A federal judge tipped his hand on how he views a case involving corporate espionage in the hypercompetitive industry of self-driving cars. In short, he thinks something foul is afoot.
In an order issued Tuesday, U.S. District Judge Edward Davila granted the most important parts of WeRide’s request to expand a preliminary injunction against a bevy of corporate actors, multinational companies replete with puppet CEOs and a few shadow companies allegedly created to dodge liability.
“The public interest will be served by protecting both intellectual property rights and the court’s authority to enforce its orders,” Davila wrote in the 20-page order. “The court will enjoin defendants from creating any new corporate entities.”
The expansion of the preliminary injunction to include the creation of new companies came after a tense hearing in October, when plaintiff WeRide, a Silicon Valley-based self-driving technology company, accused defendants Ken Huang and Jin Wang of setting up shell companies to avoid the first preliminary injunction that prevented them from using stolen trade secrets.
Huang worked as chief software engineer at WeRide and downloaded enormous troves of proprietary data, WeRide claims, scrubbing work computers and then absconding to China with the trade secrets in tow.
Huang soon surfaced as a high-ranking engineer working for a nebulous network of companies founded in China called AllRide.AI.Inc and Zhong Zhi Xing Technology.
WeRide says its suspicions about Huang’s potential theft were confirmed when it noticed AllRide giving demonstrations to prospective investors using technology that was developed in an accelerated time frame and with design concepts similar to WeRide’s.
WeRide sought and won a preliminary injunction, with Davila indicating the company was likely to succeed on the merits of its lawsuit.
At the time, WeRide sought to enjoin Wang, who was tangentially affiliated with the Chinese companies but not officially listed as an employee. Wang claimed he was merely providing introductions for the fledgling companies and trying to facilitate connections to investors.
Davila initially declined to enjoin Wang but reversed that decision in Tuesday’s order after Wang formally accepted the position as CEO of AllRide.AI.Inc, a move Wang’s lawyers acknowledged during the October hearing.
But Davila went farther and enjoined Wang in his personal capacity too. He also forbade Wang and Huang from setting up any other corporations after WeRide accused Huang of creating a shadow company called Kazir based in Silicon Valley and essentially proceeding with business as usual to avoid the court’s first preliminary injunction.
Davila’s expanded injunction also applies to Kazir.
The plaintiffs argue Wang was the architect of the entire scheme, purporting to be uninvolved with any of the companies. But they say Wang had his wife Rong Wang buy all the shares of the Chinese parent company Smart Car AI Holdings, which owned all of the aforementioned corporations accused of trade secret theft.
The fact that Davila awarded a preliminary injunction to WeRide means he believes they are likely to succeed on the merits, which bodes ill for the defendants as the case proceeds to the central question of whether Huang and Wang conspired to steal WeRide’s source code for its self-driving technology.