Musk Taps '$5 Billion Man’ Chu for OpenAI, Altman Lawsuit (1)

Morgan Chu, once called Irell & Manella’s “$5 billion man” for his prowess securing courtroom wins for clients, is at the top of a new lawsuit filed by Elon Musk against OpenAI and fellow technology mogul Sam Altman.

The civil complaint, filed in a California state court in San Francisco, lists Chu and Irell litigation partners Alan Heinrich and Iian Jablon—who also serves as the law firm’s general counsel—as outside counsel to Musk. Irell associates Abigail Sellers, Justin Koo, and Henry “Hank” White are also on the case for Musk.

Chu is predominantly known for his intellectual property work. The American Lawyer bestowed the big-money moniker on him for a 2015 profile and within the past few decades Chu has often appeared on the cover of the publication’s monthly magazine. Chu declined to discuss how Los Angeles-based Irell came to represent Musk in his action against OpenAI and Altman, its chief executive.

Musk, who helped create OpenAI with Altman in 2015, three years later stepped down from OpenAI’s board, citing potential conflicts of interest with Tesla Inc., an electric vehicle manufacturer he controls. Musk now claims that OpenAI and Altman are pursuing profit instead of adhering to the enterprise’s original mission to develop artificial intelligence for the benefit of all humanity.

Irell has previously done work for Tesla, having helped the company secure dismissal of a shareholder class action in 2017. The firm has also handled other disputes for Tesla, including a patent fight over mobile broadband technology.

Lawyers for OpenAI and Altman have yet to enter appearances in Musk’s lawsuit. OpenAI didn’t immediately respond to a request for comment on the matter.

Chu’s Role

Chu is known for winning historically large patent infringement verdicts against Intel Corp. totaling more than $3 billion on behalf of VLSI Technology LLC, a company formed by hedge fund Fortress Investment Group LLC.

A jury in Waco, Texas, awarded $2.2 billion to VLSI in 2021. A separate jury in Austin, Texas, where Tesla is headquartered, found that Intel owed an additional $948 million to VLSI the following year.

Irell has often tapped Chu to be its lead trial lawyer on cases against large semiconductor companies. Demaray LLC, a Chu client, last month sought more than $4 billion from Samsung Electronics Co. The jury in that case, also in Waco, ultimately found that Samsung didn’t copy Demaray’s patented chip technology.

Musk hasn’t been shy in expressing his preferences for legal counsel. X Corp., owner of the social media service formerly known as Twitter, has retained litigation boutique Schaerr Jaffe to represent users who believe they were retaliated against over posts made to the platform. Musk has also publicly lashed out against Cooley and Perkins Coie, whom he blames for wronging him.

Altman and OpenAI have been keeping both in-house and outside counsel busy in recent months. Wilmer Cutler Pickering Hale and Dorr is conducting an internal investigation into a boardroom coup that tried to oust Altman last year.

Latham & Watkins and Morrison & Foerster are advising OpenAI in a copyright lawsuit filed in December by the New York Times Co. accusing the San Francisco-based company of scraping the newspaper’s articles to train its technology.

OpenAI’s Legal Needs

OpenAI, which named a new general counsel last summer in Che Chang, has been recruiting dozens of lawyers since the launch of its ChatGPT program in late 2022. Many of those lawyers lined up to show their support for Altman following his firing and subsequent reinstatement in November.

The US Securities and Exchange Commission is reportedly investigating whether OpenAI’s investors were misled amid the leadership turmoil surrounding Altman’s aborted exit. Musk claims OpenAI’s unique structure, which sees a nonprofit board oversee the operations of a for-profit entity, is inherently illegal.

His lawsuit, which asserts breach of contract and fiduciary duty claims, as well as unfair business practices, argues that Musk donated to a nonprofit dedicated to creating safe artificial intelligence. Instead, OpenAI has essentially become a subsidiary of technology giant Microsoft Corp., according to Musk’s complaint.

OpenAI has changed since its founding as a nonprofit research lab. Besides receiving a $10 billion investment last year from Microsoft, OpenAI no longer provides public access to its founding documents, financial statements, and other materials, according to a recent report by Wired. Musk’s lawsuit, however, could be complicated by his other business endeavors.

The Tesla titan has launched his own artificial intelligence outfit called xAI Corp., which raised $500 million in January as it looks to challenge OpenAI. Musk’s xAI is now a part of his constellation of companies, nicknamed the “Muskonomy.”

Public records show that Adam Weiss, chair of the trademark, copyright, and branding practice at Polsinelli, is handling trademark work for xAI.

— With reporting by Michael Shapiro