Thoughts on Solar by Run on Sun's Founder & CEO, Jim Jenal

Just in time for Valentine’s Day, solar powerhouse SunPower sued SolarCity and five of its employees in federal court on Februrary 13.  Alleging violations of the federal Computer Fraud and Abuse Act as well as various state law claims including theft of trade secrets, the Complaint is less of a Valentine and more of an existential threat to SolarCity’s commercial solar division.

The suit alleges that the five employees - all of whom previously worked for SunPower before being employed by SolarCity - illegally accessed SunPower computers and stole tens of thousands of computer files.  Indeed, it appears from the documents filed with the court, that SunPower has some fairly extensive forensic evidence of the theft, noting the specific types of USB drives that were used to acquire the stolen files and where and when the downloading occurred.  Assuming that evidence holds up to review by computer experts, it could be pretty damning against the five former employees.

Far less clear, however, is whether there is actually any case to be made against SolarCity.  Having lititgated a number of corporate espionage cases (in one of my earlier lifetimes), I know that it can be difficult to connect the dots between the illicit conduct of the former employees and their new employer.  It is the classic question of “What did SolarCity know, and when did it know it?“  Interestingly, SolarCity put out a statement regarding the suit, but did not expressly deny any of the allegations. Instead, it simply noted that:

SolarCity upholds high standards in operational integrity for itself and its employees. SolarCity takes trade secret issues very seriously and we will ensure that we act in accordance with the law.

(Curiously, that statement does not appear on the SolarCity website’s list of press releases, but you can find the entirety of the statement here.)

It is unfortunate to see two well-known solar companies involved in such a dispute, but it was probably inevitable.  Indeed, the history of Silicon Valley is replete with similar lawsuits and as the financial stakes in the solar industry increase, the potential for such actions will also increase.

Of course, the public is unlikely to ever learn the whole truth behind this story - as common as such lawsuits are, public trials are a rarity.  Factor in SolarCity’s rumored desire to go forward with an IPO this year and the likelihood of a settlement increases dramatically.

We will keep you posted as new developments unfold.