In one of the latest high-profile trade secret misappropriation cases, the US District Court for the Northern District of California ironically cleared the air between two competitors on the market for air taxis (Wisk Aero LLC v. Archer Aviation Inc., 3:21-cv-02450-WHO (N.D. Cal. Aug. 24, 2021)).

The facts

Wisk Aero and Archer Aviation are two of the leading manufacturers of electronic vertical takeoff and landing (eVTOL) aircraft. The latter had hired several engineers who had previously worked for Wisk. Wisk later learned that before leaving the company, the engineers had downloaded confidential documents. On those grounds, the company then argued that Archer misappropriated their trade secrets. It therefore sought a preliminary injunction to stop Archer from using the trade secrets while Archer filed a motion to dismiss the complaint.

The decision: High(-er) requirements regarding circumstantial evidence of misappropriation

To prove the alleged misappropriation, Wisk relied on circumstantial evidence pointing out in its argument—the hiring of its engineers, visual similarities between the designs of the aircraft as well as the suspiciously short amount of time that Archer needed to develop the design once its former engineers had joined Archer. The court denied Archer’s motion to dismiss, noting that the evidence gave rise to “a plausible implication of Archer’s misappropriation.” However, it also dismissed Wisk’s motion for preliminary injunction. The court held that there was no sufficient evidence linking the downloading of the files and the misappropriation of trade secrets embodied in those files.

The aftermath

The decision thus set a relatively high bar to prove trade secrets misappropriation arising from third-party downloads and suspected use of confidential information. Courts must be expected to be reluctant to accept that simply downloading information is sufficient circumstantial proof of misappropriation. Instead, they will critically evaluate the totality of the circumstances in order to find whether misappropriation occurred.