Key Takeaways
- A California court has granted a temporary restraining order preventing Xuechen Li from working for OpenAI.
- Xuechen Li previously worked on Grok for xAI, which has accused him of stealing trade secrets.
- Trade secrets protect xAI’s model weights, training data, tuning methods, system prompts, and more.
Elon Musk’s artificial intelligence startup xAI has won a court order blocking a former employee from collaborating with rival OpenAI.
The restraining order deepens the ongoing feud between xAI and Xuechen Li, who left the company for a new role at OpenAI in August.
xAI Accuses Departing Engineer of Stealing Trade Secrets
In a lawsuit filed in California last month, xAI accused one of its founding team of engineers who worked on Grok of “willful and malicious misappropriation of xAI’s confidential information and trade secrets.”
The lawsuit states that Xuechen Li copied trade secrets from his company laptop to personal storage systems, in violation of the terms of his employment.
These allegedly included “cutting-edge AI technologies with features superior to those offered by ChatGPT and other competing products.”
According to xAI, Xuechen Li copied trade secrets the same day he received millions of dollars in company stock. Three days later, he “suddenly resigned,” the suit states.
Appealing to the Defend Trade Secrets Act
In seeking to prevent Xuechen Li from exposing trade secrets to a rival, xAI appealed to the Defend Trade Secrets Act (DTSA), a 2016 law that allows owners of trade secrets to sue in federal court when those secrets are misappropriated.
The DTSA permits court injunctions “to prevent any actual or threatened misappropriation” of plaintiffs’ trade secrets.
In the case of xAI vs. Xuechen Li, Judge Rita Lin issued a temporary restraining order that prohibits the defendant from “having any role or responsibility” at OpenAI pertaining to generative AI.
The order will remain in effect until xAI confirms that trade secrets in Xuechen Li’s possession have been deleted.
A hearing to determine whether the order should be extended or modified is scheduled for Oct. 7.
Relevant Case Law
The first company to win a verdict under the DTSA was Dalmatia Import Group, which successfully sued a former contractor for stealing its fig jam recipe in 2017.
Since then, the law has increasingly been applied to technology workers who abscond with sensitive files.
If forensic evidence proves that employees copied trade secrets, courts have even been willing to impose restrictions after the relevant files have been deleted.
For example, in Waymo vs. Uber, the court ordered that Uber could not assign a former Waymo engineer to oversee or direct lidar development, even though he claimed the files at the center of the case had been deleted.
Uber later fired the employee in question following an internal investigation into the dispute.
Based on this precedent, xAI likely has a strong case, even in a Californian venue, where case law tends to favor employee mobility more than elsewhere.
Recommended Secure Partners
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
