A $2 billion patent infringement lawsuit filed by Nikola Corp. against electric vehicle maker Tesla Inc. could be dismissed next Wednesday unless Nikola can show why it should continue.
A federal judge in the Northern District of California has administratively closed the case filed in March 2018. The two companies have stopped responding to the suit, in which Nikola accused Tesla of infringing on patents for its hydrogen-powered Nikola One semi, which Nikola has since discontinued.
U.S. District Court Judge James Donato wrote in the “show cause order” published this week that Nikola “has dropped the ball, and this 2018 action is languishing without explanation or apparent good cause.”
The action was first reported by The Verge on Friday afternoon.
Neither Nikola (NASDAQ: NKLA) nor Tesla (NASDAQ: TSLA) commented on the court’s move, according to The Verge. A Nikola spokesperson told FreightWaves the company does not comment on litigation.
Nikola “has dropped the ball, and this 2018 action is languishing without explanation or apparent good cause.”
U.S. District Court Judge James Donato
Nikola claimed that the oft-delayed Tesla Semi was using the same wraparound windshield, mid entry doors and aerodynamic fuselage, among other details, as Nikola’s planned truck.
The startup also alleged that a Tesla recruiter had tried to poach Nikola’s chief engineer, claiming it was evidence that Tesla was interested in Nikola’s designs.
Nikola claimed Tesla was causing “confusion in the market” and said it would cost Nikola more than $2 billion in sales. Tesla said that it was “patently obvious there is no merit” to the lawsuit.
Time marches on
A lot has happened since the suit was filed. Nikola founder and former Executive Chairman Trevor Milton, who was CEO when the suit was filed, left the company in September 2020 following a scathing report by Hindenburg Research alleging Milton had lied about the company’s technological progress.
Milton was indicted July 29 on three federal fraud charges based on allegations he tried to inflate Nikola’s share price for his own benefit. Even after recent sales of millions of dollars in company stock, he remains Nikola’s largest shareholder.
Milton pleaded innocent to the charges and is free on $100 million bail.
Tesla, which originally planned to produce its Semi in 2019, has delayed production until at least 2022. It also has recently redesigned the truck, which may render moot infringement claims based on design patents.
Nikola has actively distanced itself from Milton over the past year, canceling a planned electric pickup truck called the Badger and shuttering a motorsports division. Current CEO Mark Russell said some of Milton’s pursuits were distractions to the company’s mission of making trucks and creating a hydrogen fueling network.
Nikola One discontinued
Nikola quietly discontinued work on the Nikola One in late 2020 and refocused efforts on the Nikola Tre battery-electric daycab to be followed by a fuel cell variant and then the Nikola Two conventional truck. Pre-series production on the Tre begins in Arizona this quarter.
As for the lawsuit, both Nikola and Tesla apparently stopped responding to some of the court’s requests in recent months, ignoring July 7 and Sept. 2 court requests that could have led to new hearing dates.
The two sides spent much of the past three years arguing over which specific patents would be included in a trial. The Financial Times reported last year that Nikola licensed the design for its own truck from Rimac, a Croatian supercar company.
The U.S. Patent and Trademark Office declined a Tesla request to invalidate some of the patents in April 2020.
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The case against Nikola’s Trevor Milton: ‘Lied about nearly every aspect’