A hydrogen trucking company, Nikola, has been granted permission to pursue the three-year-old $2 billion patent lawsuit against Tesla. The United States federal judge put the Suit on hold earlier this month after the two corporations failed to comply with the Court’s directives.

The Suit went on hold!

Suit Details: A federal judge administratively terminated Nikola’s $2 billion patent infringement lawsuit against Tesla in 2018, thereby removing it from the Northern District Court of California’s docket because the two firms failed to reply. Until October 6, 2021, Nikola has to show the cause of why the lawsuit should be continued. If this does not happen, the Suit of Nikola v. Tesla will be dismissed.

To show cause issued this week, Judge James Donato noted that Nikola “has lost the ball, and this 2018 action is languishing without explanation or apparent good cause“. “As a result, the suit has been administratively closed, and Nikola has been given until October 6, 2021, to show the reason why the Suit should not be dismissed on the grounds of prosecution failure.

Over the last few months, both Nikola and Tesla appear to have stopped responding to some of the Court’s requests. On July 7, 2021, the Court requested that the parties set new dates for the instructional and claim construction hearings. Donato writes, “Neither side answered.” “On September 2, 2021, the Court vacated further claim construction proceedings due to a lack of response. Neither party has informed the Court of potential new hearing dates as of the date of this order.”

On the other hand, Nikola has had to spend a lot of time and money in the last year putting out large fires. Nikola’s creator and former CEO Trevor Milton were accused of fraud by short-selling research company Hindenburg Research shortly after going public in 2020 and nearly immediately after General Motors revealed a proposal to buy a minority share in the venture. Milton was accused of fabricating a video depicting Nikola’s truck travelling down a road, among other things.

In a new order issued, Judge James Donato stated that the lawsuit against Tesla would stay “administratively closed” but not be dismissed. In January, he gave Nikola two new deadlines:

  • First to guide the Court through the technologies in question; and
  • Second to have a hearing on the breadth of the patents Nikola believes were violated.

After Nikola and Tesla failed to reply to demands to prepare and schedule these meetings in July and September, Donato closed the case on October 1, 2021. He set a deadline of October 6 for Nikola to demonstrate why the present Suit should be continued, which the startup satisfied – albeit not entirely persuasively.

In the judgment, the Court stated, “Nikola’s alleged justifications for not responding to the Court’s instructions are not very compelling.” “At this moment, the case will not be dismissed for failure to prosecute, but that could change if Nikola does not move this matter forward quickly and efficiently.”

Nikola accused Tesla of infringing on patents the company had submitted for its hydrogen-powered large rig in the original case filed in March 2018. Nikola said that Tesla’s own Tesla Semi had the same wraparound windscreen, mid-entry doors, and aerodynamic body, among other features. A Tesla recruiter allegedly tried to lure Nikola’s lead engineer, proving that Tesla was interested in Nikola’s designs. Nikola claimed that Tesla was causing “market uncertainty” by allegedly copying the design and that allowing the infringement to continue would cost the company more than $2 billion in sales.

Since the beginning, Tesla has stated that the claims have “no merit“. In April 2020, the Silicon Valley manufacturer lost an effort to have some of the patents in question invalidated by the US Patent and Trademark Office, prompting Nikola founder and former CEO Trevor Milton to tweet: “Two billion-dollar lawsuit moving on.” Regardless of who it is, we will defend our company’s intellectual property.

The Aftermath/Consequences:

The two businesses have fought for much of the last three years over which patents would go to trial. (Tesla tried to claim last year that Nikola stole the design for its truck from Rimac, a Croatian hypercar firm). Tesla lost a request to have some of the patents in dispute invalidated by the US Patent and Trademark Office in April 2020. “Two billion-dollar lawsuit moving forward,” Milton tweeted at the time. Regardless of who it is, we will defend our company’s intellectual property.

On the other hand, Nikola has had many problems since filing the complaint. Milton was accused of lying to investors after going public, just as the business was poised to win an investment from General Motors. He finally stepped down as CEO of the company and was arrested and charged with various fraud charges this year.

Some interesting facts about Tesla:

Tesla’s high market share and household brand for electric vehicles can be ascribed to its claims of industry-leading innovation and being one of the first companies to recognise the potential and benefit of developing electric cars for the world.

Tesla patents its innovations to complement its inventiveness, and some intellectual property is likely to be secured by trade secrets. “We felt forced to create patents out of anxiety that the big car companies would imitate our technology and then use their vast manufacturing, sales, and marketing strength to overwhelm Tesla,” Musk said of Tesla.

In essence, Tesla has previously exploited the patent system for the same reason it was created: to safeguard its hard work and creativity from being copied by others without Tesla’s permission. A cursory search of the patent database yields roughly 900 hits for patent applications filed by Tesla Inc., or Tesla Motors were previously known. A method and equipment for mounting, cooling, connecting, and safeguarding batteries was one of the earliest published applications (WO2006/124663) in November 2006. Others, such as WO2007/145726 from December 2007, deal with efficient rotors for electric motors. Many early applications concern temperature management of cells and batteries and the detection and avoidance of thermal events, charging systems, and cell designs.

Tesla EV tech giant had an advantage over the competition due to its vast portfolio of applications in an area where few businesses were working at the time. Tesla was not only ahead of the competition in terms of innovation and development, but its patents. These patents can be found on Tesla’s website, giving the company a monopoly on the patented technology and thus preventing others from infringing on their rights by using Tesla’s technology without permission.

Disclaimer: The present article intends to provide general guidance on the subject, and you can also consult us in your specific case.

Author

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    Abhishek is an intellectual property Attorney. He specializes in the registration and maintenance of patents, designs, trademarks, and copyrights. He regularly assists companies in relation to crucial technology issues. He also helps organizations or individuals to develop patent portfolio management strategies for exciting new inventions and processes. Abhishek has past work experience with reputed firms like SaiKrishna and Associates Advocates, L.S. Davar and Co., Masilamani Law Partners, and Ripple IP Services (NCR).