Off-roading and overlanding (the fusion of camping and off-roading) is exploding. Even before the pandemic, off-road adventure was growing in popularity because people love the enormous satisfaction and thrill that comes with searching out and trekking to that remote, hard-to-get-to, sweet spot where few others can go.
The market for tough, off-road capable trucks and SUVs is enormous, and as a consequence, there is a big battle heating up among electric car companies–especially between Tesla and Rivian, which are now squaring off in court.
Electric Off-Roaders Will be Awesome
The electric off-roaders I am talking about, such as those that will soon be sold by Tesla, Rivian, and Bollinger, are not ordinary electric crossovers–these are true, adventure-ready rigs that will compete with (and surpass in most respects) the most-capable combustion-engine trucks and SUVs such as the Mercedes G-Class, Jeep Rubicons, Ford Raptors, and beefed-up Toyota Land Cruisers. Lordstown, Atlis, Ford, and General Motors promise their own electric versions in the not too far future.
In terms of performance, electric off-road trucks and SUVs promise more horsepower, more torque, outrageous towing capability, more clearance, and independent power to each wheel (without heavy, complicated dangling differentials that beg to be ripped apart by rocks). Electric trucks are also insanely fast–some move 0-60 in 3 seconds. Should one of the quad-motors fail, the remaining three can get you out of the boondocks.
Of course, there is a lot of really cool engineering going on to make these new adventure vehicles, but more generally, smart, experienced employees are needed to be competitive in this market.
Trade Secrets and Employee Poaching: Tesla v. Rivian
On July 17, 2020, Tesla Inc. sued Rivian Automotive Inc. along with four former Tesla employees alleging the misappropriation of its trade secrets in connection with employee departures. Both Tesla and Rivian take advantage of the talent-rich environment of California. But in California, non-compete agreements are not enforceable, so the problem of employees leaving with valuable information is especially palpable.
As the elder, more established entity, Tesla has more to lose by way of employee departures, and Tesla is clearly frustrated by Rivian’s poaching.
Rivian is Real
Rivian is a truly viable competitor and a threat to the market share of Tesla’s Cybertruck. In the lawsuit, Tesla paints Rivian as a “small startup,” but Rivian has 1,000 employees in California alone, and a total of 2,300 employees across the nation with a home base in Michigan.
So far, Rivian has realized close to $6 billion in investment funds from Ford and Amazon, among others. Rivian also has a deal with Amazon to produce over 100,000 electric delivery vans once consumer units complete their production cycle.
The lawsuit asserts that Tesla is the “number one target from which to acquire information” for Rivian. Tesla says that Rivian has hired over 178 of its former employees–although only about 70 were hired directly away from Tesla.
It’s a case that highlights the employee poaching culture and one that illustrates how the trade secrets of a tech giant can be obtained through the procurement of the human resources themselves, the employees.
Tesla’s Grievances
As exciting as electric vehicle technology is, the lawsuit is more about the trade secrets related to recruiting and business management. From compensation to bonus schemes, candidate lists, hiring practices, and manufacturing project management–all are being taken by Rivian through former employees according to the lawsuit. In particular, the details of Tesla’s high-volume recruiting process are coming to light.
Tesla alleges that their forensics experts identified many instances of files being moved from their servers into the hands of their departing employees.
Elon Musk is none too thrilled and he hasn’t been quiet about it. In a 3-part interview on a podcast with Automotive News, he was asked about the lawsuit. Elon Musk said,
“… absolutely. Of course. I mean, it’s not like it’s a massive percentage, but they’ve definitely taken a bunch of Tesla’s intellectual property. It’s not cool to steal our IP, and for people to violate their confidentiality agreements… that kind of thing. They’re doing bad things, so we sued them.”
Rivian’s Response
Rivian’s response (or objection) to the allegations and was filed on August 10, 2020. Rivian objects categorically, saying,
“Tesla did not file this case to defend or protect any legitimate intellectual property rights. Tesla sued in an improper and malicious attempt to slow Rivian’s momentum and attempt to damage Rivian’s brand. And it sued in an abusive attempt to scare employees thinking about leaving Tesla.”
Rivian is also saying that Tesla is referring to recruiting tactics and how they conduct group interviews and provide compensation, all of which (according to Rivian) is public information and is routinely disclosed.
Takeaways
It is impossible to prevent information from leaving with former employees, and employee poaching is an ongoing issue in the technology world where competition for innovation is fierce. You can’t just scrub away information from someone’s noggin. Tesla’s employees are seasoned and invaluable, and the hiring of them by any company in competition with Tesla is of no surprise.
We’ve discussed this before. It’s always better to be proactive when protecting your intellectual property on employment and operating agreements.
Treat your employees well. It is impossible to keep all employees happy, but reducing the number that are unhappy goes a long way to reduce the damage that disgruntled employees can cause. Tesla may treat employees well, but a lot of companies treat employees like a commodity — inviting departures.
Treat your information as confidential. You want a good paper trail to show that you’re actually treating your information as confidential. The first thing a court will look at if you want to enforce an NDA is whether you actually treated the information as confidential. If you, or your company, have loose rules about access to confidential information, a court may actually find that it isn’t confidential at all.
Respect trade secrets. Trade secrets generally include any information that provides value by virtue of being secret including compensation, bonus schemes, candidate lists, hiring practices, and manufacturing project management. As an employee, recognize that you agreed not to disclose this information.
Be aware that there are forensic investigators and technologists that can be hired to look at the history of file movement and emails going out. Know, as a departing employee, the movement of files from a company server to your own machine is a very bad idea and you are being watched.
We’ve hit on some of these points when asking if a trade secret is right for you. The employee culture, the market culture, and how you protect those variables are also part of the entire equation.
We’ll be following this case and let you know what developments come out of this one.