Tech billionaire Elon Musk and his xAI startup have been pursuing a lawsuit to block competitor OpenAI and its CEO Sam Altman from moving forward with plans to transform the nonprofit company into a for-profit venture.

On Tuesday, Musk suffered a setback in that effort after a federal judge denied his request for a preliminary injunction that would effectively stop that transition from happening, according to Reuters.

However, the litigation is far from concluded and the judge agreed to move the case toward a trial later this year on an expedited timeline.

Judge denies Musk's request but hastens lawsuit toward a trial

Musk was an original cofounder in 2015 of OpenAI, the creator of the Chat GPT artificial intelligence bot, and even contributed $45 million of his own wealth to help get the fledgling company off the ground, but later left following a dispute with others about the long-term goals of the effort and how it would be run, according to the New York Post.

He later founded xAI as a competitor to OpenAI, and last year filed an antitrust lawsuit that accused OpenAI of abandoning its initial plan to remain a nonprofit entity focused solely on benefiting humanity with advancements in artificial intelligence.

Unfortunately for Musk and his fellow plaintiffs, U.S. District Judge Yvonne Gonzalez Rogers, an Obama appointee, didn't buy their claims of possible imminent "irreparable harm" if OpenAI became a for-profit entity, and she ruled on Tuesday that they "failed to meet their burden of proof for the extraordinary relief requested" in the form of a preliminary injunction.

Likely undermining Musk's arguments in that regard, per the judge, was his recent unsolicited bid of $97.4 billion to take over OpenAI, which was promptly rejected by Altman and others at the company.

However, Rogers seemed to agree that the legal dispute was worth settling in a timely fashion, as she also declared in her ruling that "Given the public interest at stake and potential for harm if a conversion contrary to law occurred, the Court is prepared to expedite trial to the fall of 2025."

Reactions to the decision and Musk's failed bid

Newsweek reported that in reaction to the judge's ruling, an attorney for Musk praised the decision to expedite the timeline for a trial and said, "We look forward to a jury confirming that Altman accepted Musk's charitable contributions knowing full well they had to be used for the public's benefit rather than his own enrichment."

In contrast, OpenAI said in a statement, "This has always been about competition. Elon's own emails show that he wanted to merge a for-profit OpenAI into Tesla. That would have been great for his personal benefit, but not for our mission or U.S. interests."

As for the apparent feud between Musk and Altman, Musk said in January about the company he helped co-found, "OpenAI was funded as an open source, nonprofit, but has become a closed source, profit-maximizer."

Less than a month later in February, in response to Musk's failed bid to retake control of OpenAI, Altman said of his rival in an interview, "I wish he would just compete by building a better product, but I think there's been a lot of tactics. Many, many lawsuits, all sorts of other crazy stuff, now this, and we'll try to just put our head down and keep working."

OpenAI viewed as far more valuable than xAI

According to Reuters, OpenAI views the planned restructuring into a for-profit venture to be vital to its continued growth and success via the infusion of additional capital from investors.

In that regard, the SoftBank Group is in the process of pulling together around $40 billion for an initial infusion into the company that it values at around $300 billion, far more than the estimated valuation of xAI at just $75 billion.