Tesla And Zoox Settle Trade Secret Lawsuit Over Self-Driving Vehicles

Zoox, a self-driving vehicle startup, has settled a trade secret dispute with Tesla. In March of last year, Tesla filed a lawsuit alleging that four former employees hired by Zoox stole trade secrets. The employees had allegedly made copies of sensitive documents containing proprietary information before walking out the door. Zoox will pay an undisclosed amount of money and undergo an audit to ensure no other employees possess trade secrets.

Tesla alleged that the employees emailed copies of confidential documents to personal accounts and later passed them on to Zoox. The documents contained inventory procedures, internal schematics, and layouts of certain Tesla warehouses. They also contained information regarding the tracking and monitoring of parts inventory, along with analyses of the same.

On March 12, 2019, a simple emailing accident tipped off Tesla. A former employee mistakenly emailed the deactivated Tesla account of another ex-employee – both of whom now worked at Zoox. The email contained a document that was a slightly modified version of a confidential Tesla document. Only now, it had a Zoox logo attached to it. In its lawsuit, Tesla alleged that the layout and structure of the two documents was nearly identical. Moreover, at least one reference to another Tesla proprietary document was left in.

But that wasn’t the only mistake. Three days later, the same former employee emailed another document to his colleague’s defunct Tesla account. And yet again, the document was intercepted by Tesla management.

A court filing now indicates that the lawsuit is over. For its part, Zoox acknowledged that certain former Tesla employees were in possession of stolen confidential documents. The audit that Tesla will conduct can check to see if additional trade secrets are being harbored at Zoox.

The Zoox case illustrates how trade secret theft can give a company an unfair advantage in the market. Self-driving vehicle technology is a rapidly expanding area. Numerous companies are racing to develop the vehicles, which means there is rampant theft. As employees leave one company and go to another, it is not uncommon for them to take secrets with them. In some cases, they may even offer to steal the trade secrets as part of their new employment negotiations.

Additionally, the case shows how important it is to keep a tight watch on potential employee theft of trade secrets. The impending Tesla audit is a remedial measure that, ideally, would not have been necessary. Once secrets get out, it can be very difficult to ever get them back in.

Cases involving trade secret theft often settle, as here. But a company agreeing to settle is just the first step. A reasonable amount of damages must be negotiated to compensate the injured party in a case like this. While the exact amount of the Tesla-Zoox settlement is undisclosed, it will likely be substantial. Trade secret breaches can cost a company millions of even billions of dollars in lost revenue. This is because losing trade secrets can put your company at a significant competitive disadvantage.

The intellectual property attorneys of Eddington & Worley can zealously advocate for you in court. But we are a comprehensive law firm that likes to prevent breaches before they happen. We can meet with your organization to take steps that make it less likely your trade secrets will be stolen. Protecting your intellectual property requires a customized approach, and that’s a skill we bring to the table.

Let Eddington & Worley Fight For Your Intellectual Property Rights

The experienced intellectual property attorneys of Eddington & Worley understand what’s at risk in trade secret cases. We’re ready to fight for you and your company. Call us today to explore your legal options.

Source:  https://arstechnica.com/cars/2020/04/self-driving-startup-zoox-settles-claim-that-it-stole-secrets-from-tesla/