Tesla Drops Lawsuit Against Former Head of Autopilot

April 19, 2017, 7:16 PM UTC
Photograph by Getty Images

Updated at 8:30 p.m. ET to show a notice of the settlement has been filed.

A lawsuit filed by Tesla against a startup founded by super stars of the self-driving car industry has been dropped after the two parties reached an agreement.

The agreement, which was signed Wednesday, covers three primary points: the recruitment of Tesla employees, an independent audit, and $100,000 paid by self-driving car startup Aurora Innovation LLC to Tesla. Aurora Innovation has said the $100,000 will be used to reimburse Tesla the cost of the independent audit.

“Today, less than three months after filing (and even before we were permitted to file a response) Tesla has withdrawn its claims, without damages, without attorney’s fees, and without any finding of wrongdoing,” Aurora Innovation said in an emailed statement. “We have even agreed to reimburse the cost of a future audit to demonstrate the integrity of Aurora’s intellectual property.”

Tesla, in a statement, confirmed that an agreement was reached. A notice of the settlement was filed Wednesday with the Santa Clara Superior Court.

Tesla filed a lawsuit in January against Sterling Anderson, its former director of Autopilot, as well as Chris Urmson, the previous director of the Google self-driving project, and their startup Aurora Innovation—a new venture the men launched with Drew Bagnell, the former head of the autonomy and perception team at Uber’s Advanced Technology Center in Pittsburgh.

The lawsuit filed in Santa Clara Superior Court alleged that Anderson violated his contract by attempting to recruit at least a dozen Tesla engineers, taking confidential and proprietary information, and doctoring and destroying evidence to “cover his tracks—all for the benefit of a competing venture he launched while still a Tesla employee.”

Anderson has denied those allegations.

Tesla has agreed to file for dismissal of litigation with prejudice, a legal designation that means the automaker cannot file another case on the same claim, according to a copy of the agreement which was reviewed by Fortune. Tesla could sue Aurora Innovation if the startup violates terms of the agreement.

Aurora Innovation has agreed to several terms, including that it will not recruit Tesla employees for one year, beginning February 1, 2017, and will name any former Tesla employees who have been hired by the startup.

Aurora Innovation has also agreed to provide the results of a forensic audit conducted by a third-party investigator that shows that no material Tesla confidential information exists on any of its personal computers or company systems and that there is no evidence any employees of Aurora Innovation used or have access to such information.

Tesla reached the agreement with Aurora Innovation before it examined the forensic audit, an Aurora Innovation spokesperson confirmed.

Under the agreement, Tesla has the right to hire a third-party investigator to conduct a second forensic audit of Anderson’s and the startup’s computers and cloud accounts at any time until February 1, 2018. Finally, Aurora Innovation has agreed to pay Tesla $100,000 to offset the costs of the litigation.

“Under the settlement, Mr. Anderson’s contractual obligations to Tesla will remain in place and will also be extended to Aurora, with additional specific protections being added to ensure there are no further violations,” according to a statement provided by a Tesla spokesperson. “The settlement also establishes a process to allow Tesla to recover all of the proprietary information that was taken from the company, and it provides for Aurora’s computer systems to be subject to ongoing audits to monitor for any improper retention or use of Tesla’s property.”

The lawsuit against Anderson and Aurora Innovation occurred while the startup was still in stealth. Tesla’s decision to withdraw its lawsuit and reach an agreement with the startup removes that looming legal challenge.

“Delivering on a lofty vision is hard; in late January 2017 it got harder,” the statement from Aurora Innovation said. “Tesla filed a meritless lawsuit against us, supported by an aggressive public relations effort. Disappointed, but determined to defend our integrity, we immediately commissioned a comprehensive forensics audit that proved what we already knew to be true: (1) no material Tesla confidential information exists on our personal computers or company systems, and (2) there is no evidence that anyone at Aurora has used or has access to Tesla confidential information.”