SEATTLE—U.S. District Judge James Robart tossed out a $72 million lawsuit against Boeing on Wednesday, August 14, brought forth by defunct electric-aircraft startup Zunum Aero who alleged that Boeing had “stolen its technology” and shared it with other industry partners.
Zunum Aero was founded in 2013 by Dr. Ashish Kumar (CEO) and Matt Knapp (CTO) in Kirkland but later relocated to Bothell. The startups’ goal was to introduce a fleet of hybrid-electric commuter aircrafts by 2019 with its first type certification by 2020, according to an article by Aviation Space and Week Technology.
The aircrafts were intended for short-distance flights of up to 1,500 miles with the goal of working up to longer flights later in the future.
These plans immediately garnered interest from Boeing HorizonX and JetBlue Technology Ventures who both invested a combined $6.2 million in Series A funding, Forbes reported in 2019. The funding was matched with $800,000 from Washington State’s Clean Energy Fund.
Just a year later Zunum, $50 million short in Series B funding to hire a team, received an additional Bridging Loan from Boeing and JetBlue, respectively, in April 2018, but failed to attract additional investors. The company, overpromising and failing to produce a single airplane, collapsed after funding dried up in 2019.
United Technology Aerospace Systems (UTAS) and companies associated with Safran S.A. were among the agencies initially interested in Zunum but ultimately decided to not invest.
In its 2020 lawsuit against Boeing Zunum blamed the company’s collapse on Boeing stating it was “forced halt its development program due to Boeing-caused capital starvation,” court documents state.
In a counterclaim by Boeing, the aerospace giant argued the failure of Zunum rested on “the turbulence of Mr. Knapp’s and Dr. Kumar’s mismanagement” and a lack of a realistic business plan, the Seattle Times first reported.
Zunum’s claim further alleged that Boeing had stolen its trade secrets and used them to develop its own hybrid-electric aircraft.
Back in 2016 when Zunum first identified Boeing as a potential investor the two companies executed a proprietary information agreement under which Boeing agreed to keep Zunum’s information confidential and Zunum agreed to share proprietary documents with Boeing.
In November of 2020, a year after its collapse, Zunum sued Boeing in King County District Court bringing counts of:
- violating the Washington Uniform Trade Secrets Act (WUTSA);
- breach of their 2016 PIA;
- breach of their 2017 IRL;
- breach of the 2018 IRL;
- declaratory judgment of no obligation to repay the 2017 and 2018 NPAs;
- breach of the implied covenant of good faith and fair dealing;
- breach of fiduciary duty;
- tortious interference with a business expectancy;
- violation of the Washington Consumer Protection Act (“WCPA”) for an unlawful contract, combination, or conspiracy in restraint of trade;
- violation of the WCPA for unlawful monopolization;
- violation of the WCPA for unfair practices harmful to the public interest; and
- violation of the Securities Act of Washington (“SAW”).
Boeing, in turn, filed counterclaims of:
- breach of the 2017 NPA;
- breach of the 2018 NPA;
- declaratory judgment of no breach of the 2017 IRL;
- declaratory judgment of no breach of the 2018 IRL; and
- declaratory judgment of patent inventorship.
On May 30, 2020, a jury ruled in favor of Zunum and awarded $72 million in damages. However, U.S. District Judge Robart agreed with Boeing that Zunum dismissed key “evidentiary gaps” and that the argument is based on speculation.
In Robart’s ruling he wrote that the law allows the overturning of a jury verdict when “there is no legally sufficient evidentiary basis for a reasonable jury” to come to its verdict and that when “the jury could have relied only on speculation to reach its verdict.”
Zunum, dissatisfied with the ruling Wednesday, said it plans to appeal.
