Lawsuit flies before electric planes take off

(NYTIMES) – The age of electric planes may still be years away, but the fight for that market is already heating up.

Wisk Aero, a start-up developing an electric aircraft that takes off like a helicopter and flies like a plane, has sued another start-up, Archer Aviation, accusing it of stealing trade secrets and infringing on Wisk’s patents.

The lawsuit brings into public view a dispute between two little-known companies in a business that has become a playground for billionaires. It also entangles giants of aviation and technology.

Wisk is a joint venture of Boeing and Kitty Hawk, which is financed by Google co-founder Larry Page. Archer’s investors include United Airlines, which is a major Boeing customer and plans to buy up to 200 aircraft from the start-up.

The niche market for electric vehicles and planes has become frenzied in recent months as so-called blank cheque firms, which have little more than a stock market listing and a pot of cash, have snapped up fledgling businesses with little or no revenue, let alone profits.

Investors in the blank cheque firms – formally known as special purpose acquisition companies, or Spacs – are hoping to acquire businesses that they believe could follow Tesla’s recent trajectory on the stock market. To entice those investors, start-ups such as Archer promise top-notch technology and optimistic business plans.

In its lawsuit, Wisk contends the intellectual property that Archer promoted as part of its merger was stolen by engineers the company hired from Wisk.

The lawsuit accuses two engineers of downloading thousands of files containing confidential designs and data before leaving Wisk to join Archer. Wisk accused a third engineer of wiping the history of his activities from his computer before leaving for Archer.

“Wisk brings this lawsuit to stop a brazen theft of its intellectual property and confidential information and protect the substantial investment of resources and years of hard work and effort of its employees and their vision of the future in urban air transportation,” the lawsuit says.

Archer has denied wrongdoing.

“It’s regrettable that Wisk would engage in litigation in an attempt to deflect from the business issues that have caused several of its employees to depart,” Archer said in a statement.

“The plaintiff raised these matters over a year ago, and after looking into them thoroughly, we have no reason to believe any proprietary Wisk technology ever made its way to Archer. We intend to defend ourselves vigorously.”

Archer also said it had placed an employee accused in the suit on paid leave “in connection with a government investigation and a search warrant issued to the employee, which we believe are focused on conduct prior to the employee joining the company”.

Archer said it and three employees who had worked with the individual had been subpoenaed in that investigation and were cooperating with the authorities. Wisk described the case as a criminal investigation and said it was cooperating with the government.

Intellectual property lawsuits are not uncommon in quickly developing and promising industries – as Mr Page knows well.

In one recent case, Waymo, a company owned by Google’s parent Alphabet, accused one of its former employees and Uber of stealing trade secrets to gain an advantage in the race to develop autonomous cars. The companies settled the case in 2018, and the former Waymo employee, Anthony Levandowski, a former confidant of Mr Page’s, was sentenced last year to 18 months in prison. Former president Donald Trump pardoned him in January.

Archer announced its merger in February with a Spac, Atlas Crest Investment, in a deal that valued the company at US$3.8 billion (S$5 billion). Wisk said its suspicions were confirmed at that time when Archer released a presentation that contained designs similar to those in a Wisk patent filing.

Wisk says its Cora aircraft can fly a pair of passengers about 40km at a speed of about 160kmh. Archer says it is developing an aircraft that can carry up to four people on a 95km trip, topping out at 240kmh. Both aircraft are being designed to fly autonomously.

Other companies trying to make electric aircraft include Joby Aviation, which announced a US$6.6 billion deal with a Spac led by LinkedIn co-founder Reid Hoffman in February, and German start-up Lilium, which went public last month by merging with a Spac led by former General Motors executive Barry Engle.

Those deals are only a small sliver of the Spac activity this year, as investors, celebrities and athletes have all raced to partake in Wall Street’s new favourite toy. So far this year, 299 Spacs have raised US$97 billion, according to Spac Research – more than in all of last year.

But regulators and some investors say more scrutiny is needed. The Securities and Exchange Commission published two notices last month warning companies considering merging with Spacs to ensure that they are ready for all the legal and regulatory requirements being a public company entails.

Join ST’s Telegram channel here and get the latest breaking news delivered to you.

Source: Read Full Article