Signage is displayed at the entrance of the new Tesla Inc. showroom in New York, U.S. (Photographer: Mark Kauzlarich/Bloomberg)

Tesla Sued for $2 Billion by Startup Over Semi Truck Design

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(Bloomberg) -- Nikola Corp., a hydrogen-powered truck startup, is suing Tesla Inc. for $2 billion, claiming the Elon Musk-led company intentionally copied patented design features of its tractor trailers.

The complaint, filed on Tuesday in Arizona, claimed that Tesla copied Nikola designs with the electric semi truck Musk unveiled in November. The closely held, four-year-old startup alleges similarities in the wraparound windshields, doors and look of the cab of its Nikola One hydrogen-electric hybrid truck revealed in 2016. The case pits two companies both named after the inventor and futurist Nikola Tesla, best known for developing alternating current in electrical systems.

Nikola said it sent a letter to Tesla after becoming aware of the design similarities, demanding it not unveil its semi until the infringement had been resolved. The Salt Lake City, Utah-based startup, which is requesting a jury trial, said it received no response. Nikola claims the similarities have created confusion in the marketplace and hurt its ability to attract partners and investors.

Tesla is accused of copying a wrap windshield that gives drivers an unobstructed view of the road, as well as the Nikola One’s fuselage and a side door. Nikola said its windshield design “is identifiable from a distance.”

A Tesla spokeswoman denied the allegations in an emailed statement and said there’s no merit to the lawsuit.

Reservations for the Nikola One, slated to begin production in 2020, are currently worth more than $6.3 billion, according to the complaint. Tesla plans to start production of its semi next year.

Design Patent Cases

Design patents are granted for aesthetic inventions, rather than ones that have a specific function. They last 15 years from the date of issuance and are considered easier cases to prove than ones over technical parts or functions, said lawyer Rob Katz of Banner & Witcoff in Washington, who specializes in design patents and isn’t involved in the case. Courts will consider the earlier known designs and overall look of the patented design.

It’s rare for two automakers to sue each other over designs, Katz said. Most suits by automakers are efforts to curb the market for replacement parts, or allegations that Chinese manufacturers are producing copies of well-known brands to sell in their home market.

Nikola and Tesla both need unique designs to differentiate themselves in an established market, Katz said.

“Both want to enter this market and say ‘We’re the cool one,’” he said. “Nikola thinks that Tesla got too close.”

Tesla shares rose 0.2 percent to $300.43 as of 11:55 a.m. in New York.

The case is Nikola Corp. v. Tesla, Inc., 18-01344, U.S. District Court for the District of Arizona (Phoenix).

©2018 Bloomberg L.P.

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