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Welcome to The Fineprint, where we reveal hidden details faster than the Marauder’s Map (iykyk)

True or false… In France, it is legal to marry a dead person.
_{You can find the answer at the end!}

Now let’s take a look at the most interesting legal developments that have unfolded since we last saw you, including:

• Elon Musk’s new lawsuit paints OpenAI in a scandalous light but we explain why it’s probably still a lost cause.

• Crowdstrike’s legal misery continues to escalate after their security update caused a global IT outage.

• The wife of an ex-Amazon executive goes public about her legal drama with the e-commerce giant.

But first…

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FRAUD

Elon Musk’s New OpenAI Lawsuit Is Scandalous—But Probably Still A Lost Cause

Why we’re paying attention… Elon Musk’s revival of this lawsuit raises a critical question: can companies pivot from their original mission after securing investors and stakeholders who were drawn to that initial vision? The outcome could set a precedent for how much flexibility companies have in altering their purpose and redefining their goals. 

On March 1st of this year, Elon Musk sued Sam Altman, accusing him of breaching OpenAI’s founding principles. 

Musk says he invested in OpenAI’s founding mission to benefit humanity but that Altman has since ditched this benevolent mission in favor of cold, hard, profit. 

However, the evidence Musk presented was “hilariously bad,” according to some legal analysts which led to a silent withdrawal of the lawsuit and subsequent firing of the legal team that filed the claim. 

But now Musk is back with a vengeance alongside a fresh legal team and a sharper legal angle. This time, the lawsuit focuses on two stronger arguments:

1. Altman’s quiet pivot to profit is an act of fraud 

Musk’s lawsuit ultimately weaves a story of betrayal and deliberate deception. 

Musk’s lawyers say that Altman knew all along that he wanted to convert OpenAI into a cash cow. 

They say that OpenAI’s altruistic mission was nothing more than a ruse to trick Musk into backing the project with his influence and over $44 million in donations. 

Sometime in 2017/2018, Sam Altman and his co-founder Greg Brockman had some back and forth with Musk where they floated the idea of pivoting to a for-profit entity. 

Musk reminded them of OpenAI’s founding document: 

“The resulting technology will benefit the public and the corporation will seek to open source technology for the public benefit when applicable. The corporation is not organized for the private gain of any person. . . . The property of this corporation is irrevocably dedicated to the[se] purposes . . . and no part of the net income or assets of this corporation shall ever insure to the benefit of any director, officer or member thereof or to the benefit of any private person.” 

After some debate, Musk wouldn’t budge, and emphasized: 

“Either go do something on your own or continue with OpenAI as a non-profit. I will no longer fund OpenAI until you have made a firm commitment to stay or I’m just being a fool who is essentially providing free funding to a start-up. Discussions are over.”

Altman and Brockman reportedly assured Musk that they would stick to the original approach and went back to work. 

But from there, the lawsuit alleges that the duo began secretly converting OpenAI into a for-profit entity as Musk continued to donate (and be defrauded of) millions of dollars. 

Musk points to the creation of over a dozen for-profit corporate entities such as “OpenAI OpCo, LLC,” “​​OAI Corporation,” and “OpenAI Investment LLC.” 

The suit alleges that these entities formed a “corporate web” that Altman and Brockman secretly owned and started filling up with funds and assets from the non-profit. 

Altman also supposedly struck deals with other businesses in which he has a personal stake, including: 

• Licensing content to OpenAI from Reddit—the latter of which Altman has a large stake in and generated an estimated $69 million for him personally. 

• The OpenAI startup fund which Altman apparently owned, a fact hidden from OpenAI’s board. 

• A chip deal with Rain AI in which Altman holds a stake. 

• Powering OpenAI in partnership with Helion Energy in which Altman also owns a stake.  

Just “follow the money,” Musk’s lawyers say, pointing to the non-profit’s 2022 IRS tax return that showed just $44,485 in revenue at a time when OpenAI was reportedly generating hundreds of millions of dollars.

2. OpenAI’s partnership with Microsoft is null and void

Musk is also seeking to break up OpenAI’s partnership with Microsoft. 

In July 2019, Microsoft and OpenAI created an exclusive computing partnership to develop AGI.

As a part of this deal Microsoft have unfettered access to OpenAI’s suite of technology and are entitled to profits from “pre-AGI” business activities. 

Musk is not happy that the deal allows OpenAI’s board to decide when AGI has been achieved. 

In his terms, AGI refers to “a software capable of mimicking human intelligence”. 

Musk argues that OpenAI has already achieved AGI and that the companies are just planning to extend their profitable partnership indefinitely. 

The lawsuit seeks to have the court recognize Musk’s definition of AGI and rule that OpenAI has achieved it. 

If successful, this could potentially void the partnership between Microsoft and OpenAI, which Musk describes as being driven by financial and power interests. 

Or, alternatively, Musk wants the court to at least set out a clear definition of what it means to have achieved AGI so there is an official end to their venture.

DRIFT OR GRIFT? 

This is only one side of the story and OpenAI’s lawyers are undoubtedly drawing up their motion to dismiss the case as we speak. 

It’s undebatable that OpenAI has drifted away from the mission that Musk originally bought into. 

The question is whether that’s illegal or not. 

Musk’s lawyers say that OpenAI’s mission drift amounts to wire fraud and is a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act. 

The greatest hurdle the case faces is that you must be able to prove that any fraud was intentional. 

This means having proof that Altman and Brockman deliberately intended to deceive Musk. 

This level of proof is often tough to demonstrate. 

Those sympathetic to OpenAI might argue that the mission drift is a good faith attempt to stay competitive in a fierce market. 

Whatever the outcome, this case will set a fascinating precedent for the responsibility that a company owes to its investors to stay true to its stated mission at the time of investment. 

NEGLIGENCE

Crowdstrike Continues To Experience Severe Legal Turbulence

Why we’re paying attention… the latest lawsuit to hit Crowdstrike sparks an interesting debate over who can be held accountable when things go wrong. It is also an ongoing reminder how devastating a single mistake can be.

Last week, we reported on the litany of lawsuits flying around since Crowdstrike’s security update caused a global IT outage:

1. Delta Airlines were sued by their customers for IT related travel disruptions.

2. Delta Airlines lawyered up to sue Crowdstrike.

3. Crowdstrike was sued from within by their own shareholders.

But it seems there’s plenty more turbulence ahead because passengers across the entire airline industry are now suing Crowdstrike as part of a class action lawsuit.

The passengers are making the case that Crowdstrike broke California’s Unfair Business Practices law, which says companies can’t act in ways that cause harm to the public.

They’re also making a public nuisance claim, which argues that the outage interfered with the public’s legal right to travel.

But CrowdStrike only has a direct relationship with airlines, not passengers. It’s very rare for a third-party vendor like CrowdStrike to be held responsible since there’s two degrees of separation.

Anyone impacted by the outage—from corporate accountants who couldn’t bill their clients on time to individuals who missed their morning coffee due to contactless payment issues—would be able to file a lawsuit if this were the case.

That would expose CrowdStrike to millions of claims, almost certainly leading to bankruptcy.

But this offers little comfort to the company.

The real concern for CrowdStrike is whether they can weather the flood of lawsuits from immediate clients like Delta, to whom they are clearly liable.

Remember: dot your i’s, cross your t’s, and for the sake of your legal bills… always roll out updates to small batches of users at a time.

A single mistake is all it takes to cause chaos.

ANTITRUST

How A 20th Century Law Bankrupted A Global Media Organization

Why we’re paying attention… the implosion of GARM is a stark reminder that you’d better ensure your legal defenses and your finances are solid before taking on a competitor with deep pockets. This suit also serves as a warning to tread carefully when teaming up with your competitors because, while it might seem like a strategic move, it can quickly cross into illegal territory.

While Elon Musk might be struggling to win retribution against OpenAI, the tech billionaire is faring much better in other legal battles.

This comes after Musk scored a major legal win against advertisers who boycotted X.com last week.

Last Tuesday, Musk’s lawyers filed a lawsuit targeting massive corporations including Unilever, Mars, and CVS Health.

These companies were all members of the Global Alliance for Responsible Media (GARM) which had the stated mission of creating safer online spaces.

But Musk’s case argued that corporations conspired together via GARM to deprive X.com of billions of revenue after they boycotted the platform following Musks’ takeover.

The lawsuit argued that this collective action was a breach of antitrust laws. In the U.S., the Sherman Act, originally passed in 1890, prohibits companies from joining forces to harm a competitor or control a market.

At first, antitrust experts expressed their doubt that the lawsuit would succeed given that Musk would need proof that the advertisers conspired.

But shortly after Musk’s legal team dropped hints that they had such evidence, GARM published this statement on its website announcing its dissolution:

The lawsuit will move forward despite GARM’s untimely demise. A few days go we saw another development as a Texas judge who was assigned to the case decided to recuse himself. The judge revealed that he owns shares in another one of Musk’s companies, Tesla, which raised questions over his ability to be impartial.

These developments remind us of 2 key principles:

1. It’s important to brush up on antitrust laws before teaming up with other companies against a rival

2. Legal disputes can quickly bankrupt your organization unless you have deep pockets

SNIPPETS

The devil is in the default as a judge rules Google is an illegal monopoly. Google owns over 90% of the search engine market and search accounts for 77% of Google’s total revenue. But a U.S. judge found that Google has kept its dominance by paying billions to phone makers to offer up Google as their default search engine. While this ruling confirms Google runs an illegal monopoly, the consequences are yet to be decided. Experts think that instead of breaking up the company, users might be given a “choice screen” to pick their search engine, ending Google’s era of default privilege. This could ultimately impact Apple more than Google because Apple could lose out from its $20bn+ exclusivity deal, meanwhile many users are likely to still pick Google anyway. Despite the historic ruling, Google’s stock only fell by 4.5% alongside broader tech sector declines, which shows that investors don’t think the case will hurt the company much.

Amy Nelson, the wife of a former Amazon Real Estate Acquisitions & Development Executive, took to social media to expose her husband’s legal battle with the e-commerce giant. According to Mr Nelson’s employment contract, he was allowed to work with Amazon’s partners provided the nature of the work was different. When he left to start his own real estate company, work that was different to his role at Amazon, he struck deals with some of Amazon’s partners. Despite the nature of work being different, Amazon accused him of “honest services fraud, as per the company’s code of conduct, and breaching the non-compete clause. Amy argues that her husband's actions were entirely legal and the company’s code of conduct shouldn’t apply as it doesn’t impose legal obligations to its employees. As an NYU-trained lawyer, Amy took on much of the legal fight herself, criticizing Amazon for their aggressive tactics, noting that families without similar resources and knowledge would struggle in such a situation. Though she eventually managed to get her husband exonerated, she contends that Amazon still won in the end, as the four-year legal battle emotionally and financially devastated their family, destroying their careers and reputations. Amy Nelson’s story underscores the importance of thoroughly reviewing contracts and the benefits of marrying a badass lawyer.

Two Texas influencers, Alyssa Sheil and Sydney Nicole Gifford, are locked in a legal battle over who owns the right to the “neutral, beige, and cream aesthetic.” Gifford claims that after a 2023 photo shoot, Sheil blatantly borrowed her carefully curated beige style, and even pushed similar products to their followers. Naturally, Gifford is seeking damages for this alleged mimicry, citing lost profits and—of course—mental anguish. Sheil, however, is clapping back. Sheil is countering that her taste in muted tones and minimalist vibes is fair use, arguing that the “clean girl” aesthetic is a shared look that anyone with a TikTok account can claim.

OpenAI hit with class action lawsuit over YouTube video transcriptions. David Millette, a YouTube user since 2009, filed a lawsuit in San Francisco earlier this month alleging that OpenAI transcribed millions of YouTube videos without consent to train its AI models. Millette’s points out that OpenAI’s audio transcription model, “Whisper,” was reportedly trained on 680,000 hours of content. However the world’s largest public database of speech data contains only 400,000 hours of content. Therefore, Millette alleges that OpenAI surely must have trained on private data including from YouTubers who will not benefit from the use of their content—a breach of California’s fair business practices. We suspect the odds of success are quite low for Millette given that:
(1) There’s no concrete proof that OpenAI trained on YouTuber’s videos. OpenAI have stayed mysteriously silent on what data they trained their audio and visual models on.
(2) YouTube would likely be reluctant to come to its creator’s rescue as it could jeopardize its own attempts to train AI on creator content.
(3) Top authors suffered defeats in a similar lawsuit earlier this year given that OpenAI’s outputs fall short of breaching conventional copyright law. For example, ChatGPT either cannot or will not reproduce books verbatim.

MEME

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The answer to today’s “did you know” is…

True. You can marry a dead person… but only with the President's approval. This takes 'til death do us part' to a whole new level.

Remember: always read the Fineprint!

Mischief managed.