Judge Overturns $72 Million Award in Boeing-Zunum Aero Trade Secrets Case

In a significant legal development, a US federal judge has overturned a jury’s decision that initially awarded $72 million to Zunum Aero, a now-dormant electric aviation startup, in its trade secrets infringement lawsuit against Boeing. This reversal comes from Judge James L. Robart of the US District Court for the Western District of Washington, who ruled on August 14, 2024, that there was no evidence Boeing misused Zunum Aero’s trade secrets.

Zunum Aero had accused Boeing of leveraging its intellectual property to further its own hybrid-electric aircraft project while allegedly blocking Zunum from securing necessary funding. The dispute began in August 2016 when Zunum sought financial support from Boeing. The two companies entered into a Proprietary Information Agreement (PIA), under which Boeing agreed to keep Zunum’s confidential information secure in exchange for access to proprietary documents. Boeing, impressed by Zunum’s proposals, provided two loans totaling $9 million—$5 million in March 2017 and $4 million in May 2018—along with investment rights letters for further proprietary reviews.

Despite these loans, Zunum struggled to attract additional investment from major aerospace players like United Technologies Aerospace Systems (UTAS) and Safran S.A. With limited funding options and Boeing’s refusal to provide further investment, Zunum faced severe financial difficulties. By October 2018, the startup had to furlough employees and cease operations, existing only “functionally as a non-operating entity,” according to court records.

Zunum’s founders filed a lawsuit in King County Superior Court, claiming Boeing’s actions led to their company’s downfall. Boeing responded with a counterclaim, asserting that it supported Zunum but faced issues with the startup’s management and unrealistic business plans, including an inflated valuation exceeding $100 million.

The case went to trial in May 2024, with the scope reduced to three primary issues: trade secret misappropriation, breach of agreements, and interference with potential business deals. The jury awarded Zunum $67.08 million for trade secret misappropriation and breach of contract, $14.15 million for unjust enrichment, and $11.56 million for tortious interference. However, the jury also found that Boeing did not breach the 2016 PIA or interfere with Zunum’s dealings with UTAS and that Zunum had failed to mitigate $20.82 million in damages.

Following a motion by Boeing for judgment as a matter of law, Judge Robart ruled in Boeing’s favor, dismissing all of Zunum’s claims. The judge found Zunum’s evidence insufficient and speculative, ruling that Boeing did not misuse Zunum’s intellectual property. The court granted Boeing’s motion, vacated the previous judgment, and entered a new judgment in favor of Boeing, with Zunum’s post-trial relief motion denied as moot.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com