Agent AI Project Eliza Labs aims to “deplatform” Agent AI LaunchPads, filing a lawsuit against Elon Musk's Xai, claiming that the AI company is engaged in exclusive practices.
The lawsuit alleges that Xai tried to “extract” valuable information, including technical documents and usage related to the development of the Eliza Labs platform, and attempted to copy the idea before “expelling” Eliza Labs from Xai.
Shaw Walters, co-founder of Eliza Labs, claims that the relationship between the two companies began in a friendly manner in the lawsuit, and Xai invites Walters to share their ideas. He also said it was built on Xai's application programming interface (API). Walters added:
“Just as X was launching new versions of ANI and GROK, the joint tone became a transaction. Suddenly, they asked to pay $50,000 a month for an enterprise license ($600,000 a year).
Walters continued. Cointelgraf contacted Walters, but he refused to provide further comment.
The lawsuit highlights the nature of the AI sector's litigation as it continues to build up the periphery of AI service providers' exclusive practices, intellectual property rights and legal liability.
Related: Eliza Labs is launching Auto.Fun.
Early AI sector lawsuits arise
The AI industry is still in its early stages, with key regulatory and legal issues not answering about early technology.
These regulatory grey zones exist in line with legal issues traditionally faced by high-tech companies such as trademarks and patent infringement, making the AI sector a ripe battlefield for litigation.
In February 2024, Elon Musk filed a lawsuit against Openai founder Sam Altman and Openai itself over the company's proposal to become a for-profit company.
Musk claimed that the company has abandoned its original mission as a non-profit, open source project that creates tools for public goods.
The lawsuit was withdrawn in June a few months later, but without prejudice. This means that Musk can continue to reintroduce the lawsuit until it is rejected or retired and withdrawn.
In July 2024, the New York Times sued Openai over the use of copyrighted materials in its large-scale language model (LLM), requesting that it provide detailed source material for AI's generated content.
Xai, an Ethereum-centric gaming company, sued Elon Musk's Xai for trademark infringement in August 2025, claiming that the similarity of the trademarks disrupted consumers and damaged their business.
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