Tesla sues former employees, Zoox for alleged trade secret theft

NelsonG · March 21, 2019

Tesla has filed a pair of lawsuits against a handful of former employees who went to work at self-driving vehicle startup Zoox and Chinese EV automaker Xiaopeng.

The separate lawsuits filed late Wednesday allege former Tesla employees stole trade secrets and used them at their new places of employment. Tesla declined to comment on either lawsuit.

Zoox and Xiaopeng, also known as XPeng have not responded to requests for comment. TechCrunch will update the article once either company responds.

While both lawsuits hinge on different trade secrets, they both share certain similarities: allegations of employees taking sensitive and valuable information as they left Tesla.

In one lawsuit, Tesla alleges that Zoox as well as four former employees Scott Turner, Sydney Cooper, Christian Dement, and Craig Emigh, have made “concerted efforts “to steal Tesla’s proprietary information and trade secrets to help Zoox leapfrog past years of work needed to develop and run its own warehousing, logistics, and inventory control operations.” Tesla called the theft “blatant and intentional.”

Tesla claims in the complaint that the four former employees took “select proprietary Tesla documents useful to their new employer, and at least one of them used Tesla’s confidential information to target other Tesla employees for hiring by Zoox. In the process, they misappropriated Tesla’s trade secrets, violated their agreements with Tesla, and breached their duties of loyalty, all with the knowledge and support of Zoox.”

In a separate case, Tesla alleges former employee Guangzhi Cao, who worked on the company’s Autopilot driver assistance feature, stole source code before abruptly quitting in January and taking a job XPeng. Tesla refers to the company as XMotors in its complaint.

“Tesla’s confidential information is not safe in the hands of XMotors or its employees,” the complaint reads. “Inspired by and on a mission to beat Tesla, XMotors reportedly designed its vehicles around Tesla’s open-source patents and has transparently imitated Tesla’s design, technology, and even its business model. XMotors has also introduced reportedly “Autopilot-like” features (called X-Pilot), and now employs at least five of Tesla’s former Autopilot employees, including Cao.”

Tesla said it has “spent hundreds of millions of dollars” and more than five years developing Autopilot. The company claims that Cao’s action have put that investment is at risk.

“Tesla must learn what Cao has done with Tesla’s IP, to whom he has given it, and the extent to which Tesla has been harmed. Tesla files this lawsuit to compel the return of its valuable IP and protect it from further exploitation, and for all other relief as the facts may warrant,” the complaint reads.

This isn’t the first time Tesla or its CEO Elon Musk have filed lawsuits against several employees before, some of which have been viewed as acts of retribution. In 2017, Tesla dropped its lawsuit just weeks after its original filing against Sterling Anderson, former director of Autopilot, and Aurora, the self-driving vehicle startup he co-founded, after the two parties reached an agreement.

Tesla filed a lawsuit in December seeking $167 million against former employee Martin Tripp, the former employee who Musk has referred to as a saboteur. The lawsuit, originally filed in June and seeking just $1 million at the time, alleges Tripp stole confidential and trade secret information, and gave it to third parties.

Tripp, filed a formal whistleblower tip to the U.S. Securities and Exchange Commission alleging Tesla misled investors and put its customers at risk.

Read both lawsuits below.