Archer Aviation sues rival Joby and alleges ties to China
Archer Aviation Inc. (ACHR) sued Joby Aviation, Inc. (JOBY) in US federal court, accusing its air-taxi rival of defrauding the American government and failing to disclose its close ties to China that Archer said gives Joby an unfair competitive advantage.
The legal filing is a counterclaim, after Joby sued Archer in November, alleging "corporate espionage."
In its countersuit, Archer said "Joby and/or its agents fraudulently misclassified thousands of pounds of Chinese-origin aircraft materials as consumer goods...in an apparent effort to evade U.S. tariffs and foreign-influence oversight."
Joby has had a subsidiary operating in Shenzhen, China for more than a decade, and Archer alleges that the company has benefited from technology-development grants provided by the Chinese government.
Archer's suit accuses Joby of fraudulently hiding aerospace imports from the subsidiary by misclassifying the items as hair clips, napkins, thousands of pounds of socks and other items.
And Archer also accuses Joby of engaging in false advertising, which is against federal law.
“Historically, the aviation industry has not sourced parts from China,” Eric Lentell, Archer’s chief legal and strategy officer, said in an interview with The Wall Street Journal. “The fact that you’re sourcing from China at all is a huge problem.”
Archer is seeking inductive relief and damages.
Alex Spiro, an attorney for Joby, said in a statement that the company “doesn’t respond to nonsense.”
“Archer’s constant legal issues and flailing business operations have left it no choice but to resort to invented nonsensical theories,” he said. “We will see them in court.”
Joby’s lawsuit, filed in a California Superior Court in Santa Cruz in November, called Archer’s alleged corporate espionage "planned and premeditated," stemming from the hiring of George Kivork, the former US state and local policy lead for Joby.
According to the complaint, Archer began recruiting Kivork last summer.
Because of the nature of Kivork's position at Joby, it meant he "had access to confidential and proprietary information regarding Joby’s strategic partnerships, regulatory strategies, technical information, and communications with stakeholders, among other sensitive information that would be valuable for a competitor," the lawsuit states.
Joby alleged that two days before he announced his resignation from the company, Kivork "downloaded dozens of files from Joby's systems" and sent them to his personal email account.
Both Joby and Archer are at the forefront of the electric vertical take-off and landing (eVTOL) space that is looking to modernize air mobility across the globe. Both companies are expected to launch commercial air taxi service in the Middle East this year.
"It is imperative that the innovative work done by Joby in this field—representing billions of dollars and innumerable man hours over the course of nearly two decades—is protected from this type of espionage to allow the sector to thrive," Joby said in a statement about its lawsuit.
In its countersuit, Archer denied that it had misappropriated trade secrets or pushed Kivork to breach his contract with Joby. The company filed a motion to dismiss Joby's lawsuit.
Archer's stock is down nearly 16% this year, while Joby's has sunk more than 25%.