San Francisco / Washington, D.C. — Elon Musk–owned X Corp. has filed a major lawsuit against a former senior engineer, accusing her of stealing confidential source code and using the proprietary technology to establish her own company. According to the complaint, Yao Yue, the former Head of Infrastructure Optimization and Performance, allegedly downloaded millions of lines of X’s internal source code onto USB drives before her termination in 2022.
The lawsuit, filed in the US District Court for the Northern District of California, claims Yue’s actions were “willful and malicious,” and that the unauthorized extraction of highly sensitive software directly undercuts X’s competitive advantage and technological backbone.
X Claims ‘Highly Confidential Code’ Forms Core of Platform Efficiency
The company alleges that Yue exfiltrated approximately 6 million lines of proprietary code, including advanced optimization tools that power X’s system with “maximum efficiency and minimal resource expenditure.” These internal mechanisms, the complaint states, are central to X Corp.’s performance, cost management, and market competitiveness.
The filing further notes: “Yue launched IOP Systems just days after she exfiltrated the code, offering customer services built on the same specialized tools developed inside X.”
X Corp. alleges that Yue exploited a period of transition during Musk’s acquisition of the platform, when internal security protocols were still being reorganized, to take the data without detection.
2022 Termination and Controversy: Dispute Began After Social Media Post
Yue was terminated in 2022, shortly after posting a message on social media urging colleagues: “Don’t resign, let him fire you.”
She later filed a complaint claiming she had been wrongfully terminated. However, in 2024, a judge from the National Labor Relations Board (NLRB) dismissed her case, ruling that Yue held a supervisory role and therefore did not fall under the protections provided by federal labor law.
Serious Allegations: ‘Bragged’ About Taking Code, Sought to Open-Source It
The complaint further asserts that Yue “bragged” to her former supervisor about taking the code. Additionally, X alleges that after her termination, she attempted to persuade company employees to open-source portions of the proprietary code, an act that would constitute a direct violation of trade secret laws.
According to X Corp., these actions demonstrate that Yue had been planning to use the company’s internal technology for her own business venture for an extended period.
Questions Over IOP Systems; No Response Yet From Yue
The complaint alleges that Yue’s new venture, IOP Systems, provides services built upon the same confidential performance and optimization frameworks that X considers critical to its infrastructure. The company claims that such use of proprietary tools has caused measurable harm to its technical systems and business operations.
Yue has not yet issued a public statement or responded to media queries. X Corp. officials say the company will pursue “all necessary legal steps to protect its intellectual property and safeguard its operational integrity.”
