By Alyssa Lukpat

A California federal judge Monday dismissed a lawsuit from Elon Musk's artificial-intelligence company xAI that accused OpenAI of trying to steal trade secrets.

Judge Rita Lin said xAI didn't prove that the rival firm had recruited a former engineer to induce him to share information about the company's Grok chatbot. Musk's AI unit had sued OpenAI last year for allegedly taking xAI's trade secrets and poaching its employees.

"In essence, xAI equates asking a candidate about their prior work experience with encouraging the candidate to divulge trade secrets obtained during that prior work experience," Lin said.

The judge said xAI didn't have evidence that the engineer at the center of the lawsuit, Xuechen Li, disclosed trade secrets in a presentation to OpenAI while he was being recruited to work there. The judge barred xAI from continuing to pursue the case. Musk is the founder and chief executive of xAI, which is now a unit of his SpaceX company.

Musk's xAI had initially sued OpenAI over trade secrets in September. Lin dismissed the lawsuit in February over a lack of evidence and allowed xAI to refile a complaint the following month. In her ruling Monday, Lin said allowing further amendments would be "futile."

Tech companies are growing increasingly paranoid about trade-secret theft. The secrets behind critical technology, especially AI, can be worth billions of dollars. At xAI, the Grok model has lagged behind competitors.

Musk's xAI is suing Li separately in part over trade-secret misappropriation. Li was among the first 20 engineers at xAI in 2024 and helped develop the Grok chatbot, according to the company's lawsuit against him. A Chinese national, he has a doctorate in computer science from Stanford University, according to the lawsuit. The company said he sold millions of dollars of stock before joining OpenAI.

Lawyers for Li and xAI didn't immediately return requests for comment Monday.

OpenAI on Monday referred to its statement in February when the judge dismissed the initial lawsuit. "This baseless lawsuit was never anything more than yet another front in Mr. Musk's ongoing campaign of harassment, " the company said at the time.

Musk lost a separate legal challenge against OpenAI last month when another California federal judge ruled that the statute of limitations expired for his lawsuit. Musk had alleged that leaders of then-nonprofit OpenAI manipulated him into donating millions before converting into a for-profit company.

Musk earlier this year merged his company SpaceX with xAI. SpaceX last week had the largest initial public offering ever.

News Corp, owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.

Write to Alyssa Lukpat at alyssa.lukpat@wsj.com

(END) Dow Jones Newswires

June 15, 2026 16:47 ET (20:47 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.