In a motion for preliminary injunction filed Friday, xAI wrote that Assembly Bill 2013, which went into effect on Jan. 1, is "unconstitutional several times over," because it forces xAI to disclose its "fiercely protected" trade secrets without any promise of compensation, in violation of the U.S. Constitution's takings clause.
The Elon Musk-founded AI company said A.B. 2013 also flouts the First Amendment by compelling xAI to disseminate specific information based on the generative AI models it develops, "a content- and viewpoint-based requirement that triggers and fails strict scrutiny."
A.B. 2013 also provides no guidance as to which AI systems or datasets it covers or how much detail developers are required to provide, making it unconstitutionally vague, xAI alleged.
"A.B. 2013 threatens to gut the AI industry, violating numerous constitutional provisions along the way," xAI asserted in its motion. "The court should enjoin the enforcement of this deeply misguided and Constitution-flouting law."
A.B. 2013, which California Gov. Gavin Newsom signed into law in September 2024, requires generative AI system developers to post information on their websites about the data used to train their models.
California Assembly Member Jacqui Irwin, D-Thousand Oaks, had said in the bill's analysis that the measure provides "transparency to consumers of AI systems and services by providing important documentation about the data used to train the services and systems they are being offered." She said consumers may then use such knowledge to, among other things, "compare competing systems and services."
But A.B. 2013, despite being billed as a consumer-transparency statute, is "really a trade secrets-destroying disclosure regime that hands competitors a roadmap for how companies like xAI develop and train their proprietary models," xAI asserted in its Friday motion.
XAI, which Musk launched in 2023, filed suit against California Attorney General Rob Bonta on Dec. 29, seeking to have the California federal court declare A.B. 2013 in violation of the takings clause, the First Amendment and the due process clause of the U.S. Constitution. It also sought to have the court permanently bar California from enforcing the bill's provisions against xAI.
In seeking a preliminary injunction, xAI argued that like other AI-focused companies that develop generative AI models, xAI invested substantial time and resources into acquiring datasets that vary in source, data type and format.
The Grok developer said datasets play a critical role in the development process and that details about the datasets are thus "highly valuable — and kept secret."
XAI said it takes several measures to ensure its trade secrets don't end up in competitors' hands, including having employees sign confidentiality agreements and securing its datasets in locations only known by those who need access for approved purposes and are approved for such access.
But A.B. 2013's disclosure requirements amount to "per se takings" in that they appear to compel xAI to reveal the sources of its datasets, the datasets' sizes, the type of data the company uses and how the datasets further its models' intended purpose — "all information that would otherwise be protected as confidential trade secrets," xAI said.
A.B. 2013 likewise violates the First Amendment by compelling xAI to disclose specific content about its AI models and by discriminating based on viewpoint, xAI alleged. It said California is not allowed, under the First Amendment, to compel private speech based on its perception that certain ideas — for example, training data for security or military AI models — are important enough to be kept secret compared to training data for creative-writing AI models.
A.B. 2013 is also "plainly not narrowly tailored to advance any legitimate interest California could assert," xAI said
The company said it risks suffering irreparable harm if A.B. 2013 is not enjoined. The disclosures required by the law will not only destroy its property interests in its information, but allow its rivals to gain an unfair advantage in the "burgeoning, trillion-dollar" AI industry, xAI said.
"And if A.B. 2013's obligations are as sweeping as they appear to be, xAI would need to devote substantial time and resources to locating, collecting, cataloguing, and summarizing the information related to its AI datasets — costs that only increase the older the model," xAI said. "Such substantial compliance costs, which xAI has no hope of recovering from the state…, further show that xAI will suffer substantial irreparable harm if A.B. 2013 is not enjoined."
The California Department of Justice told Law360 that it is "committed to defending California's laws" and is "reviewing the filing and will respond as appropriate."
Counsel for xAI did not immediately respond to a request for comment Tuesday.
XAI is represented by Adam S. Sieff of Davis Wright Tremaine LLP, and Erin E. Murphy, Matthew D. Rowen, James Y. Xi, Mitchell K. Pallaki and Ilan J. Posner of Clement & Murphy PLLC.
Bonta is represented by Joseph Henry Meeker of the California Department of Justice's Government Law Section.
The case is x.AI LLC v. Rob Bonta, case number 2:25-cv-12295, in the U.S. District Court for the Central District of California.
--Additional reporting by Allison Grande. Editing by Linda Voorhis.
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