On The Radar
On July 7, William H. Orrick, judge of the U.S. District Court for the Northern District of California, is due to hear a lawsuit in which an eVTOL aircraft developer is accusing a rival of stealing its design. While it might not be the first lawsuit of its kind in the emerging advanced air mobility (AAM) sector, the one brought by Wisk Aero against Archer Aviation stands to be the highest-profile case so far in the gold rush subculture of start-ups racing to be the first to market.
Wisk’s legal team this week filed for a preliminary injunction to compel Archer to stop using the intellectual property and trade secrets that it alleges have been unlawfully taken from it. In the filing on May 19, the attorneys asked the court to compel the plaintiff to give full access to all evidence relating to the case, in which Wisk alleges Archer stole trade secrets and intellectual property.
Archer has strenuously denied the allegations. In a written statement on May 19, it said: “This is a baseless motion in a baseless lawsuit. Archer independently designed its aircraft, before any employees from Wisk joined Archer, and Archer looks forward to demonstrating that in court. Archer is moving forward with its business plans, including the development, certification, and production of its proprietary aircraft.”
The 31-page filing suggests that the key questions Wisk’s lawyers will ask the judge to consider are ones that AAM observers have long pondered in a more general sense: How long will it take for new companies to conceive, design, develop, test, and certify eVTOL aircraft before bringing them into commercial service? And what sort of resources would the task take?
Wisk says that when Archer persuaded 20 or so of its former employees to migrate seven miles across Silicon Valley from Mountain View to Palo Alto, California, it acquired more than just talent. The company, which is a joint venture between Boeing and Kitty Hawk, maintains, at first somewhat politely, that Archer has taken an “improper shortcut” to unfairly get ahead of its rivals.
The details of Wisk’s case get a lot less polite beyond that point. They say that one former employee, identified as Jing Xue, illicitly copied almost 5,000 files containing extensive information about a sixth-generation eVTOL design for which it had filed patent applications in January 2020. Wisk says that the technology covered by these patents resulted from many years of engineering work and hundreds of millions of dollars invested.
The FBI and Department of Justice are engaged in a criminal investigation into this allegation. Archer has previously acknowledged that when Wisk first filed the lawsuit in April, it placed an unnamed employee on paid administrative leave in connection with “a government investigation.”
According to Wisk’s latest filing, Archer co-founders Brett Adcock and Adam Goldstein incorporated the company in 2018. The business partners had recently sold their human resources platform Vettery to the Adecco Group for a reported $100 million. Neither has a background in aerospace engineering and both had previously worked in the financial sector.
Fast forward to November 2019 when according to Wisk’s court papers Archer recruited the company’s vice president of engineering, Thomas Muniz—hardly an uncommon occurrence in the milieu of high-tech start-ups, most observers would say. However, the court will hear testimony from Geoff Long, who was Wisk’s head of hardware engineering in December 2019, when he met with Adcock and Goldstein to discuss his recruitment. He declined the opportunity, apparently because he did not consider Archer to be on a sufficiently stable business foundation, and is now Wisk’s chief aircraft engineer.
However, between January 8 and 14, 10 other Wisk employees jumped ship to Archer. Jing Xue left on January 10, less than three weeks after December 25, when according to Wisk’s lawyers he downloaded the proprietary data in question, both via a USB stick inserted into a company laptop and using an IP address associated with an internet service provider not used by Wisk.
Like most other eVTOL aircraft start-ups, Archer has not been shy about talking up its prospects for establishing an early and richly rewarding leadership position in the anticipated air taxi boom. In Archer’s case, the self-promotion culminated in an announcement in February of its plans to raise $1.1 billion through an initial public offering based on a merger with a special purpose acquisition company called Atlas Crest. Wisk’s lawsuit seems highly unlikely to be resolved before this deal is due to close at the end of the second quarter of this year.
However, another key aspect of the evidence outlined by Wisk’s legal team in the May 19 filing is a narrative about how Archer’s leadership team seemingly acknowledged in several public statements a connection between their aircraft and technology that has been in the works at Wisk for close to a decade. It will be interesting to hear how the Archer legal team disentangle this evidence from their claim that their design originated entirely in-house.
The success of new advanced air mobility technology and business models clearly hinges on the verdicts reached by prospective financial backers as to its potential for return on investment. The sector will soon also need to get through a hearing in the court of public opinion as consumers assess whether they see an eVTOL aircraft in their future travel plans.
In this context, some may see the proceedings pending in a San Francisco courthouse as a sideshow. Let’s wait to hear what judge Orrick makes of this saga.
Insiders close to the case say that Wisk's investors are in no mood to back down in their determination to hold Archer accountable for actions they consider to be seriously harmful to their company's future plans. These backers include Google co-founder Larry Page and Sebastian Thrun, who launched Google's autonomous vehicle venture. Both made substantial investments in Kitty Hawk before harnessing the support of aerospace behemoth Boeing to form Wisk.