Dogfight erupts between air taxi startups over trade secrets

Archer Aviation, an air taxi startup planning to go public soon through a SPAC merger, is now facing a federal investigation and accusations that the company stole trade secrets from a key rival.

Why it matters: The dispute between Archer and Wisk Aero, a joint venture of Boeing and Google co-founder Larry Page's Kitty Hawk, underscores the intense competition to dominate the still-unproven market for flying cars.

• It also has the potential to impact Archer's planned merger with blank check-company Atlas Crest Investment Corp.

Driving the news: Shortly after Wisk filed a federal lawsuit Tuesday accusing Archer of poaching employees who had stolen trade secrets, Archer disclosed that it is cooperating with a government investigation into the matter.

• “Archer has placed an employee on paid administrative leave in connection with a government investigation and a search warrant issued to the employee, which we believe are focused on conduct prior to the employee joining the company," Archer said in a statement.
• "Archer and three other Archer employees with whom the individual worked also have received subpoenas relating to this investigation, and all are fully cooperating with the authorities.”

Between the lines: Wisk outlined its allegations in a blog post Tuesday, describing what it calls "significant and troubling evidence indicating that Archer has been using Wisk’s proprietary intellectual property without our permission."

• The lawsuit, filed in U.S. District Court for the Northern District of California, contends that two engineers stole files before departing Wisk and joining Archer.
• A third engineer allegedly wiped the history of his activities from his computer before leaving for Archer, the suit contends.

• Wisk, which has been working on electric vertical takeoff and landing aircraft (eVTOLs) for 10 years, said Archer, a recent newcomer backed by Stellantis and United Airlines, is "seeking to gain a foothold in this industry without respecting the rules of fair competition."

The other side: “It’s regrettable that Wisk would engage in litigation in an attempt to deflect from the business issues that have caused several of its employees to depart," Archer said in a statement.

• "The plaintiff raised these matters over a year ago, and after looking into them thoroughly, we have no reason to believe any proprietary Wisk technology ever made its way to Archer.  We intend to defend ourselves vigorously.”