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Tesla Accuses Chinese Company of Stealing Trade Secrets

Auto maker Tesla took legal action Thursday against a Chinese rival in what it characterized as a necessary defense of its trade secrets related to self-driving technology.

SAN JOSE, Calif. (CN) – When Guangzhi Cao resigned abruptly from his position this past January as an engineer working for Tesla on one of the most secretive and closely guarded technologies in Silicon Valley, the automaker may be forgiven for harboring suspicious about the Chinese national's motives.

Those suspicions jumped into the red zone when they found that Cao had also scrubbed his computer, erased his browser history and destroyed over 120,000 files in the few days leading up to his abrupt departure. That he soon surfaced in China was the final tell.

Xiaopeng Motors is in the middle of the pack racing to become the first to perfect self-driving technology and usher in a new automotive era. 

In a lawsuit filed in federal court Thursday, Tesla says their worst fears were confirmed when it discovered Cao had furtively downloaded over 30,000 documents including the source code that runs the self-driving technology and absconded abroad with those vital documents. 

Tesla’s suit against Cao says the former employee recently absconded to China with trade secrets that include the source code for the core technology of the program.

“Tesla has spent hundreds of millions of dollars and more than five years developing Autopilot,” the company said in the complaint. “Now that investment is at risk. Tesla must learn what Cao has done with Tesla’s IP, to whom he has given it, and the extent to which Tesla has been harmed.”

Tesla said it became suspicious when Cao abruptly resigned in January and left the company without telling anyone he had accepted a job with Xiaopeng Motors Technology Company, a rival startup based in China.

“As Tesla has now learned, Cao began searching for a new job by November 2018,” Tesla says in the complaint. “Long before he left, Cao began uploading complete copies of Tesla’s Autopilot-related source code to his personal iCloud account – more than 300,000 files and directories, in violation of Tesla’s policies and its agreements with Cao.”

Along with the uploading of files, Tesla alleges Cao scrubbed his computer, browser history and deleted more than 120,000 files from the company cloud.

The California-based automaker said it believes Cao is still in possession of all the information needed to replicate the Autopilot technology. It accuses Xiaopeng Motors of transparently copying Tesla in other aspects of its production, including its design, technology and its business model.

Tesla said Xiaopeng Motors has poached other employees in an attempt to gain insight into aspects of its business and specifically its self-driving technology.

The race to get to a fully functioning and safe self-driving car remains fiercely competitive, with companies like Google, Uber, Apple and others attempting to one-up each other.

Tesla also filed suit against one of these competitors called Zoox on Thursday. Zoox, based in California, is a comparatively secretive startup that is entirely focused on self-driving technology.

Tesla said the company poached four employees recently “to help Zoox leapfrog past years of work needed to develop and run its own warehousing, logistics, and inventory control operations.”

Tesla said one of those employees named Scott Turner emailed himself confidential Tesla documents with only four words in the body of the email — “you sly dog you.”

Christian Dement, another employee named in the complaint, also emailed himself confidential documents from a company email to a personal email.

Finally, Tesla said Craig Emigh, a former employee, accidentally sent an email containing a document with proprietary information, which was essentially just a Tesla document with Zoox letterhead.   

The automaker says it shows “without doubt, that the Defendants are actively using the Tesla information they stole.”

In both cases Tesla is seeking a preliminary injunction seeking to stop the former employees from using the trade secrets, while asking a judge to issue an order to prevent the companies from ever using any of the information they garnered from the five employees.

An email sent to Zoox seeking comment Thursday was not returned as of press time. Xiaopeng Motors Technology Company also did not respond to an email seeking comment.

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