Augmented reality rival claims Magic Leap's lawsuit is baseless

Augmented reality startup Nreal is asking a court to throw out a lawsuit from Magic Leap, saying the heavily touted startup's suit amounts to sour grapes rather than a breach of contract.

Why it matters: The virtual reality and augmented reality markets are taking longer to develop, prompting companies to compete for their slice of a smaller-than-anticipated pie.

• In June, Magic Leap sued Nreal and CEO Chi Xu, who worked at Magic Leap for about a year, from mid-2015 to mid-2016. The suit alleges that Xu and Nreal are exploiting "Magic Leap's confidential and proprietary information to unfairly compete in the development of wearable spatial computing glasses and other related technology."
• In its motion to dismiss, Nreal said "rather than focus on developing a superior product, Magic Leap has resorted to filing lawsuits to slow down new entrants in the AR market."
• Magic Leap was not immediately available for comment.

The big picture: Despite tons of buzz and billions of dollars in funding, Magic Leap has struggled to get its product to market, and recently announced layoffs.

• It's also had quite a bit of litigation for a young company, including a prior trade secret suit against an ex-employee, a legal fight with its former head of security, and a now-settled sex discrimination case with another former employee.

Go deeper:

• Magic Leap raises $280 million in latest funding round
• Magic Leap launches its first product