Autonomous trucking company TuSimple Holdings Inc. is suing a new venture led by TuSimple’s co-founder and ex-CEO in one of the first Texas business court cases.
San Diego-based TuSimple claims Houston-area Bot Auto has misappropriated key proprietary technologies. TuSimple accuses Bot Auto founder Xiaodi Hou of preparing to launch his company while he was still on TuSimple’s board.
The lawsuit is among the first of its kind, said Timothy McCarthy, Dykema senior counsel who is representing TuSimple.
“This is one of the larger cases that have been seen in the country to date in which artificial intelligence technology is at the heart of the subject matter,” McCarthy said.
The parties’ first video conference before Judge Sofia Adrogué of the Houston-based Eleventh Business Court Division in early October marked the first-ever substantive hearing before any of the business court divisions.
A hearing on a temporary injunction is slated to take place on Monday and Tuesday. Last month, the parties agreed to a stipulation and order restraining Bot Auto from disseminating trade information.
Bot Auto denies it uses TuSimple’s technology and believes the lawsuit seeks to “harm” Bot Auto’s success while furthering shareholder litigation in Delaware and California over TuSimple’s management, said Jackson Walker partner Joseph “Tré” Fischer III, who is representing Bot Auto.
TuSimple’s technologies, such as the self-driving system’s ability to perceive objects around the truck while it’s driving, contain valuable trade secrets that Bot Auto has incorporated in testing vehicles, TuSimple alleges in its Oct. 1 petition and application for a temporary restraining order.
Bot Auto has also made statements to prospective investors about its capabilities and intentions that indicate its misappropriation of TuSimple technologies, TuSimple argues.
Hou was fired from TuSimple in October 2022 following news of an investigation brought by the federal Committee on Foreign Investment in the U.S. into TuSimple’s relationship with a Chinese startup. According to TuSimple’s lawsuit, revelations indicated that Hou improperly shared confidential information with the Chinese company, which was founded by another TuSimple co-founder. TuSimple was ultimately cleared of wrongdoing.
This year, TuSimple reached a $189 million settlement with shareholders who brought a class action lawsuit accusing the company of defrauding them by overstating its safety record and concealing ties to a Chinese rival. The defendants denied wrongdoing in the settlement reached in the U.S. Southern District of California.
A substantial TuSimple shareholder, Hou remained on the board until March 2023.
During the period between Hou’s firing and his resignation from the board, Hou established the website domain name for Bot Auto, TuSimple alleges. He also solicited TuSimple employees to join him in a new venture, according to TuSimple’s claims.
Hou left TuSimple amid mismanagement in the C-Suite and Board Room and started a new company to be free of corporate dysfunction, according to Bot Auto’s Oct. 23 response.
Many of TuSimple’s engineers later joined Bot Auto after TuSimple laid them off and dismantled the autonomous trucking program, Bot Auto claims.
Technology that Bot Auto is using, including artificial intelligence, was not available during TuSimple’s technology development, the response says.
TuSimple is still “substantially” in the business of developing autonomous trucking, albeit mostly outside the U.S., its lawyer said. The company is also developing its technology in other sectors, including the video game industry.
The case is 24-BC-11A-0007.
TuSimple is also represented by Cliff Riley and Isaac Villarreal of Dykema.
Bot Auto is also represented by Leisa Peschel and Tori Emery of Jackson Walker and Richard Liu of Innovative Legal Services.