Blow to Wisk’s industrial theft suit against Archer as feds exit

In a potentially pivotal development in the legal battle between electric vertical takeoff and landing (eVTOL) airplane manufacturers Wisk and Archer, federal authorities investigating the underlying accusations of intellectual property theft have decided to end their inquiry into the case. That exit appears to signal vulnerability in Wisk’s charges that its rival misappropriated industrial secrets as the litigation heads to civil trial later this year.

The new twist in the prolonged and bitter legal row between the two eVTOL startups was revealed today by Archer. The San Francisco-based company said the US Attorney General’s Office decided last Friday not to bring charges against Archer engineer Jing Xue, who joined the company after working for Wisk. The suit Wisk filed last April claimed Xue had downloaded secret aircraft designs and other data before switching jobs, amounting to intellectual property theft that he was said to have shared with his new employers. 

The move not to lodge a federal case against Xue suggests the US Attorney General’s Office found insufficient evidence to support Wisk’s accusations in court, raising questions about whether the judge in the civil proceedings will be prone to find likewise. That was certainly the conclusion drawn by Archer’s chief legal counsel, Andy Missan, after learning the news.

“Wisk’s allegations of ‘brazen theft’ and ‘wholesale’ misappropriation made against this employee were gravely serious, and have serious consequences,” Missan said. “At a minimum, such allegations should have been backed up by serious evidence. This outcome serves as further confirmation of what we’ve asserted from the outset of this case: Wisk’s claims lack any factual basis.”

The saga began March 30, when the FBI turned up at Xue’s door and searched his home as part of a federal investigation. A week later, Wisk filed suit charging the engineer of stealing aircraft, component, and system designs of its eVTOL, as well as facility inventory and test data. It also accused Archer of using that in creating its similar-looking Maker craft. A legal fist fight ensued.

A few months later, Archer landed a blow when the judge presiding in the case rejected Wisk’s request to block its San Francisco rival from using the allegedly stolen information in continued work on its eVTOL. But in August, the same judge denied Archer’s demand charges the litigation is built on be thrown out. 

Around the same time, Archer countersued for $1 billion, accusing Wisk of engaging in a “false, extra-judicial smear campaign” made up of “false and damaging statements outside the judicial process.” That move was motivated by Archer’s plan to take the company public, and having to modify its initial $2.7 billion valuation down to $1.7 billion amid the publicity the legal battle created – as well as waning investor appetite as several other eVTOL makers introduced stock. 

Archer finally began trading on Wall Street in September, raising $857.6 million.

Since then, both companies have enjoyed a series of fortuitous business milestones that have provided happy distraction from their bitter fight. Archer received Federal Aviation Administration flight worthiness certification, and has begun its testing of Maker. Wisk, meanwhile, received an enormous $450 million infusion from Boeing ­– co-backer of the company with Kitty Hawk. It said it will use those funds to accelerate further development, testing, and eventual certification of its own sixth-generation eVTOL air taxi. It also announced ambitious targets for the next half decade.

Update

Their respective business successes won’t make the legal fight between the two rivals disappear – especially with Wisk determined as ever to get justice for what it maintains was intellectual property theft, regardless of the decision of the Attorney General’s Office not to pursue the case.

“The (Department of Justice) criminal investigation has always been entirely separate from our civil litigation against Archer,” a company spokesperson declared Thursday. “Our case involves multiple claims based on substantial evidence of both trade secret misappropriation and patent infringement. The defendant in our case is Archer, and we remain focused on holding it accountable at trial.”