Intellectual Property Law

The New York Times reports that Tesla Motors, the Silicon Valley electric sports car maker, has filed suit in San Mateo Superior Court in California against Fisker Automotive and two employees, including Henrik Fisker. Fisker was hired by Tesla last year to design a four-seat sedan, codenamed White Star.

Key graph: “The Tesla lawsuit contends that Mr. Fisker and his chief operating officer, Bernhard Koehler, doing business under the name Fisker Coachbuild, fraudulently agreed to take on Tesla?s $875,000 design contract to gain access to confidential design information and trade secrets, then announced a competing vehicle [the aforementioned "Karma"]. Last fall Mr. Fisker founded Fisker Automotive, which is backed by the venture capital firm Kleiner Perkins Caufield & Byers.”

The Tesla lawsuit seeks to stop Mr. Fisker from using Tesla design documents, along with a return of the money from the contract and unspecified punitive damages.

For what it’s worth, earth2tek.com is reporting that Fisker Automotive has said that the suit is “ridiculous” and that it will ?vigorously defend? itself from ?these meritless claims.?

My question is what design documents did he take, if any. It’s not stated in the article that he took anything, only that he had access to design documents while he was working for Tesla. Also, is Tesla referring to design documents that existed before Fisker arrived, or the very design documents that Fisker was hired to produce? This question shouldn’t matter if Fisker “walked out the door” with design documents (whether he produced them or not) because they would clearly fall under the ownership of Tesla based on the “work made for hire” doctrine–and I assume that Tesla had confidentiality agreements and non-disclosure agreements in place (if not, then they haven’t been reading this blog). However, if Fisker was designing his own car (the Karma) from memory it may present a more interesting question.

You’ll recall that we reported a case in Ohio where the court found that trade secrets did not lose their status as trade secrets simply because someone memorized them. You can read about that here. California has no such ruling. Did Fisker memorize his designs? Is that even possible in this situation? Might this be the case that reviews the issue of memorization of trade secrets?

Also, remember that there are no non-compete agreements in California. This case could become very interesting because of the short amount of time that Fisker was with Tesla. Stay tuned…