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An image included in Wisk's court filing compares a Wisk prototype, left, to one later produced by Archer. Image: Wisk

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.” 

Go deeper

Exclusive: Texas nonprofit got massive border contract after hiring Biden official

Migrants attempting to enter the United States from Ciudad Juarez, Mexico. Photo: David Peinado/Xinhua via Getty Images

A Texas nonprofit that recently hired a Biden transition official got a contract worth as much as $530 million to help manage the influx of migrant children at the southern border, Axios has learned.

Why it matters: The contract is by far the largest ever awarded to Family Endeavors. It's potentially worth more than 12 times the group's most recently reported annual budget — a sign of the demand the new work will place on its operations.

2 hours ago - Politics & Policy

Exclusive: $1 million ad buy defends Georgia law to business critics

Illustration: Aïda Amer/Axios

A leading conservative group is targeting the business community with a seven-figure ad buy on CNBC and local TV defending Georgia's new voting law from its corporate critics, Axios has learned.

Why it matters: By focusing on the C-suite through a network it watches, Heritage Action for America is offering a rejoinder to some companies — even Major League Baseball — after they waded so prominently into politics.