X.AI Corp. filed a 56-page opening brief in the US Court of Appeals for the Ninth Circuit on Monday afternoon, asking the court to reverse the dismissal of its Defend Trade Secrets Act suit against OpenAI. Lead counsel is Paul J. Watford, a former judge of the same Ninth Circuit he is now arguing to.

The fact in the jurisdictional statement

On page four, the brief states that the district court "granted OpenAI's motion to dismiss on June 15, 2026, and entered judgment that same day," and that xAI filed its notice of appeal on 13 July. The summary of argument confirms the disposition: the court "dismissed xAI's complaint with prejudice for failure to state a claim."

What the conventional framing gets wrong

"xAI is suing OpenAI" is wrong in tense. xAI lost. Judgment was entered against it more than two months ago, the dismissal was with prejudice, and the district court case is over. What exists now is an appeal from a final judgment. The second error runs the other way: a Rule 12(b)(6) dismissal is not a finding that OpenAI did nothing. No court has weighed any evidence. The holding is that xAI's allegations, taken as true, did not state a claim — a distinction xAI's own framing of the issue concedes when it asks whether it "stated a plausible claim." The third is that an appellate brief is an advocacy document. Every figure below is xAI's allegation, restated by its own counsel, and OpenAI has not yet responded.

What xAI alleges

That a senior engineer, Xuechen Li, "stole xAI's entire codebase and disclosed the company's trade secrets during job interviews with OpenAI"; that Li was one of eight xAI employees OpenAI targeted, of whom six downloaded, retained, accessed or disclosed trade secrets on their way out; that the subject matter was reinforcement learning and data centre optimisation; and that much of this coincided with OpenAI's use of "disappearing, encrypted messages." The brief also points at a second case, citing Apple's July 2026 complaint alleging that OpenAI has been taking Apple's trade secrets through current and former employees.

What is actually at stake

The appeal tests how much a company must plead to survive dismissal in an AI talent-poaching trade-secret case — a fact pattern now running through the entire sector. xAI argues the district court's standard "sets an impossibly high bar for pleading trade secret claims" and supplies "a roadmap for bad actors to evade liability." Meanwhile, back in the district court, OpenAI's motion for attorney fees went fully briefed on 20 August. Losing the appeal could leave xAI paying OpenAI's legal bill on top.