Self-driving startup Zoox settles Tesla lawsuit, lays off 100 workers

The self-driving startup Zoox has settled claims that four Tesla employees stole trade secrets on the way out the door to new jobs at Zoox.

Zoox has ambitious plans to build a vertically integrated taxi service, with Zoox engineers designing a vehicle, self-driving software, and a ride-hailing network. Zoox has raised hundreds of millions of dollars over the last five years; a 2018 fundraising round valued the company at more than $3 billion. However, the company has struggled in the last couple of years. Zoox’s founding CEO was pushed out in 2018, which is never a good sign for a startup that hasn’t launched a product. Zoox laid off about 100 workers—10 percent of its workforce—earlier this week.

Tesla sued Zoox over trade secret theft in March of last year, alleging that between November 2018 and March 2019, four employees each made personal copies of confidential documents before leaving their Tesla jobs.

One of the employees, a manager who supervised two of the other defendants, emailed two confidential documents to his personal email account, according to Tesla’s lawsuit. The documents “contained confidential and proprietary Tesla receiving and inventory procedures, as well as internal schematics and line drawings of the physical layouts of certain Tesla warehouses.” The subject line: “you sly dog you.”

Another Tesla employee allegedly stole “confidential parts pricing information, an export of information of Tesla’s confidential and proprietary WARP system regarding the tracking and monitoring of parts inventory, and several analyses of such information,” according to Tesla.

The smoking gun came on March 12, 2019, when one of the employees accidentally emailed a document from his new Zoox email account to the disabled Tesla account of one of his former Tesla (and now Zoox) co-workers. Tesla discovered that it was a lightly modified version of a confidential Tesla document, now bearing a Zoox logo.

“The layout and structure of the Tesla and ‘Zoox’ versions are nearly identical,” Tesla’s lawsuit said. “Indeed, Zoox left at least one reference to another proprietary Tesla document.”

Tesla says the same employee repeated his blunder three days later, sending another purloined document to his colleague’s defunct Tesla account, where it was obtained by Tesla management.

Now the lawsuit is over, according to a court filing.

“Zoox acknowledges that certain of its new hires from Tesla were in possession of Tesla documents pertaining to shipping, receiving, and warehouse procedures when they joined Zoox’s logistics team,” Zoox said in a statement to Reuters. Zoox says it will pay Tesla an undisclosed sum. Tesla will also get a chance to audit Zoox and confirm that the employees no longer possess confidential Tesla documents.