a non-profit to for-profit behemoth is replete with per se anticompetitive practices, flagrant breaches of its charitable mission, and rampant self-dealing. Allowing this course of conduct to continue until final disposition will seriously harm Plaintiffs and the public at large, whether as competitors, FAC ¶ [First Amended Complaint] ¶ 201, 227, 330-89, as donors and early members, id. ¶¶ 237-39, 416-83, as investors facing a complex and costly unwinding, id. ¶¶ 113, 124, 387(f), as consumers, id. ¶¶ 330-415, as taxpayers, id. ¶¶ 183, 312, 387(d)-(e), as citizens concerned about violations of California and federal law, id. ¶387(a)-(i), or simply as people, concerned about rushed, unsafe AI products, id. ¶¶ 186, 401.

darryll k. jones