Below the Sky /
7 June 2024NewsTrade secretsMuireann Bolger

Virgin Galactic moves $46m countersuit in Boeing ‘mothership’ dispute

Space tourism company removes countersuit against Boeing citing unlawful claims to proprietary information from California | Boeing alleged secrets theft and outstanding fees for work carried out on Virgin’s ‘mothership’.

Virgin Galactic has moved its complaint against Boeing alleging breach of contract and unlawful claims to trade secrets in the firms’ dispute over a space-tourism ‘mothership’ from California to the Eastern district of Virginia.

The space tourism company lodged a filing in the US District Court for the Central District of California confirming that it would drop the case “in its entirety” at the venue following a surge in litigation between the pair in recent months.

$25m ‘outstanding’

In March, Boeing sued Virgin Galactic over the alleged theft of proprietary information during a partnership aimed at the creation of a new ‘mothership’ to aid Virgin’s space tourism offering, and outstanding fees of $25 million for work on the project.

Less than a month later, Virgin Galactic countersued over Boeing's alleged “shoddy and incomplete work” on the aircraft, arguing that it was owed damages of at least "the difference between the $45.6 million paid by Virgin Galactic to Boeing and the substantially lower actual value of Boeing's performance”.

The origins of the dispute emerged in 2022 when Virgin Galactic contracted Boeing unit Aurora to design a new jet carrier and launch vehicle for its space tourism business, founded by Richard Branson 20 years ago.

Boeing contended that this ‘mothership’ was intended to be a crucial improvement on Virgin Galactic’s existing model to enable it to fly multiple commercial space flights a day.

Inadvertent secrets sharing

However, the collaboration soured when Aurora accidentally disclosed mathematical equations used to design and model aircraft to Virgin Galactic and conditionally disclosed a set of test data.

According to Boeing, these documents contained trade secrets and required Virgin Galactic to return or destroy them if requested to do so.

In May 2023, Aurora performed the preliminary work but then told the company that the production of a new mothership would take longer, and be more expensive, than originally envisaged.

Contractual obligations

Claiming that this “was not the answer Virgin Galactic wanted”, Boeing said that since then work on the project had stalled and that Virgin Galactic had refused to pay Aurora for its work to date.

Further, Virgin then “refused to honour its contractual obligation to destroy the two sets of trade secrets at issue” and maintained that it was entitled to use the information in further development efforts, including with a new partner, according to Boeing.

The airspace giant had argued that Virgin’s announcement that it planned to release a new mothership in 2027 “demonstrates that if it has not yet misappropriated the equations by use or disclosure, it will do so imminently”.

The case is Virgin Galactic v The Boeing Company and Aurora Flight Sciences

Brett Williamson, Brian Cook and Jaston Burri of O’Melveny & Myers represent Virgin Galactic.

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Trade secrets
25 March 2024   Space tourism company accused of refusing to destroy proprietary documents after business relationship ended | Boeing claims Virgin Galactic owes $25m for work on new jet carrier craft.