A federal judge dismissed xAI’s trade secret lawsuit against OpenAI on Monday, handing Sam Altman’s company a legal win in its widening rivalry with Elon Musk.

US District Judge Rita Lin in San Francisco ruled that xAI failed to show OpenAI induced former xAI engineer Xuechen Li to misappropriate trade secrets. The court also found that xAI had not shown Li disclosed confidential information in a presentation delivered while OpenAI was recruiting him.

The case was dismissed with prejudice, meaning xAI cannot bring the same claims again. Lin had already dismissed an earlier version of the lawsuit in February, giving xAI a chance to amend its complaint.

xAI originally sued OpenAI in September, accusing former employees of taking confidential material tied to Grok, including source code, after leaving for roles at OpenAI.

The ruling removes one legal overhang for OpenAI as the company remains locked in a broader fight with Musk across AI, talent, and corporate control. For Musk, the decision marks another setback in his legal campaign against the company he helped create before later becoming one of its most aggressive critics.