Magic Leap Stumbles in Secrets Fight With China-Bound Engineer
Magic Leap Stumbles in Secrets Fight With China-Bound Engineer
(Bloomberg) -- Magic Leap Inc., the maker of augmented-reality headsets backed by Alphabet Inc. and Alibaba Group Holding Ltd., didn’t get far with a lawsuit accusing a former engineer of stealing its technology to launch a rival business in China.
A federal judge in San Jose, California, on Wednesday granted a request by Chi Xu, who left Magic Leap in 2016, to throw out the case. She found that Magic Leap didn’t adequately allege that Xu exploited proprietary information to build his own mixed-reality glasses, which project digital objects onto the real world. But U.S. District Judge Lucy Koh gave Magic Leap a chance to revise its complaint to address her concerns.
The case was filed last June amid growing tension between the U.S. and China over complaints by American firms of intellectual property theft by Chinese companies.
The ruling is the latest setback for the Florida-based startup once seen as the future of at-home augmented reality. The company laid off about 1,000 employees, or half of its workforce, and is stepping away from its consumer business to shift its focus to enterprise products, Bloomberg reported in April.
Magic Leap’s complaint “is devoid of any allegation as to what specific ‘confidential information’” the startup believes Xu used to start his Beijing-based company Nreal or to create and promote its product called Nreal Light, Koh said.
The judge gave Magic Leap 30 days to amend its complaint that accuses breach of contract, fraud and unfair competition.
Nreal, Xu and Magic Leap didn’t immediately respond to requests for comment.
The case is Magic Leap Inc. v. Xu, 19-cv-03445, U.S. District Court, Northern District of California (San Francisco).
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