(Bloomberg) — Archer Aviation Inc. may have no quick escape from trade-secret theft accusations by rival Wisk Aero LLC as it prepares to go public in the futuristic flying-taxi space.
A San Francisco federal judge on Wednesday tentatively rejected Archer’s request to throw out the more than 50 trade-secret claims in Wisk’s lawsuit accusing Archer of stealing its technology for electric-powered aircraft.
U.S. District Judge William Orrick took no position on the merits of the allegations but reminded lawyers for the companies they “can be attacked with gusto.” The judge said he will finalize his ruling “pretty quickly” and proposed holding a trial in late November of 2022.
Atlas Crest Investment Corp., the blank-check company through which Archer plans to go public via a merger orchestrated by investment banker Ken Moelis, said in July the startup’s implied equity value has been slashed to $1.48 billion from $2.525 billion. Atlas Crest said Tuesday in an amended regulatory filing that it has set a stockholder vote on the proposed merger for Sept. 14 and agreed with Archer to extend until Oct. 10 the deadline for either company to kill the deal.
Archer said in a statement it’s eager to move forward with pretrial fact-finding and expects to prevail.
“We will continue to expose the holes in this sham lawsuit that is an attempt to stifle competition and nothing more,” Archer said.
Wisk said the tentative ruling means “Archer’s attempt to avoid accountability failed.”
Wisk “will obtain additional evidence from Archer in the coming months and looks forward to presenting its case to the jury,” the company said in a statement.
Orrick last month rejected Wisk’s request that he block Archer from using any of the trade secrets it alleges were stolen while the case continues. Wisk’s suit, in addition to two trade-secrets counts, also includes patent-infringement claims. Wisk is a venture backed by Boeing Co. and Google co-founder Larry Page’s Kitty Hawk Corp.
During Wednesday’s hearing, Wayne Barsky, a lawyer for Archer, decried what he described as “open-ended language” in Wisk’s complaint that he said is vague about what’s being alleged.
“If they’re going to accuse us of having stolen something,” he told the judge, “they ought to be able to tell us what it is, and do it with enough precision so that we know where that trade secret begins, and where it ends.”
Atlas said in its regulatory filing that any disputes between Archer and Wisk that aren’t resolved by the time the special purpose acquisition company, or SPAC, takes Archer public “could prevent or delay the completion” of the deal.
An investigation by U.S. prosecutors into a former Wisk employee the company accused of stealing trade secrets before taking a job at Archer “was ongoing” as of Tuesday, according to Atlas’ filing.
Wisk said it learned of “suspicious activity” after hiring a third party to conduct a forensic investigation of computer hard drives used by the former employees, a routine practice for protecting its intellectual property. According to Wisk’s complaint against Archer, the investigation showed USB thumb drives were used to download thousands of files, including more than 3,400 by an engineer on Christmas Day in 2019.
The stolen Wisk files, the suit says, fit at least five categories of trade secrets: aircraft designs, component designs, system designs, facility inventory and test data.
Archer in June unveiled its future electric aircraft in traffic-choked Los Angeles, one of the cities where the company anticipates it one day will shuttle customers to and from the airport.
The case is Wisk Aero LLC v. Archer Aviation Inc., 3:21-cv-2450, U.S. District Court, Northern District of California (San Francisco).
(Updates to add company comments, judge’s remark and case scheduling details.)
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