With the electric vehicle (EV) industry ramping up with new battery technology, a situation has arisen with Tesla. The company has filed a federal lawsuit accusing former supplier Matthews International of stealing trade secrets related to its battery manufacturing technology.

In the complaint filed in U.S. District Court for Northern District of California, Tesla alleges that Matthews misused confidential information about Tesla’s dry electrode battery coating process after being hired in 2019 to supply manufacturing equipment according to Reuters.

Tesla also claims Matthews improperly incorporated its trade secrets into patent applications, attempting to claim ownership over Tesla’s innovations. The lawsuit states that Matthews “unambiguously attempted to claim for itself both ownership and inventorship of Tesla’s confidential trade secrets” through these patent filings.

Moreover, Tesla further claims that Matthews disclosed the company’s confidential information to competitors according to the lawsuit, where it accuses Matthews of “selling equipment for dry-electrode battery manufacturing to Tesla competitors, where said equipment embodied Tesla’s confidential trade secrets.”

As a result of claims in regards to sharing Tesla’s proprietary innovations with others, the lawsuit alleges that Matthews caused “direct and serious harm” to Tesla’s business. In consequence, the company is requesting the court to block Matthews from misusing its trade secrets and hand over its patent applications while seeking damages that it estimates will exceed $1 billion.

In response, Matthews has denied Tesla’s allegations, claiming the lawsuit is simply Tesla’s latest attempt to improperly acquire Matthews’ valuable intellectual property related to dry battery electrode technology.

“Tesla’s lawsuit is simply a new tactic in their ongoing efforts to bully Matthews and improperly take Matthews’ valuable intellectual property,” a Matthews spokesperson stated.

Furthermore, Matthews responsively remarked that the situation is actually the opposite of what Tesla claims stating, “Contrary to the allegations in the complaint, Tesla’s lawsuit is simply a new tactic in their ongoing efforts to bully Matthews and improperly take Matthews’ valuable intellectual property.”

Since 2019, Matthews began supplying equipment used by Tesla to refine its dry-electrode manufacturing process, with the goal of making lighter batteries with solid storage capacity. As part of their agreement, Matthews agreed to keep confidential information private.

If Tesla’s allegations are true, Matthews will have to pay damages according to the court’s judgement. If Matthews’s allegations are true, Tesla would see the same situational outcome with Matthews also stating that it may “may pursue legal remedies.”

As the dispute highlights the intense technology race in the EV industry as automakers like Tesla race to develop more powerful and efficient batteries, situations like this may appear more often. While both sides exchange accusations of IP theft, the case will likely come down to whether Matthews violated confidentiality agreements related to the shared technology.

As the EV industry waits for further details to emerge, the lawsuit may result in major implications for battery innovation in the rapidly growing EV market.

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