OpenAI and xAI: A Legal Battle Over Trade Secrets
On Monday, OpenAI requested a federal judge in California to rule that xAI’s trade secrets lawsuit against it should never have been filed and to order xAI to cover over $1 million in legal fees. This came just four days after Apple initiated its own trade secrets case against OpenAI.
July 14, 2026 – 9:21 am
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On Monday, OpenAI filed a request asking the judge to dismiss xAI’s lawsuit, which alleged that OpenAI poached engineers and encouraged them to bring confidential information. The case has been dismissed twice and is now being appealed.
xAI initially sued OpenAI in 2025, claiming that its rival had recruited engineers and enticed them with confidential data. In February, Judge Rita Lin granted OpenAI’s motion to dismiss the amended complaint but gave xAI until mid-March to rephrase their arguments.
xAI attempted to redo their complaint, adding allegations regarding a newly hired employee discussing work from his previous employer. On June 15th, Judge Lin dismissed these claims for the second time, finding that the complaint was based on speculation and did not meet the legal standard for trade secret misappropriation.
Her ruling characterized xAI’s claims as attempting to turn ordinary Silicon Valley hiring practices into a conspiracy.
OpenAI’s fee motion stems from this decision. Interestingly, just last Friday, Apple sued OpenAI in the same federal district, accusing them of stealing hardware trade secrets for consumer devices.
Apple’s complaint alleges that OpenAI engaged in theft "at every level" and even involved coordination with business partners. Tang Tan, a former Apple vice-president, is accused of directing Apple staff to bring digital designs and prototypes to "show and tell" sessions during interviews at OpenAI. Chang Liu, an eight-year Apple senior engineer, is alleged to have downloaded confidential documents on his Apple laptop after leaving for OpenAI.
Apple seeks an injunction, the return of its trade secrets, and damages. OpenAI has stated that it has no interest in other companies’ trade secrets and is focused on building innovative technology.
Fee awards are rarely granted for losing cases; however, the Defend Trade Secrets Act allows courts to make the losing side pay if a misappropriation claim was brought in bad faith—a higher standard than simply being wrong twice before the same judge.