TuSimple Inc.

On behalf of their clients (shareholders in TuSimple, Inc.), on December 22, 2023 Bottini & Bottini and its co-counsel Bernstein Litowitz Berger & Grossman LLP filed this case against several TuSimple directors, Hydron, and Nominal Defendant TuSimple for violations of the Defend Trade Secrets Act of 2016 (the “DTSA”), the California Uniform Trade Secrets Act (“CUTSA”), and civil conspiracy. The case is pending in the United States District Court for the Northern District of California. The allegations in the complaint, paint a distinct portrait of unauthorized disclosures of corporate trade secrets, shocking conflicts of interest, and close connections with the Chinese government and the Chinese Communist Party.

Founded in San Diego in 2015, TuSimple purports to “develop[] the world’s most-advanced self-driving technologies specifically designed for heavy-duty trucks.” The Company’s research and development efforts have focused on making long haul trucking safer, more reliable, efficient, and environmentally friendly. TuSimple pursued these benefits through automation, seeking to develop a “fully integrated software and hardware solution” to eventually produce the “world’s most advanced” autonomous operation of semi-trucks without the assistance, intervention, or even presence of a human driver. This is referred to as “L4 Technology” or “Level 4” autonomy, which in industry parlance means the highest amount of autonomy a vehicle can have.

TuSimple has spent an extraordinary amount of time, money, and effort to develop this technology, with research and development expenses since the beginning of 2015 topping $1 billion. These expenditures have started to pay dividends; in December 2021, the Company completed the first fully autonomous vehicle run on public roads in Arizona. This technology was the primary basis for TuSimple’s $8.5 billion valuation.

TuSimple was founded by two Chinese nationals. Seeking to fleece U.S. investors, they raised $1.3 billion in the Company's IPO and used that money to develop the Company's proprietary L4 technology.

After having raised the $1.3 billion from U.S. investors, Defendants Mo Chen and Xiaodai Hou then embarked on a concerted plan to unlawfully transfer TuSimple's intellectual property to Hydron, a company that Chen had also founded and which was also targeting the autonomous truck market.

Defendant Chen clandestinely formed Hydron, Inc., in March 2021 to compete in the same automated trucking space as TuSimple. Hydron designs, manufactures, and sells autonomous trucks, which makes Hydron a direct competitor of TuSimple. Hydron was founded in March 2021 by Defendant Chen, while he served as Executive Chairman of TuSimple’s board and was obligated under his employment agreement to refrain from “engag[ing] in any other employment, consulting or other business activity (whether full-time or part-time) that would create a conflict of interest with the TuSimple Group.” Hydron is believed to be tied to the Chinese Communist Party through Chao’s backing as the head of Sina. Chen remains Hydron’s CEO and is believed to be its controlling stockholder.

Defendants recruited TuSimple employees to work for Hydron. Chen and Hou recruited TuSimple employees, including senior executives, to work on Hydron-related matters while being compensated by TuSimple. In October 2022, the Company announced that the Board’s Audit Committee had conducted an investigation and found that:
[D]uring 2021 Company employees spent paid hours working on matters for Hydron Inc. (f/k/a Turing Auto), a company which the Company believes has significant operations in China, and that such paid hours had an estimated value of
less than $300,000. Mr. Mo Chen, one of our co-founders and former Executive Chairman, is a founder, director and chief executive officer of Hydron, and he has an equity interest in the Company of greater than 10%. This related party
transaction was not presented to, or approved by, the Audit Committee as required by the Company’s Code of Conduct.

Similarly, Defendant Hou was caught recruiting TuSimple employees to join Hydron. The Company announced this news on March 9, 2023, describing “an internal investigation into claims that Dr. Hou was approaching TuSimple employees about leaving the Company and joining a new venture being planned by Dr. Hou.” Defendants also transferred TuSimple’s proprietary intellectual property to Chen and Chao’s company — Hydron. Defendant Hou aided Chen and Hydron by expropriating TuSimple’s intellectual property without authorization — including trade secrets that would enable Hydron to replicate TuSimple’s technology — and transferring this intellectual property to Hydron. Chao, in turn, benefitted from these transfers as a stockholder in Hydron. When TuSimple disclosed that it had paid employees to work for Hydron (as discussed above), it also made an even more disturbing announcement. Specifically, on October 31, 2022, TuSimple reported that during 2022, Defendants caused the Company to “share[] confidential information with Hydron and its partners, which was not brought to the attention of the Audit Committee and Government Security Committee, and before entering into relevant non-disclosure and other cooperation agreements.” Shortly thereafter, TuSimple entered into a non-disclosure agreement with Hydron that “covered the information” at issue, but TuSimple conceded that it “does not know whether Hydron shared, or publicly disclosed, the information before entering into that agreement.” Id. TuSimple also announced that it “has not been able to determine the value, if any, of such information.”

Bottini & Bottini filed suit against Defendants to enjoin the IP misappropriation on December 22, 2023. Then, on January 5, 2024, B&B filed a Motion for a Temporary Restraining Order as well as an ex parte motion for an order shortening time on the motion. The Court granted that motion and set a hearing on the Motion for TRO for January 23, 2024.

On January 23, 2024, the Court granted Plaintiffs' Motion for a TRO. The TRO enjoins Defendants for a period of forty-five (45) days from:
1. Violating the National Security Agreement between TuSimple, Holdings, Inc.
and the Committee on Foreign Investment in the United States (“CFIUS”).
2. Selling, transferring, or disclosing TuSimple trade secrets to people or entities
outside the United States, including TuSimple’s China-based businesses.
3. Selling, transferring, or disclosing TuSimple trade secrets to Hydron, Inc.
4. Transferring outside of the United States any proceeds obtained from the sale,
transfer, or disclosure of TuSimple’s trade secrets.
5. Transferring outside of the United States any proceeds obtained from the sale,
transfer, or disclosure of TuSimple’s assets other than trade secrets.

A copy of the TRO Order and Plaintiffs' complaint is contained below.