XAI Files Amended Complaint Against OpenAI: New Allegations And A Sharpened DTSA Strategy

The xAI v. OpenAI litigation has taken another significant turn. Two weeks after OpenAI filed its motion to dismiss (see my previous post that motion here), xAI has filed an amended complaint, introducing new details that substantially expand its allegations and strengthen the foundation of its trade secret claim under the Defend Trade Secrets Act (DTSA).

The new complaint, spanning 34 pages and supported by multiple exhibits, adds new factual allegations about the nature of xAI's alleged trade secrets, how OpenAI and its employees obtained them, and how those secrets were protected. It also broadens the cast of alleged actors and reasserts that OpenAI's conduct was part of a "coordinated pattern" of misappropriation aimed at undermining a direct competitor in the race to build next-generation AI systems.

Strengthening the DTSA Elements

Under the DTSA, a plaintiff must show (1) the existence of trade secrets, (2) reasonable measures to maintain secrecy, and (3) acquisition, disclosure, or use through improper means. The amended complaint adds specificity on all three fronts.

1. Identification of the Alleged Trade Secrets

The new filing adds concrete examples of the information xAI claims qualifies as trade secrets, a key improvement over the original complaint. xAI now identifies:

• The full source code and architecture of the Grok model, including training and fine-tuning processes, tokenization methods, and proprietary safety tuning protocols.
• Infrastructure and inference cluster designs, describing xAI's approach to scaling and GPU allocation for high-throughput deployment, allegedly more efficient than competitors' systems.
• Data center buildout and deployment methodologies, including details of xAI's proprietary approach to cabling, power distribution, and cooling optimization for GPU clusters.
• Operational and business information, including internal product roadmaps, confidential performance metrics, vendor pricing and supplier relationships, and future R&D directions.

These categories replace the more general references to "code and infrastructure" in the original complaint with a clearer delineation of the specific areas of alleged secrecy.¹

2. Reasonable Measures to Maintain Secrecy

xAI also bolsters its showing of reasonable measures, another crucial DTSA element. The amended complaint attaches as exhibits several employee confidentiality, non-disclosure, and invention assignment agreements, which explicitly prohibit retention or disclosure of company materials after employment ends.

The complaint further describes internal access controls on xAI's systems, including:

• Restricting access to Grok model code and data center specifications to a small group of engineers and executives.
• Requiring employees to use multi-factor authentication for cloud storage access.
• Limiting permissions for external data transfers and monitoring unusual download activity.

It also references termination certifications, which departing employees (including Li and Fraiture) were required to sign to confirm the return or deletion of all confidential materials. In Li's case, xAI alleges that he signed such a certification and then violated it almost immediately.

3. Acquisition and Use of the Alleged Trade Secrets

The new allegations under DTSA focus squarely on OpenAI's knowledge and intent, addressing the "improper means" element.

xAI now alleges that OpenAI:

• Targeted specific employees with access to its core systems, including Grok's source code and data center infrastructure.
• Knew or should have known that these employees retained xAI data when they joined OpenAI.
• Directed or encouraged employees to disclose or re-create xAI's trade secrets in their new roles.

For example:

• Li allegedly uploaded the entirety of xAI's Grok source code to his personal iCloud and GitHub accounts before leaving xAI, then accessed those same accounts from OpenAI's network. xAI alleges that OpenAI became aware of this during Li's onboarding and failed to take any steps to prevent use or disclosure.
• Fraiture, who allegedly copied xAI's infrastructure and inference cluster code via AirDrop, is now alleged to have joined an OpenAI team working on similar deployment technology within weeks of leaving xAI.
• The senior finance executive allegedly carried xAI's confidential data center expansion plan to OpenAI, where he took on a role managing GPU procurement and facility buildouts, the same area in which xAI claims to have developed unique know-how.

The amended complaint adds a key factual allegation missing from the first version: that OpenAI gained an unfair competitive advantage by incorporating xAI's proprietary methods into its own model-training infrastructure, allegedly improving performance efficiency and cost metrics.

xAI also alleges that OpenAI knowingly benefited from the misappropriated information by using it to accelerate development of its large language models and reinforce its market position.

4. Exhibits Supporting the Narrative

The attached exhibits—which include employment agreements, correspondence, and the Temporary Restraining Order (TRO) issued in xAI v. Li—serve to corroborate the claim that these trade secrets were both valuable and adequately protected. Exhibit 6, the TRO, is particularly significant because it confirms that the court already found a likelihood of success on the merits of xAI's trade secret claim against Li. That prior finding strengthens xAI's argument that the same conduct, extended to OpenAI, also violates the DTSA.

Procedural Strategy and October 28 Court Order

xAI's amended complaint mooted OpenAI's pending motion to dismiss, and the court confirmed that in an order entered on October 28, 2025.

That procedural order resets the playing field. OpenAI must now decide whether to file a renewed motion to dismiss directed at the new complaint or move straight to an answer. Either way, xAI's amended filing succeeded in halting OpenAI's effort to dismiss the case on the prior record.

What Comes Next

xAI's amended complaint represents both a procedural and substantive escalation. Procedurally, it mooted OpenAI's motion to dismiss and forced the company to start over. Substantively, it shores up the weakest parts of the original complaint by supplying detail where the DTSA requires it most—what the trade secrets are, how they were protected, and how OpenAI allegedly acquired and used them.

The amended filing also raises the stakes for OpenAI's previously asserted bad faith defense under Section 1836(b)(3)(D). With xAI now presenting a more detailed and documentary record, OpenAI's claim that the lawsuit was filed "for publicity or competitive reasons" may face a steeper climb.

Now all eyes will be on how OpenAI chooses to respond. We will be monitoring the docket closely, as this case is shaping up to be one of the most high-profile trade secrets battles in the AI industry.

Footnote

1. If you are interested in learning more about the nuts and bolts of how large language models like Grok and ChatGPT work, I highly recommend Duke Law Professor Nita Farahany's Substack, where she opens up her AI Law and Policy course to the general public, and makes the technical concepts extremely accessible. I did not have the pleasure of having a class with Professor Farahany while I was at Duke, so I'm pleased to be learning from her now!

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