OpenAI seeks $1M+ from xAI after twice-dismissed IP suit

OpenAI's Monday filing is the kind of legal move that only makes sense when you think you are going to win. The Next Web reports that the company asked a federal judge to make xAI cover over $1 million in legal expenses, arguing that the trade-secret suit Elon Musk's company brought against it "should never have been filed."

The fee motion lands after Judge Rita Lin dismissed xAI's amended complaint in June, finding that it "rested on speculation and at most described the passive receipt of information, which is not misappropriation under the Defend Trade Secrets Act." The judge went further, characterizing xAI's allegations as an attempt to "recast ordinary Silicon Valley hiring as a conspiracy." xAI has said it intends to appeal to the Ninth Circuit, so the underlying dispute over former xAI engineer Xuechen Li is not fully over even if the fee award goes OpenAI's way.

The timing is what makes this more than a housekeeping story. Four days before OpenAI's fee motion, Apple sued OpenAI in the same federal district on July 10, accusing it of stealing hardware trade secrets "at every level, from members of its Technical Staff to its Chief Hardware Officer, and in coordination with business partners." The complaint names Tang Tan, now OpenAI's Chief Hardware Officer and a 24-year Apple veteran who was previously vice-president of product design, and Chang Liu, an eight-year Apple senior systems electrical engineer who Apple alleges kept his Apple laptop after leaving and used it to download confidential technical documents. Apple claims more than 400 of its former employees now work at OpenAI.

OpenAI's public line is a boilerplate denial, that it has "no interest in other companies' trade secrets" and is "focused on building innovative technology," but the pattern is the interesting part. One case is heading toward fee-shifting sanctions on the theory that aggressive AI hiring is just hiring. The other is just getting started on the opposite theory, that coordinated hiring plus retained devices plus named executives adds up to a trade-secret program.

The honest caveat is that the reporting does not tell us which specific hardware secrets Apple's complaint identifies, or whether Judge Lin will actually grant OpenAI the full seven-figure sum. What it does tell you is that the legal cost of OpenAI's hardware push, from the Jony Ive io Products deal onward, is going to keep climbing, and that any AI company aggressively recruiting out of Apple or xAI right now should assume every offer letter is going to be read back to it in a courtroom.