The Ethereum gaming network Xai has sued Elon Musk's company $XAI for unlawful use of the trademark and unfair competition. The lawsuit was filed in the Northern District Court of California on Thursday.
Ex Populus, which is developing the Xai ecosystem, claims it has been using the trademark #XAI for commercial purposes since June 2023 through its blockchain gaming platform and the $XAI token. The complaint states: "This is a classic case of trademark infringement that requires court intervention."
Xai is a blockchain network for video games and digital transactions. The platform provides infrastructure for games, artificial intelligence-based solutions, rewards, and data management across various applications.
The troubles began after Musk announced the name of his company xAI in July 2023 and worsened in November 2024 when he announced plans to launch a gaming studio under the xAI brand.
Negative implications for the brand
Court documents indicate that "there has been confusion in the market as to whether the defendants are connected to the plaintiff's trademark XAI, whether they own it, or sponsor related goods and services." Examples include instances where consumers, publications, and even Musk's AI assistant Grok mistakenly associated the two projects.
Ex Populus claims that the reputational damage goes beyond the loss of business reputation. The company has faced "significant negative consumer sentiment" due to Musk's controversial public image and scandals related to his xAI branded products.
The lawsuit states: "The plaintiff not only suffers irreparable harm from the loss of control over the hard-earned business reputation of their trademark XAI, but also suffers because the erroneous association with Elon Musk leads to significant negative consumer sentiment."
Pressure from Musk's team
The documents claim that Musk's legal team attempted to force Ex Populus to abandon its rights by threatening to cancel the trademark registration earlier this month.
The U.S. Patent Office has already suspended several trademark applications for xAI from Musk due to the likelihood of confusion with the existing mark Xai.
Ex Populus seeks the cancellation of xAI's applications, damages for unlawful use of the trademark, and a court injunction against Musk's use of the disputed name in the context of gaming and blockchain. "There is no legal remedy for the enormous scale of damage caused by the defendants," the company stated in court.
