Scale AI has sued its former staffer for espionage

Artificial intelligence startup, Scale AI on Wednesday filed a lawsuit against its former employee and his present employer over corporate espionage in the sector.

The company has already experienced a turbulent summer after social media giant Meta Platforms took up a multimillion dollar stake in the company and hiring its CEO Alexandr Wang together with other top employees. The startup then also laid off 14% of its staff.

Scale AI allege Ling stole 100 confidential documents

Reports indicate that Scale AI is suing ex-staffer Eugene Ling and his current employer Mercor, which is also one of Scale AI’s top rivals. Scale AI, which has provided training data to spur many of the sector’s leading AI models is alleging that Ling, who was the head of engagement management at the company stole more than 100 confidential documents from the company.

The documents contained proprietary information and company strategies for managing its customers.

Now, Scale is requesting that the US District Court for the Northern District of California grant the firm both legal costs and damages in addition to barring Mercor from using its proprietary information. The company also wants its documents returned.

“Scale has become the industry leader on the strength of our ideas, innovation, and execution,” company spokesperson Joe Osborne told The Verge.

“We won’t allow anyone to take unlawful shortcuts at the expense of our business.”

Osborne.

Other allegations against Ling are that a significant number of the stolen documents were related to one of the company’s crucial customers and Ling downloaded them on the day he met with Mercor’s CEO.

Additionally, Ling tried to lure the customer to jump ship and join Mercor while he was still at Scale. According to the lawsuit, Ling approached an employee of the said customer and allegedly said:

“I’m staying within the data space and I’m actually really excited about [how] this new company can support you.”

The lawsuit further alleges that the employee asked if Ling was referring to Mercor, to which he responded: “Are you working with Mercor already?”

It is also alleged that Ling and the employee planned to further deliberate on the matter on a call.

Case surfaces amid a tight AI race between Scale AI and peers

According to correspondence cited in the lawsuit, Ling went on to have conversations with other researchers at the customer in addition to trying to recruit several Scale AI staffers to join Mercor.

As per report by The Verge, this case has surfaced at a time the AI industry is facing a continuous shake-ups characterized by mergers and acquisitions, eye-popping pay packages, and massive exodus of staff from one AI firm to the other.

With these movements, naturally the movement of sensitive information from one firm to the other becomes inevitable.

Already AI firms like OpenAI, and peers –Anthropic, Meta, Google, and Microsoft are always trying to outdo each other with new features, new tools, computing resources and funding to stay ahead of the intense AI race.

Now, Scale AI’s case is not unique to the startup alone. Last week, xAI filed a lawsuit in California federal court against one of its former employees known as Xuechen Li on allegations that Li ” betrayed the trust and faith xAI had placed in him by willfully and maliciously copying xAI Confidential Information … and trade secrets from his xAI-issued laptop.”

The lawsuit also alleges that Li sold about $7 million of his company stock, then uploaded the “trade secrets” to his personal device and resigned for a new position at OpenAI.

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