A federal court jury in Seattle on Thursday ruled against Boeing in a lawsuit brought by failed electric airplane startup Zunum and awarded $81 million in damages — which the judge has the option to triple.
Zunum alleged that Boeing, while ostensibly investing seed money to get the startup off the ground, stole Zunum’s technology and actively undermined its attempts to build a business.
It accused Boeing of “a targeted and coordinated campaign” to gain access to
its “business plan, market and technological analysis, and other trade secrets and proprietary information,” then using that to develop its own hybrid-electric plane design.
Zunum also accused Boeing of sabotaging its efforts to attract funding from aerospace suppliers Safran and United Technologies.
The jury found that Boeing had misappropriated Zunum’s trade secrets and breached its contract with the startup.
It also found that Boeing’s actions were “willful and malicious,” which opens the door for the judge to award triple damages plus legal costs in a case that has already been running for more than four years.
Boeing in a statement said it “respectfully disagrees with the jury’s verdict, which is not supported by the law or the facts. Boeing will pursue all available challenges to the judgment.”
Another part of the ruling awarded Zunum a further $12 million for Boeing’s alleged interference with Zunum’s relationship with Safran. And finally, the jury ruled the final award could be reduced by $20 million because Zunum failed to take action to mitigate the damage.
Taking all those amounts into consideration, U.S. District Judge James Robart could award Zunum a total of either $72 million or $235 million depending on his decision over tripling the basic damages.
In 2017, Zunum, founded by Ashish Kumar and Matt Knapp, had won funding from both Boeing and the state of Washington for an ambitious plan to design and build a nine-seat hybrid-electric plane for city-to-city short-hop flights.
At its height, Zunum employed 23 full-time employees at its Bothell headquarters, an additional 13 at Zunum’s electrical power facility in Elgin, Ill., near Chicago, and 10 in Indianapolis, with more than 50 additional part-time employees at those sites.
It was developing the plane’s ducted-fan propulsion system in a partnership with Purdue Research Center.
But Zunum overpromised and failed to deliver. It never produced an airplane. It ran out of cash and collapsed in 2019.
By then it had spent about $282,000 of a state grant and another $15 million from investors, including Boeing’s Horizon X venture-capital division and a venture-capital unit of New York-based airline JetBlue Airways.
In its response to the lawsuit, Boeing’s lawyers wrote that the story of Zunum’s demise was simply that of a typical failed startup.
“An ambitious startup’s reach exceeded its grasp, and investors fled,” Boeing’s filing states. “What preliminarily looked like an interesting investment prospect that promised a new hybrid electric or electric aircraft turned into a loss for Boeing.”
Rather than developing its own hybrid-electric design, Boeing said it developed only a “conceptual mock-up — a tool that Boeing used to evaluate the feasibility of the type of aircraft that Zunum hoped to build.”
The conclusion it drew from that mock-up was that “electric aircraft likely would not be economically viable for commercial passenger flights anytime soon.”
Boeing said other potential Zunum investors drew the same conclusion. It characterized the lawsuit as “Zunum’s latest attempt to extract more money from Boeing.”
Boeing’s Aurora Flight Sciences unit is doing research into small electric and hybrid-electric aircraft prototypes though the company has no firm proposal to develop such an airplane.
The jury having sided with Zunum, Judge Robart will now decide the precise damages award and then Boeing will appeal.
The final outcome could still be some years away.
Correction: A previous version of this story cited inaccurate figures for the number of employees at the various Zunum sites and the amount of investor money spent. These figures were corrected on June 5.
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