TL;DR
- Pre-Trial Hearing: A federal judge in Oakland heard arguments on Friday over whether Elon Musk’s damages expert can testify at his upcoming trial against OpenAI.
- Damages Claim: Musk’s economist assessed OpenAI’s total liability at between $78 billion and $135 billion, with the largest share tied to OpenAI’s nonprofit valuation.
- OpenAI’s Defense: OpenAI argued that the damages methodology is legally invalid because donors to a nonprofit organization do not hold an ownership interest or expect a financial return.
- Trial Date: The jury trial is scheduled to begin April 27, 2026, in Oakland, with proceedings expected to run through May.
Elon Musk’s $109 billion damages claim against OpenAI faced a critical test Friday, as a federal judge in Oakland heard arguments over whether his damages expert will be allowed to testify at trial.
Lawyers for Musk, OpenAI, and Microsoft gathered before Judge Yvonne Gonzalez Rogers for the pre-trial hearing. At issue is whether Musk’s damages expert, an economist who assessed OpenAI’s potential liability at up to that sum, can take the stand when the case goes to trial next month.
Yet if Judge Rogers bars that testimony, Musk’s claim collapses. If she admits it, OpenAI faces a judgment exceeding three times its projected 2026 revenue, a potential liability the AI company has vigorously and publicly contested.
The Damages Dispute
Musk’s damages case rests on economist C. Paul Wazzan of Berkeley Research Group, who prepared a damages analysis for the litigation. According to Wazzan’s analysis, total damages span $78 billion to $135 billion across two components, with the larger share attributable to OpenAI’s nonprofit valuation.
Furthermore, Wazzan estimates OpenAI’s nonprofit value at a range beginning at $65.5 billion, representing the larger portion of the total damages claim.
Wazzan’s analysis attributes a separate $13.3 billion to $25.1 billion component to alleged improper gains by Microsoft. Behind those figures is his assessment that Musk’s contributions account for a substantial majority of the nonprofit organization’s value, based on factors including his financial donations, co-founder role, and alleged nonmonetary contributions during OpenAI’s formative years.
Musk’s proportional argument converts those foundational contributions into a nine-figure damages theory now before the court. Thus, Friday’s ruling will determine whether the expert’s conclusions ever reach a jury.
OpenAI Challenges the Methodology
However, OpenAI’s lawyers challenged Wazzan’s analysis in a January 2026 court filing, arguing it misapplies standard damages principles to a nonprofit organization. OpenAI lawyers contended that “donors to a nonprofit do not expect a financial return,” making Musk’s equity-style damages theory inapplicable from the outset.
According to OpenAI’s position, Musk’s founding role at the organization gave him no ownership interest, and therefore no legal basis to claim a proportional share of what OpenAI subsequently became. OpenAI has sought to exclude Wazzan’s testimony entirely.
Moreover, Wazzan’s proportionality framework far exceeds conventional founder-contribution claims, effectively treating Musk’s early support as an equity stake in a nonprofit structured to operate without equity ownership. At stake: whether a charitable co-founder’s reputational and financial backing can be converted into a recoverable ownership interest once the organization acquires commercial value. If that logic stands at trial, OpenAI faces demands that would exceed any precedent in AI litigation.
Origins of a Bitter Rivalry
That legal theory has roots stretching back more than a decade. Musk filed his current lawsuit in August 2024, building on several earlier legal attempts against OpenAI and its co-founders.
According to court filings, he contributed roughly $38 million to OpenAI in the mid-2010s, a sum that makes his damages ask particularly striking in scale. During OpenAI’s founding years, Musk helped establish it as a nonprofit committed to developing artificial intelligence for broad public benefit.
Consequently, in January 2026, Judge Rogers ruled Musk’s fraud claims could proceed to trial, allowing the case to survive the company’s attempts at dismissal. Musk also added Microsoft as a co-defendant, alleging the tech giant had taken improper control of the AI company following its multi-billion-dollar investment in OpenAI.
Simultaneously, Musk has advanced xAI, his own AI company and direct competitor to OpenAI, as the litigation has entered its fourth legal iteration. His suit has been refiled and expanded multiple times as OpenAI undergoes its own transformation from nonprofit to for-profit entity.
OpenAI called the lawsuit Musk’s “fourth attempt at these particular claims” and “part of a broader strategy of harassment” aimed at slowing the company while advantaging his own AI venture, xAI.
Meanwhile, each legal expansion, from adding Microsoft as co-defendant to surviving dismissal and pursuing a nine-figure damages theory, has coincided with xAI’s own fundraising rounds and product launches. For Microsoft, the co-defendant designation extends legal risk to a company whose multi-billion-dollar investment made OpenAI’s commercial scale possible.
Trial Begins April 27
Scheduled to begin April 27 in Oakland, the trial is expected to run through May. Friday’s ruling on Wazzan’s testimony stands as one of the final procedural decisions before the case reaches a jury.
At its full range, Wazzan’s damages theory would rank among the largest judgments in AI litigation. Leading Silicon Valley founders are expected to take the stand when proceedings begin, drawing wide attention to a case that could reshape how courts assess damages in AI disputes.