Last year saw Sam Altman ousted and then reinstated as CEO of Open AI amid concerns that it had drifted from its original non-profit mission. As events unfolded, we discussed how Open AI was formed and the various changes that have been made to the board over the years, including Sam Altman’s falling out with cofounder Elon Musk over the direction of the organization. This year, Elon returns to force things in court.
In a recent filing, Musk brings no fewer than five courses of action: breach of contract, promissory estoppel, breach of fiduciary duty, unfair business practices and accounting. These give various legal takes on what is essentially the same issue: Musk agreed to fund Open AI on the promise that it would remain a non-profit aiming to develop AI for the good of humanity, and he now believes that promise to have been broken. The lawsuit partly seeks monetary compensation for his lost investment, but mostly seeks to have Open AI’s promises that its “resulting technology will benefit the public”, that “the corporation will seek to open source technology for the public benefit when applicable” and that “the corporation is not organized for the private gain of any person” be legally enforced (“specific performance of contractual duties”).
In this session, Harold Godsoe will discuss the lawsuit and ask why it exists, whether it stands up to legal scrutiny, and whether Musk will get the remedy he seeks.
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125. Defendants have breached the Founding Agreement in multiple separate and independent ways, including at least by:
a. Licensing GPT-4, which Microsoft’s own scientists have written can “reasonably be viewed as an early (yet still incomplete) version of an artificial general intelligence (AGI) system,” exclusively to Microsoft, despite agreeing that OpenAI would develop AGI for the benefit of humanity, not for the private commercial gain of a for-profit company seeking to maximize shareholder profits, much less the largest corporation in the world.
b. Failing to disclose to the public, among other things, details on GPT-4’s architecture, hardware, training method, and training computation, and further by erecting a “paywall” between the public and GPT-4, requiring per-token payment for usage, in order to advance Defendants and Microsoft’s own private commercial interests, despite agreeing that OpenAI’s technology would be open-source, balancing only countervailing safety considerations.
c. Permitting Microsoft, a publicly traded for-profit corporation, to occupy a seat on OpenAI, Inc.’s Board of Directors and exert undue influence and control over OpenAI’s non-profit activities including, for example, the determination of whether and to what extent to make OpenAI, Inc.’s technology freely available and open to the public and the determination of whether OpenAI has attained AGI.
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129. In order to induce Plaintiff to make millions of dollars in contributions to OpenAI, Inc. over a period of years, and to induce him to provide substantial time and other resources to get OpenAI, Inc. off the ground as alleged herein, Defendants repeatedly promised Plaintiff, including in writing, that OpenAI (a) would be a non-profit developing AGI for the benefit of humanity, not for a for-profit company seeking to maximize shareholder profits; and (b) would be open-source, balancing only countervailing safety considerations, and would not keep its technology closed and secret for proprietary commercial reasons.
130. In doing so, Defendants reasonably expected that Plaintiff would (as he did) rely on their promises and provide funding, time and other resources to OpenAI, Inc.
131. Plaintiff reasonably relied on Defendants’ false promises to his detriment, ultimately providing tens of millions of dollars of funding to OpenAI, Inc., as well as his time and other resources, on the condition that OpenAI would remain a non-profit irrevocably dedicated to creating safe, open-source AGI for public benefit, only to then have OpenAI abandon its “irrevocable” non- profit mission, stop providing basic information to the public, and instead exclusively dedicate and license its AGI algorithms to the largest for-profit company in the world, precisely the opposite of the promises Defendants made to Plaintiff.
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134. Under California law, Defendants owe fiduciary duties to Plaintiff, including a duty to use Plaintiff’s contributions for the purposes for which they were made. E.g., Cal. Bus. & Prof. Code § 17510.8. Defendants have repeatedly breached their fiduciary duties to Plaintiff, including by:
a. Using monies received from Plaintiff, and by using intellectual property and derivative works funded by those monies, for “for-profit” purposes that directly contravene both the letter and the express intent of the parties’ agreement, thereby breaching Defendants’ contractual promises to Plaintiff, and also breaching Defendants’ promises to the express intended third-party beneficiaries of the parties’ agreement, i.e., the public. For example, Defendants caused GPT-4, which Microsoft’s own scientists have written can “reasonably be viewed as an early (yet still incomplete) version of an artificial general intelligence (AGI) system,” to be exclusively licensed to Microsoft, in derogation of OpenAI, Inc.’s irrevocable non- profit mission to develop AGI for the benefit of humanity.
b. Failing to disclose to the public, among other things, details on GPT-4’s architecture, hardware, training method, and training computation, and further by erecting a “paywall” between the public and GPT-4, requiring per-token payment for usage, in order to advance Defendants and Microsoft’s own private commercial interests, despite agreeing that OpenAI’s technology would be open-source, balancing only countervailing safety considerations.
c. Permitting Microsoft, a publicly traded for-profit corporation, to occupy a seat on OpenAI, Inc.’s Board of Directors and exert undue influence and control over OpenAI, Inc.’s non-profit activities including, for example, the determination of whether and to what extent to make OpenAI’s technology freely available to the public.