Tesla Sues Ex-Supplier Matthews for Stealing EV Trade Secret, Claiming Patent Its Own

By Moon Harper

Jun 18, 2024 12:10 AM EDT

Tesla sued its former supplier, Matthews International, in federal court in California for stealing trade secrets and sharing them with its electric vehicle (EV) competitors.

Tesla's Battle with Ex-Supplier Matthews International

Tesla has filed lawsuits against several companies and former employees over the years, alleging the theft of trade secrets related to battery production, Dojo, and other technologies. Now, Tesla is adding another case to this list.

Tesla selected Matthews to be one of its suppliers for equipment used to advance its dry-electrode battery manufacturing for mass production in 2019, where Matthews agreed to a confidentiality agreement, pledging not to share the technology with other clients. According to Tesla, Matthews allegedly stole its trade secrets through two methods: filing patents incorporating Tesla technology and selling it to different clients.

The lawsuit, filed Friday in the US District Court of California, claims that Matthews owes damages estimating $1 billion for misusing company trade secrets concerning dry electrode battery manufacturing technology.

However, Matthews denies Tesla's lawsuit, accusing it of a bullying tactic to improperly take its valuable intellectual property, which it would vigorously defend against. Matthews further asserts that Tesla's complaint seeks to prevent them from offering their innovative solutions to others, thereby hindering the market from benefiting from the cost savings associated with their dry battery electrode ("DBE") solutions.

Matthew's Patent Infringement

Matthews allegedly utilized confidential trade secrets without Tesla's knowledge for unauthorized purposes, causing significant harm to the company. Matthews purportedly incorporated Tesla's confidential trade secrets into patent filings, attempting to claim ownership and inventorship of these secrets. This action also led to the potential publication of Tesla's confidential information related to the dry-electrode manufacturing process through these patent applications. Matthews did not seek Tesla's permission to file these applications nor disclose their existence until Tesla independently discovered them. Since discovering Matthews' actions, Tesla has been actively working to block or delay the publication of these applications, although some of Tesla's confidential information has already been published. As a result of Matthews' actions, Tesla has been deprived of patent rights to its technology, and high-value technology that would otherwise have remained confidential has been made accessible to the public, including Tesla's competitors.

Tesla also accused Matthews of disclosing Tesla's confidential trade secrets, particularly to Tesla's competitors, and attempting to sell and, in some cases, successfully selling equipment for dry-electrode battery manufacturing, which incorporated Tesla's confidential trade secrets. Tesla deemed These actions improper because Matthews did not have authorization to sell or use Tesla's confidential technology for anyone other than Tesla. Tesla also did not authorize the inspection or demonstration of any equipment or machines embodying its trade secrets by any Tesla competitor. Consequently, certain high-value confidential technologies for dry electrode manufacturing owned by Tesla have been transferred to Tesla's direct competitors without authorization or are on the verge of being transferred by Matthews.

Tesla requested the court to prevent Matthews from misusing its trade secrets, to compel Matthews to surrender its patent applications, and to seek monetary damages.