Archive for May 13th, 2008

Electric Sports Car Maker Accused of Unsportsmanlike Conduct

May 13th, 2008

800px-fisker_karma.jpg

Last month Silicon Valley electric sports car company Tesla Motors sued rival car maker Fisker Automotive for allegedly stealing Tesla’s trade secrets, including confidential design ideas for a hybrid electric sedan.  The lawsuit, filed in California state court in San Mateo County, also names as defendants Fisker Automotive’s CEO, Henrik Fisker, its COO, Bernhard Koehler, and Fisker and Koehler’s design company, Fisker Coachbuild.  (read the New York Times story here)

According to the complaint, Tesla hired Fisker Coachbuild to aid with Tesla’s “WhiteStar” project to design an electric-hybrid sports sedan.  Tesla alleges that the defendants used the trade secret and confidential information on high-performance electric-hybrid sports car technology acquired during the engagement to secretly design their own directly competing sedan, the Karma (shown above and in this Inhabitat.com piece), which Fisker recently launched.  Among other things, the complaint alleges that the defendants fraudulently concealed their intentions to make a competing vehicle, breached the parties’ service contract and violated California trade secrets law. 

Trade secrets differ from patents in that they only protect information that is kept secret and only can be enforced against those who gain access to the information by improper means, including by breaching a promise to keep the information confidential.  (see IP Watchdog’s summary of trade secrets here)

From perusing the complaint, it seems that interpretation of the contract could be a major issue in the case.  While the contract has a confidentiality clause and a provision guaranteeing that Tesla would own any resulting work product, it also states that Fisker Coachbuild was permitted to provide the same design services to other car makers while working for Tesla.  Fisker Coachbuild may argue that building a competing car for Fisker Automotive constituted providing vehicle design services to another automaker, which it had every right to do under the contract.  In the complaint, Tesla asserts that Fisker Coachbuild’s complete involvement in the design of the competing car went beyond the scope of merely providing design services. 

Of course, that defense would not win the day for Fisker Coachbuild if it did in fact disclose Tesla’s proprietary information to Fisker Automotive and used the hybrid technology to build the competing car.  So the case might ultimately come down to a comparison of Tesla’s and Fisker’s hybrid-electric technology, which would be fun for us patent and greentech observers.