Tesla joins Apple in trade secret cases tied to China’s Xpeng

  • TECH
  • Friday, 22 Mar 2019

Pedestrians walk past a closed Tesla Inc. store in Palm Desert, California, U.S., on Thursday, March 7, 2019. Tesla has cut prices of the Model 3 and its other vehicles several times this year to offset the lower incentives, most recently by announcing a plan to close most stores and shift all ordering online. Photographer: Patrick T. Fallon/Bloomberg

Tesla Inc accused one of its former engineers of stealing highly confidential autopilot information before bolting to Chinese rival Xpeng Motors, eight months after one of Apple Inc’s ex-employees was charged with taking sensitive robocar secrets to a new job with that same company. 

Allegations that a second Silicon Valley giant was betrayed by one of its own workers bound for the same Chinese startup come amid a major US crackdown on Chinese corporate espionage. The rivalry in the electric-car market, with hundreds of billions of dollars at stake, has intensified with the two nations locked in a trade war. 

Xpeng – which hasn’t been accused of wrongdoing by Apple or Tesla – says it plays by the rules and denies having any part in the alleged misconduct by the engineers. Chairman He Xiaopeng called the lawsuit “questionable” in a WeChat post March 22, adding that both Xpeng and Tesla are innovators and the “flow of talent” between companies is normal. “I firmly believe that only through independent research and development can we make good products suitable for China,” He said. 

Xpeng, which is backed by Alibaba Group Holding Ltd and Foxconn Technology Group, is among the startups in China striving to reshape the auto industry as the world’s biggest market promotes new-energy vehicles in an effort to clean its air and cut its reliance on oil imports. The automaker’s full name is Guangzhou Xiaopeng Motors Technology Co Ltd, and it has a valuation of about US$3.65bil (RM14.80bil), according to venture capital database CB Insights. 

In a lawsuit filed Wednesday in San Francisco federal court, Tesla accused Guangzhi Cao, a former engineer on its Autopilot team, of uploading more than 300,000 files and directories, as well as copies of source code, to his personal cloud storage account before abruptly quitting the company on Jan 3. 

Tesla claims Cao didn’t tell his colleagues at the time that he’d accepted a job at Xpeng. In the complaint, Tesla referred to its autopilot driver-assistance system as having “industry-leading” features and called the technology “a crown jewel” of its intellectual property portfolio. Xpeng isn’t named as a defendant in the complaint. 

Tesla filed a separate lawsuit Wednesday accusing four former employees of taking trade secrets with them to Zoox Inc, a Silicon Valley-based autonomous car startup. 

The Guangzhou-based company’s US research arm, XMotors.ai, said in a statement that it “respects any third-party’s intellectual property rights and confidential information”. XMotors said it has initiated an internal investigation but wasn’t aware of any wrongdoing by Cao, who it described as a current employee. 

“XMotors has by no means caused or attempted to cause Mr Cao to misappropriate trade secrets, confidential and proprietary information of Tesla,” the company said. 

While Cao is being sued, a former hardware engineer for Apple’s autonomous vehicle development team who went to work for Xpeng is facing criminal charges brought by the US Justice Department. He has pleaded not guilty. 

Zhang Xiaolang was accused by the US of downloading files containing proprietary information as he prepared to leave the iPhone maker in April. 

Zhang told Apple he wanted to be closer to his ailing mother in China just before revealing to his supervisor that he intended to work for Xpeng. Apple grew more suspicious after seeing his increased network activity and visits to the office before he resigned, prosecutors said in a criminal complaint. He was arrested after he passed through the security checkpoint at Silicon Valley’s San Jose International Airport to board a flight to China. 

“There is no indication that he has ever communicated any sensitive information from Apple to XMotors,” the company said after Zhang was charged. When XMotors was notified in late June that US authorities were investigating Zhang, his computer and office equipment were secured and he was denied access to his work, a spokeswoman said. He subsequently was fired. 

Another Apple hardware engineer was charged by the US in January with stealing the iPhone maker’s driverless car secrets – also on his way to China. 

Prosecutors alleged that Jizhong Chen admitted to taking photos inside a secure work space that houses the company’s autonomous car project and backing up some 2,000 files to his personal hard drive, including manuals and schematics for the project. Although he told Apple he intended to travel to China to visit his ill father, he didn’t reveal that he had applied for a job with a China-based autonomous vehicle company, they said. 

The company wasn’t identified in court papers. Xpeng said in response to an inquiry Thursday that it hadn’t received any job application from Chen and wasn’t in any employment or business discussions with him. Chen has pleaded not guilty. – Bloomberg

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