Tesla’s Effort To Short-Circuit Nikola Lawsuit Fizzles As Patent Office Denies Door Argument

Nikola, an upstart maker of electric trucks powered by hydrogen fuel cells and batteries, may not prevail in its design infringement lawsuit against Elon Musk’s electric vehicle company but it can claim a small victory after the U.S. Patent and Trademark Office rejected an attempt by Tesla
TSLA
to invalidate Nikola’s door patent that’s a key to its legal fight. 

Nikola sued Tesla in May 2018 claiming the design of Musk’s Tesla Semi that he debuted in November 2017 was too similar to its Nikola One truck, infringing on design elements including a wraparound windshield, its cab shape and the design and utility of the side door, all of which the Phoenix-based startup has patented. It’s seeking $2 billion in damages. Tesla has said the suit has no merit, and filed a request with the Patent Trial and Appeal Board in September 2019 seeking a review to invalidate Nikola’s side door patent. That effort appears to have failed.

“Tesla loses bid to invalidate @nikolamotor patents in USPTO dispute. USPTO not only upheld Nikola semi truck important patents but refused Tesla’s ask to modify our patents,” Nikola founder and CEO Trevor Milton tweeted on Monday. “Two billion dollar lawsuit moving forward. We will defend our company’s IP no matter who it is.”

Tesla didn’t respond to a request for comment. 

The USPTO decision, which appears to have been made at the end of March based on filings posted by the federal agency on its website, doesn’t directly affect Nikola’s lawsuit that was filed in U.S. court for the Northern District of California. But if Tesla’s appeal to overturn the door utility patent succeeded, it would have weakened an element of the complaint that may prove more consequential in court than the overall design similarities. 

After considering the evidence and arguments presented in the Petition, we determine that Petitioner (Tesla) has not demonstrated a reasonable likelihood of success in proving that at least one claim of the ’084 patent is unpatentable,” the USPTO said in a March 27 assessment. As a result, it denied Tesla’s appeal.

“This is obviously favorable and we think it was decided correctly,” Nikola Chief Legal Officer Britton Worthen tells Forbes. He declined to comment on the broader lawsuit. 

Nikola’s plans to commercialize hydrogen-powered trucks that the company claims will be cheaper and cleaner to operate than diesel models helped it raise substantial funds in the past year and led to key industrial partnerships with companies including Bosch, Meritor, European truckmaker Iveco, South Korean solar panel maker Hanwha and Norway’s Nel, a developer of technology for making hydrogen from renewable electricity.

Hydrogen fuel cell vehicles, like battery-powered ones, have no harmful tailpipe exhaust and can help lower overall carbon emissions. They produce electricity onboard for propulsion, instead of storing it as batteries do. Nikola argues that hydrogen is a better options for long-haul trucking, owing to faster refueling time that’s comparable to diesel and gasoline, and without the added weight of multi-ton battery packs Musk’s Semi will require.

In March, Nikola announced a $3.3 billion merger with a publicly-traded company called VectoIQ, created by former General Motors
GM
vice chair Steve Girsky. The deal included a fresh $525 million capital raise from powerhouse investors including Fidelity and hedge fund ValueAct Capital, but it hasn’t yet closed. 

Nikola has racked up orders for about 14,000 electric trucks that represent $10 billion of future revenue–if they are all built and delivered. Its business model is based on seven-year leases to shippers, such as beermaker Anheuser-Busch, that include the cost of fuel. Initially, it will start delivery of shorter-range, battery-only trucks in 2021 to be built in Europe with partner Iveco. That will be followed by longer-range Nikola semis running on electricity produced from hydrogen that should arrive in late 2021.

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