In This Story
Tesla has sued its former supplier, Matthews International, accusing the company of selling its trade secrets and trying to patent confidential information related to electric-vehicle batteries. In response, Matthews told Quartz that Tesla’s complaints are “utterly without merit.”
The Austin, Texas-based EV maker filed its complaint against Matthews in federal court in Northern California on Friday. Although neither company is headquartered in California, the suit said Pennsylvania-based Matthews regularly sent employees to California to meet with Tesla staffers. Tesla operates a sprawling factory in Fremont, near San Francisco.
In 2019, Matthews began supplying equipment used by Tesla to refine its dry-electrode manufacturing process, with the goal of making lighter batteries with solid storage capacity. As part of their agreement, Matthews agreed to keep confidential information private.
“However, Matthews betrayed that trust,” the complaint said. “Without Tesla’s knowledge, Matthews applied Tesla’s confidential trade secrets to a variety of impermissible purposes, and in [doing so] visited extraordinary harm on Tesla.”
Tesla said Matthews incorporated its trade secrets into patent filings, further alleging that the company “unambiguously” tried to claim itself as the owner and inventor of Tesla’s tech. Tesla only discovered the applications when it found its secrets in published patent applications submitted by its former supplier, according to the complaint.
But Matthews didn’t stop there, Tesla claims. Rather, it allegedly sold Tesla’s equipment for dry-electrode manufacturing to rival companies. Tesla said it never authorized such a sale, which apparently resulted in its competition gaining access to its tech.
In the suit, Tesla claimed it’s owed at least $1 billion in damages due to Matthews’ alleged misconduct.
Matthews said in a statement that it plans to “vigorously defend the matter.” The company added, “Tesla’s lawsuit is simply a new tactic in their ongoing efforts to bully Matthews and improperly take Matthews’ valuable intellectual property.”
Matthews International stock was down more than 1% in Monday afternoon trading. Meanwhile, Tesla stock gained more than 4%, as the automaker continued its fight for CEO Elon Musk’s $56 billion compensation package with renewed support from investors.