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Tesla Wins Defamation Suit Filed by a Former Employee Accused of Hacking at the Automaker's Nevada Gigafactory

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【Summary】Electric automaker Tesla won its defamation case filed by former employee Martin Tripp, who was fired for hacking and sharing intellectual property, according to court documents filed on Thursday. Tesla sued Tripp in June 2018 over the incident. Tesla’s lawyers accused him of writing software that hacked the company’s internal manufacturing operating system at Tesla's Nevada gigafactory, then transferring several gigabytes of the data to third parties.

Eric Walz    Sep 18, 2020 12:15 PM PT
Tesla Wins Defamation Suit Filed by a Former Employee Accused of Hacking at the Automaker's Nevada Gigafactory
A sign outside Tesla's gigafactory near Reno Nevada. (Photo: David Calvert/The Washington Post via Getty Images)

Electric automaker Tesla won its defamation case filed by a former employee, who was fired for hacking and transferring company intellectual property to third parties, according to court documents filed on Thursday, Reuters reported.

Tesla had filed a lawsuit against Martin Tripp in June 2018. He worked at Tesla's Gigafactory in Nevada, where the automaker manufactures its EV batteries in a joint venture with Tesla's battery partner Panasonic. Trip worked as a processing technician at the factory and was hired by Tesla in Oct 2017.

Tesla's lawyers accused Tripp of writing software that hacked the company's internal manufacturing operating system, then transferring several gigabytes of the data to third parties. 

Tesla lawyers said that Tripp wrote the software to aid in an elaborate theft of confidential photos and video of Tesla's manufacturing systems. 

Tripp however countersued over statements made by Tesla and its Chief Executive Elon Musk related to his activities, but a federal judge in Nevada said none of the statements was false, and Tripp could not show actual malice.

The U.S. district court of Nevada said in its ruling that it will grant Tesla's motions to seal "because compelling reasons support them, and they are unopposed."

Tesla's attorneys also claimed that Tripp gave journalists false information about the company, including claims about flaws in Tesla's battery manufacturing process and that "punctured" batteries had been used in Tesla's Model 3 sedans. Tripp claimed there were hundreds of Model 3s that had the defective batteries installed. 

Tripp admitted that he shared information about Tesla's battery manufacturing process with Business Insider, but denied any hacking claims.

Internal documents which were reviewed by Business Insider showed at the time that Tesla expected that as much as 40% of the raw materials used to produce batteries and drive units at Tesla's Nevada Gigafactory needed to be scrapped or reworked by employees before they were sent to Tesla's factory in Fremont, California for installation in the Model 3. 

The documents were dated in the first quarter of 2018.

Tesla admitted to scrapping parts as it implemented changes to some manufacturing processes during the ramp up of Model 3 production back in 2018.

In a statement to Business Insider, Tesla wrote, "As is expected with any new manufacturing process, we had high scrap rates earlier in the Model 3 ramp. This is something we planned for and is a normal part of a production ramp."

"It's also important to remember the reason we scrap parts, because we want to ensure that only the highest-quality parts are used to create the best vehicles for our customers." 

Tesla said it would not ship any cars that have safety concerns.

Shortly after Tesla filed its suit, Tripp was interviewed by The Washington Post. He told the newspaper that he did not tamper with internal systems and viewed himself as a whistleblower who spoke out after seeing "some really scary things" inside the company, including dangerously punctured batteries that were installed in cars. Tripp even sought official protections as a whistleblower. 

He said he did not share the information to hurt Tesla but to shine a light on potential dangers.

He also denied hacking into any of Tesla computers. "I don't have the patience for coding, Tripp said to The Washington Post.

Tripp told the Washington Post that he left his previous job with a medical-device company and moved his family to Nevada to work for Tesla, believing it was "a golden opportunity." "I looked up to Elon, I looked up to Tesla," he said.

Tesla's lawyers said that Tripp became disgruntled after not receiving a promotion, which led to his whistleblower complaints at the factory.

In an email at the time to Tesla employees from Chief Executive Elon Musk, he said an employee accused of sabotage had complained about not getting promoted and added "there may be considerably more to this situation than meets the eye."

Also in June 2018, Musk addressed the company once more after another employee was accused of sabotaging the model 3 assembly line at its Fremont, California factory in a separate incident.

After that incident, Musk called on Tesla employees to "be extremely vigilant" and said, "There are a long list of organizations that want Tesla to die."

Tesla however, managed to become the world's most valuable automaker in the two years it took for the suit to be settled with a market cap of over $400 billion.

The court also denied Tripp's motion for leave to file an additional reply citing it as "unnecessary".

resource from: Washington Post, Reuters

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