Judge shelves Nikola’s $2 billion patent lawsuit against Tesla

Nikola has until October 6th to change the judge’s mind

Judge shelves Nikola’s $2 billion patent lawsuit against Tesla0

A federal judge has administratively closed a $2 billion patent infringement lawsuit hydrogen trucking startup Nikola filed against Tesla in 2018, essentially pulling it off the Northern District Court of California’s docket because the two companies stopped responding. Nikola has until October 6th to show cause as to why the case should continue. Otherwise, the case of Nikola v. Tesla will be dismissed.

Nikola “has dropped the ball, and this 2018 action is languishing without explanation or apparent good cause,” Judge James Donato wrote in an order to show cause published this week. “Consequently, the case is administratively closed. Nikola is ordered to show cause in writing by October 6, 2021, why the case should not be dismissed for failure to prosecute.”

Both Nikola and Tesla have apparently stopped responding to some of the court’s requests over the last few months. “On July 7, 2021, the Court asked the parties to schedule new tutorial and claim construction hearing dates. Neither side responded,” Donato wrote. “On September 2, 2021, the Court vacated further proceedings on claim construction for the lack of a response. As of the date of this order, neither party has advised the Court of proposed new hearing dates.”

Nikola “has dropped the ball”

Michael Rhodes, an attorney representing Tesla, declined to comment. A spokesperson for Nikola declined to comment. Attorneys for Nikola did not respond to requests for comment.

Nikola, for its part, has had to spend a lot of time and money putting out some major fires in the past year. Shortly after going public in 2020 — and almost immediately after General Motors announced a plan to take a minority stake in the startup — Nikola’s founder and former CEO Trevor Milton was accused of fraud by short-selling research firm Hindenburg Research. Among the allegations, Milton was accused of faking a video of Nikola’s truck driving down a road (it was really rolling down a hill).

Nikola performed its own investigation into the allegations (and found many of them to be true), but so did the Securities and Exchange Commission and the Department of Justice. Milton was indicted on multiple counts of fraud in July. He was taken into federal custody but released on bail and has maintained his innocence.

In the original complaint filed in March 2018, Nikola accused Tesla of infringing on patents the startup had filed for its hydrogen-powered big rig. Nikola tried to make the case that Tesla’s own Tesla Semi was using the same wraparound windshield, mid-entry doors, and aerodynamic fuselage, among other details. The startup also alleged that a Tesla recruiter had tried to poach Nikola’s chief engineer, and claimed this was evidence that Tesla was interested in Nikola’s designs. By allegedly stealing the design, Nikola said Tesla was causing “confusion in the market” and that letting the infringement continue would cost the startup more than $2 billion in sales. Tesla said at the time that it was “patently obvious there is no merit” to the lawsuit.

The two companies have spent much of the last three years arguing over which specific patents would make it to trial. (At one point last year, Tesla tried to argue that Nikola stole the design for its own truck from Croatian hypercar company Rimac.) In April 2020, Tesla lost a bid with the US Patent and Trademark Office to invalidate some of the patents in question. Milton tweeted at the time: “Two billion dollar lawsuit moving forward. We will defend our company’s IP no matter who it is.”

Correction: Trevor Milton is no longer in federal custody, as this story erroneously stated. He was released on a $100 million bond secured against two of his homes in July. We regret the error.

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