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Autonomous Driving Startup Zoox Agrees to Settle Lawsuit Filed By Tesla Over Stolen IP

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【Summary】Silicon Valley-based autonomous vehicle developer Zoox, a company developing bi-directional self-driving shuttles for a planned commercial robotaxi service, has agreed to settle a lawsuit filed by electric carmaker Tesla. Tesla filed its suit in March of last year accusing four Zoox employees of taking proprietary documents.

Eric Walz    Apr 15, 2020 1:25 PM PT
Autonomous Driving Startup Zoox Agrees to Settle Lawsuit Filed By Tesla Over Stolen IP
An autonomous concept vehicle developed by Zoox.

Silicon Valley-based autonomous vehicle developer Zoox, a company developing bi-directional self-driving shuttles for a planned commercial robotaxi service, has agreed to settle a lawsuit filed by electric carmaker Tesla.

Tesla filed its suit in March of last year accusing four Zoox employees of taking information related to the electric automaker's "WARP" system, which is its internal software the company uses to manage its manufacturing, warehousing, inventory, distribution and transportation.

Tesla alleged in one of the suits that the former Zoox employees, Scott Turner, Sydney Cooper, Christian Dement and Craig 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."

"These materials and knowhow were developed by Tesla over many years, and at great expense," the lawsuit stated.

"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," Zoox said.

Zoox said the settlement required it to pay Tesla an undisclosed amount and undergo an audit to ensure that none of its employees had retained or are using any part of Tesla's confidential information.

In the Summer of 2018, Zoox first made headlines when it poached 17 engineers from Apple's secretive "Project Titan" autonomous car development program.

Zoox, founded in 2014, has ambitious plans and is building a driverless vehicle from scratch that it hopes to launch as early as this year. The company stands out, as many of its competitors are working on self-driving technology, with no plans to build an entire vehicle from the ground up.

In December 2018, The California Public Utilities Commission (CPUC) announced that Zoox was the first company to join a state pilot program allowing self-driving cars to transport members of the public.

In August 2018, Zoox fired co-founder and CEO Tim Kentley-Klay, a month after it raised $465 million. The company hired Intel's former chief of strategy, Aicha Evans, as its new CEO in January 2019. 

Zoox's latest funding round was in October 2019, when the company raised $200 million in new convertible note funding. The company continues to refine its autonomous driving technology on roads in California and is working to launch its autonomous transportation service.

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Zoox hopes to launch an autonomous shuttle service. (Photo: Zoox)

In Silicon Valley's Competitive Culture, Companies are Very Protective of Their IP

Tesla's suit against Zoox is one of several high-profile cases surrounding intellectual property. In the ultra-competitive culture of Silicon Valley, tech companies frequently try to poach engineers and other employees from rival startups to gain an edge on their competition, especially at companies development of self-driving cars and related technology. It often leads to accusations of IP theft. 

The most recent case to make headlines involved former Google engineer Anthony Levandowski, who once led Google's early self-driving car project now known as Waymo.

Levandowski was accused of downloading over 14,000 files and schematics from Google's secure servers in early 2016 before leaving to found self-driving truck startup Otto. The files were related to lidar technology, a laser technology that helps autonomous vehicles perceive their environment.

Just eight months after founding Otto, ride-hailing giant Uber purchased the startup for around $680 million and hired Levandowski to lead Uber's self-driving vehicle development arm Uber ATG. Uber was accused of purchasing Otto to gain access to the stolen IP to jumpstart its own driverless car development. Waymo filed its suit against Uber in Feb, 2017.

The case was finally settled last month. Levandowski was ordered to pay $179 million to Google's parent company Alphabet, which includes attorney fees, to settle the dispute. 

The settlement includes an agreement to ensure that Waymo's confidential IP is not being incorporated into any of Uber's future technology, which Waymo has said was its main reason for the lawsuit to begin with.  Waymo was also awarded a 0.34% equity stake in Uber.

In addition to the suit filed against Zoox, Tesla filed a separate suit lawsuit against an engineer working at Chinese electric vehicle startup Xpeng Motors for IP theft. Tesla claimed that Xpeng employee Guangzhi Cao stole IP related to Tesla's autonomous driving system.

Prior to joining Xpeng, Cao was a former employee of Tesla's Autopilot team and one of only about 40 people said to have access to the software's source code, Tesla said. The electric vehicle maker said that Cao quit "abruptly" on Jan 3, 2019 to take a job at Xpeng.

Xpeng has a Silicon Valley office that employs around 100 people.  

In the suit, Tesla accused Cao of moving more than 300,000 files and directories related to Tesla's Autopilot and deleting 120,000 files off his work computer before leaving to take the job at Xpeng. Like most automakers, Xpeng is developing its own advanced autonomous driving technology. Cao was accused by Tesla of sharing the content of those files with his new employer.

In its suit against Cao, Tesla wrote, "Absent immediate relief, Tesla believes Cao and his new employer will continue to have unfettered access to Tesla's marquee technology, the product of more than five years' work and over hundreds of millions of dollars of investment, which they have no legal right to possess." 

Cao eventually admitted taking IP from Tesla. In a July 2019 court filing, Cao said he uploaded zip files to his personal Apple iCloud account which contained source code for Tesla's Autopilot just prior to him leaving for Xpeng. However, he denied Tesla's claims that he engaged in trade secret theft and said he never shared any of Tesla's IP with Xpeng.

Tesla even subpoenaed documents from Apple to help prove its case, although Apple was not named in the suit.

Xpeng's founder He Xiaopeng said he was inspired by the success of Tesla, which led him to found the company. Xpeng studied hundreds of Tesla's open source patents released in 2014 as it developed its first electric vehicle the G3 SUV, which is currently on sale in China.

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