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Tesla wins monetary settlement in lawsuit over self-driving car startup Zoox stealing secrets

Tesla has agreed to settle a lawsuit it initiated against Zoox, which is going to have to pay Tesla some money and conduct an internal audit to make sure it is not using any tesla trade secrets.

Zoox is a relatively secretive startup that has been developing a fully electric and autonomous vehicle.

You’d think that if Tesla would have an intellectual property issue with them it would be about self-driving, but Tesla is actually claiming that Zoox has stolen “proprietary information and trade secrets” about their logistic systems.

In May of 2019, they filed a lawsuit against Zoox and 4 former logistics employees who went to the startup:

“This dispute arises out of the concerted efforts of Zoox, Inc. (“Zoox”), a competitor to Tesla, Inc. (“Tesla”), and several now-former Tesla employees, 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. As they departed Tesla, these employees, including Defendants Scott Turner (“Turner”), Sydney Cooper (“Cooper”), Christian Dement (“Dement”), and Craig Emigh (“Emigh”), absconded with 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.”

Yesterday, both companies agreed to settle with Zoox paying a “monetary payment” of an undisclosed amount and conducting an audit to make sure they are not currently using the “select proprietary Tesla documents” in question.

They wrote in a statement:

“Tesla and Zoox have reached a settlement of Tesla’s lawsuit against Zoox. Under the settlement, Zoox will make a monetary payment to Tesla and will undergo an audit of its systems to ensure that no Zoox employees have retained or are using Tesla confidential information. Zoox acknowledges that certain of its new hires from Tesla were in possession of Tesla documents pertaining to shipping, receiving, and warehouse procedures when they joined Zoox’s logistics team, and Zoox regrets the actions of those employees. As part of the settlement, Zoox will also conduct enhanced confidentiality training to ensure that all Zoox employees are aware of and respect their confidentiality obligations.”

It’s not clear what is to happen with those 4 employees.

When first filing the lawsuit, Tesla described some very compelling evidence that it was a concerted effort to steal IP in the lawsuit:

“For example, just before departing Tesla for Zoox, Defendant Turner – a manager in Tesla’s Newark, California Regional DistributionCenter – emailed two confidential Tesla documents to his personal email address, with only the words “you sly dog you…” in the body of the email. Similarly, shortly before his own departure from Tesla, Defendant Dement – a former warehouse supervisor – sent four confidential Tesla documents to his personal email account, with the subject line “Good Stuff.” After Defendant Emigh joined Zoox, he mistakenly sent an email to Cooper’s old Tesla email address, attaching a modified version of a Tesla proprietary document, freshly-emblazoned with the Zoox logo, yet still bearing the layout, design, and other vestiges of the Tesla version – showing, without doubt, that the Defendants are actively using the Tesla information they stole.”

Zoox has been testing a prototype of its self-driving technology in vans on the road in Las Vegas

However, it’s reportedly far from the final product, which is apparently a brand new type of autonomous electric vehicle built from the ground up.

The startup managed to raise $800 million in 2018 and $200 million in 2019.

Like many other startups, it recently had to lay off a lot of employees due to the current coronavirus pandemic.

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