Benzinga | Jul 23, 2020 08:52AM EDT

Tesla Sues Rival EV Maker Rivian For Poaching Employees, Stealing Intellectual Property

Tesla Inc (NASDAQ:TSLA) has sued rival electric vehicle startup Rivian Automotive Inc. for allegedly poaching its employees and stealing secrets, Bloomberg reported late Wednesday.

What Happened

The Elon Musk-led automaker says there is an "alarming pattern" of Rivian poaching employees and obtaining its intellectual property.

"Misappropriating Tesla's competitively useful confidential information when leaving Tesla for a new employer is obviously wrong and risky," the leading EV maker said in the complaint filed in a state court in San Jose, California.

"One would engage in that behavior only for an important benefit -- to use it to serve the competitive interests of a new employer," it further alleged.

Denying the allegations, Amazon.com Inc. (NASDAQ:AMZN)-backed Rivian said it requires new employees to confirm "that they have not, and will not, introduce former employers' intellectual property into [its] systems."

Tesla says it is the "number one target from which to acquire information" for the Plymouth, Michigan-headquartered EV firm, as reported by Bloomberg.

Why It Matters

Rivian has reportedly hired 178 former Tesla employees, 70 of which joined the automaker directly after leaving Musk's company. In April, another startup Silicon Valley-based Zoox acknowledged that some of its hires from Tesla were in possession of confidential information. The two companies have reconciled.

Tesla also sued a former employee for stealing secrets on behalf of Alibaba Group Holding Limited (NYSE:BABA)-backed Xpeng Motors last year.

The Palo Alto-based company declared an unexpected profit in the second quarter earlier in the day, with adjusted earnings per share of $2.19 per share.

Price Action

Tesla shares closed 1.5% higher at $1,592.33 on Wednesday and added another 4.1% in the after-hours session.