If Archer Aviation (ACHR +9.76%) and Joby Aviation (JOBY +21.20%) were a hot celebrity couple instead of a couple of hot aviation stocks, the tabloids would be ablaze with the news.
In November, Joby sued its fellow maker of electric vertical takeoff and landing (eVTOL) aircraft, alleging corporate espionage. Archer's chief legal and strategy officer released a statement refuting the claim, but the company didn't officially respond in court... until now.
On Monday, Archer hit back at Joby with a countersuit accusing Joby of defrauding the U.S. government and its competitors and of having secret ties to the Chinese government.
Espionage? Secret government contacts? Why is this starting to sound like a James Bond movie? Here's what's really going on and how it could affect the companies' stock prices.
Image source: Getty Images.
He said, she said
Despite all the sensational-sounding details, the fact that these two rival companies are suing one another isn't particularly noteworthy. Lawsuits -- especially ones over patents, trade secrets, and similar intellectual property issues -- are pretty commonplace in the U.S.
Still, Joby's lawsuit against Archer is more than a simple patent infringement case. It alleges that a former Joby employee, George Kivork, who was hired away from Joby by Archer, stole a "cache of highly valuable Joby filings containing confidential partnerships terms, business and regulatory strategies, infrastructure strategies for vertiports and airport access, and technical information about Joby's aircraft and operations" before resigning two days later.
Joby said it learned about the theft when Archer shared detailed and confidential terms from its exclusive agreement with one of its partners with the partner. In its public response, Archer characterized Kivork as "a non-technical employee" who held only a "business development role" at Archer and dismissed Joby's claims as having "no evidence" behind them.
Image source: Getty Images.
A surprise twist
Archer's official countersuit contained a bombshell claim of its own. In it, Archer alleges that Joby used a Chinese subsidiary to source critical aircraft components from Chinese suppliers who had Chinese government support and fraudulently misclassified the materials as consumer goods like hair clips and socks to avoid paying tariffs on them and to pass its products off as American-made.
Then it was Joby attorney Alex Spiro's turn to be dismissive, saying in a statement, "Archer's constant legal issues and flailing business operations have left it no choice but to resort to invented nonsensical theories."
Image source: Getty Images.
A thriller with no thrills
The market has yawned at both lawsuits.
In November, the Joby lawsuit barely made a dent in Archer's share price. It slid 8% (and dragged Joby's down by 4.6%), but shares of both companies fully rebounded in less than a week and went on to rise by double-digit percentages in early December.
NYSE: ACHR
Key Data Points
This time around, the news of Archer's countersuit was overshadowed by a major announcement that was released on the same day as the counterclaim was filed. The U.S. Department of Transportation revealed both Joby and Archer were selected to participate in multiple projects under the Advanced Air Mobility and Electric Vertical Takeoff and Landing Integration Pilot Program (eIPP), which sent both stocks upward.
NYSE: JOBY
Key Data Points
Ultimately, it's unlikely these claims and counterclaims will amount to much in court, unless there is some rock-solid, irrefutable evidence of corporate espionage or tariff avoidance that somehow hasn't yet materialized. The circumstances of the corporate espionage allegation (a Joby partner told the company that Archer told them about information that supposedly was known to an Archer employee who had worked at Joby in the past) sound all but impossible to conclusively prove. Similarly, proving that past shipments to Joby from China secretly contained aircraft parts would also be a heavy lift without additional evidence.
That means they're unlikely to have a major impact on either company's share price, especially given the glacial pace of lawsuits in the U.S. these days. What's more important (and will probably occur much sooner) is FAA commercial approval for one or both of the companies' eVTOLs. That's what Archer and Joby investors should be focused on. Save the spy thrillers for the movies.
