Flying-Taxi SPAC Faces U.S. Probe Over Secrets, Rival Says

(Bloomberg) -- Archer Aviation Inc., a Silicon Valley startup developing a flying taxi business, is under criminal investigation for allegedly stealing trade secrets from rival Wisk Aero LLC, a venture backed by Boeing Co. and Google co-founder Larry Page’s Kitty Hawk Corp., court records show.

In documents filed Wednesday as part of its civil lawsuit against Archer, Wisk said it reported the alleged theft in June 2020 to the Santa Clara County district attorney, who referred the matter to the Federal Bureau of Investigation. Wisk also said it supplied documents to U.S. Department of Justice prosecutors in response to a grand jury subpoena.

Archer and Wisk compete in the market for so-called electric vertical takeoff and landing aircraft, or eVTOLs. Archer’s valuation soared in April 2020 to $3.8 billion through a merger announced in February with a special purpose acquisition company, or SPAC, orchestrated by investment banker Ken Moelis. Also involved with Archer is United Airlines Holdings Inc.

A spokesperson for Archer had no immediate comment on Wednesday’s court filing. A representative of Moelis & Co. declined to comment.

Wisk asked a federal judge in San Francisco on Wednesday to issue a preliminary injunction prohibiting Archer from using or disclosing the trade secrets, and to compel expedited discovery in the civil case. Wisk alleges the trade secrets include designs for electric-powered aircraft, components and systems, as well as facility inventory and test data.

‘Government Investigation’

In April, Archer said it had “placed an employee on paid administrative leave in connection with a government investigation and a search warrant issued to the employee.” A spokesman said Archer and three other employees had received related subpoenas, and “all are fully cooperating with the authorities.”

A Wisk spokesperson said in a statement on Wednesday that the company “will continue to cooperate with the FBI and U.S. Department of Justice on their criminal investigation into Archer relating to the theft and use of Wisk’s intellectual property.”

Developing aircraft for city use is being driven by urbanization and the need for innovative mobility options. An October 2020 report by BloombergNEF on the market for electric aviation said about 5,000 eVTOLs would be needed to move about 100,000 passengers in the U.S. alone, where some city commutes could be replaced by flying taxis. Uber Technologies Inc. plans to offer aerial ridesharing services by 2023. BloombergNEF was tracking 186 companies developing eVTOLs globally.

“The theft of our highly confidential files, the virtual copy of Wisk’s design from a confidential patent application, and Archer’s startlingly short operational history make clear that Archer’s program is built on Wisk’s intellectual property, as we outlined in our complaint,” Wisk said in its court filing.

The case is Wisk Aero LLC v. Archer Aviation Inc., 5:21-cv-2450, U.S. District Court, Northern District of California (San Jose)

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