Elon Musk’s legal case against OpenAI is hilariously bad

Elon Musk sued OpenAI today, alleging a wide range of incendiary things, including that GPT-4 is actually an artificial general intelligence. It’s a fun complaint to read; it fundamentally accuses OpenAI and its CEO, Sam Altman, of pretending to run a nonprofit designed to benefit humanity while actually running a regular ol’ tech company and trying to make a lot of money. That’s a pretty good criticism of the entire OpenAI situation, actually! Someone with some intellectual honesty and a competent lawyer should run at that sometime.

Sadly, Musk is not that person, and his lawyers have figured out that letting the world’s richest man rack up billable hours filing nonsensical lawsuits is more lucrative than fitting the “facts” to the “law,” or whatever it is regular lawyers do.

Let’s just take the very first cause of action of the lawsuit, for example. It is a claim for breach of contract — a very, very simple claim that almost any first-year law student can evaluate, because step one is asking if there is a contract, and step two is figuring out what the contract says. To have a valid contract, you need an offer, acceptance, and an exchange of value — what lawyers are trained to call “consideration,” in an enduring effort to make simple concepts sound confusing and increase fees.

Most importantly, contracts need to be written down — proving that an unwritten contract exists, what its terms are, and if they are enforceable is extraordinarily difficult, and courts do not like doing it, especially for ultra-sophisticated parties with a long history of dealing.

My friends, Musk is straightforwardly alleging that OpenAI breached a contract that does not exist. It is simply not a thing! The complaint makes reference to a “Founding Agreement,” but no such Founding Agreement is attached as an exhibit, and the breach of contract claim admits that the “Founding Agreement” is basically a vibe everyone caught in some emails. Seriously, here’s what Musk’s lawyers wrote:

This Founding Agreement is memorialized in, among other places, OpenAI, Inc.’s founding Articles of Incorporation and in numerous written communications between Plaintiff and Defendants over a multi-year period.

(Lawyers use “memorialized” as a fancy way of saying “written down” because again: impenetrable language pays the bills.) 

It then goes on to quote the “Articles of Incorporation,” which are not a contract, which Elon Musk did not sign, and which simply say the following:

The specific purpose of this corporation is to provide funding for research, development and distribution of technology related to artificial intelligence. The resulting technology will benefit the public and the corporation will seek to open source technology for the public benefit when applicable. The corporation is not organized for the private gain of any person.

There’s no agreement there — maybe it is true that OpenAI’s byzantine corporate structure that involves a nonprofit owning a for-profit corporation subverts the ideals laid out in this document, but Musk cannot sue over that since it is not a contract

The breach of contract claim goes on to reference an email from Sam Altman to Elon Musk, which says the technology OpenAI develops would be used for “the good of the world,” to which Musk replied, “Agree on all.”

I asked a few lawyer friends if any of that looked like a contract, and most of them just made puzzled faces. This tracks with Musk’s increasingly fuzzy understanding of how contracts work; just yesterday a judge told lawyers for X that its breach of contract case against the Centers for Combating Digital Hate involved “one of the most vapid extensions of law I’ve ever heard.”

This entire complaint is more like a 1L exam question than a real lawsuit — to the extent that the second cause of action is something called “promissory estoppel,” a concept that sets the hearts of law professors aflame and which comes up in the real world approximately never. The important thing to know is that the richest person in the world is now trying to tell a court that he somehow detrimentally relied upon the promises of a nonprofit when he donated millions of dollars to it with no written contract. This is, at the very least, extremely funny.

From there, the complaint continues to fade into a wet fart — there are some catchall state claims and then a final desperate cause of action for “accounting,” which has two elements under California law, one of which is that OpenAI has to owe Musk money. This is an unusual expectation for donations to a nonprofit, to say the least.

Anyway, my guess is that this case will continue to be a gold mine for law schools around the country because it is almost a certainty that OpenAI’s response will be another 1L favorite: a 12(b)(6) motion to dismiss for “failure to state a claim.”

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