SpaceX Sued for Alledgedly Poaching Top Semiconductor Engineers
A secret computer chip project has ended in a lawsuit brought against Space Exploration Technologies’ (SpaceX) by chip manufacturer Broadcom. The suit claims that SpaceX raided five of its top engineers in order to obtain their trade secrets, and short circuit the huge R&D costs associated with developing the chips on its own.
The lawsuit, filed in Orange County, California, alleges that Broadcom was selected from a group of other manufacturers to develop highly specialized computer chips for an undisclosed project of SpaceX.
Broadcom then established a team of its best engineers, including the five Iranian-born engineers who are also named as defendants in the suit. Broadcom alleges that it invested hundreds of hours in the project. As is typical, the companies entered into a non-disclosure agreement, so that the developed technology would be kept confidential.
Eventually the deal fell through. But Broadcom believes SpaceX used the project as a tool to identify and lure away Broadcom’s best and brightest engineers. The engineers resigned, allegedly not disclosing that, two days before, they had been hired by SpaceX.
SpaceX claims that the engineers actually shopped their services, possibly due to potential layoffs and other challenges at Broadcom.
The lawsuit claims that SpaceX raided/poached the employees as part of a plan to gain the confidential information needed to manufacture the chips, and also to reduce the enormous amount of R&D that would have been necessary to engineer them from scratch. The suit papers claim “If it succeeds in its brazen attempt to purloin essential engineering skills and technical knowledge from Broadcom, SpaceX can effectively save itself years of design and development time and hundreds of millions of dollars, leaving Broadcom with a depleted engineering team and diminished capability to serve the needs of its customers.”
The engineers have also been sued for alleged breach of their employment agreements, and the confidential/non-disclosure clauses they likely contained.
The suit seeks money damages. It also asks the court to forbid SpaceX from (1) hiring other employees and (2) from actively employing the five employees allegedly raided.
SpaceX won the first round of the lawsuit when, in May, the court denied the requested injunction and ruled that the engineers could indeed begin work.
This suit highlights, on a very high level, the importance of having, and understanding, non-disclosure agreements. Such agreements are standard in the aerospace industries, and the breach of then can have devastating effects on a company.