IP Law Daily, TRADE SECRETS—N.D. Cal.: Taken to extremity: Tesla-requested preliminary injunction over robotics hand technology is denied as overbroad, (Nov 17, 2025)

By Matthew Hersh, J.D.

The electric vehicle and robotics company sought to shut down a competitor that allegedly purloined its trade secrets.

Tesla was not entitled to a preliminary injunction against a competitor that allegedly misappropriated trade secrets relating to the hand sensors of the company’s new autonomous humanoid robot, the federal court for San Jose, California has held. The court, while allowing that Tesla had shown serious questions going to the merits of its case, found that Tesla had not shown that it was likely to ultimately prevail in the action and had sought an injunction so broad that it would basically order its competitor “to go dark” while the litigation proceeded (Tesla, Inc. v. Proception, Inc., No. 5:25-cv-04963-SVK (N.D. Cal. Nov. 14, 2025)).

The request for the preliminary injunction arises from a lawsuit that Tesla brought against one of its former employees and the company he later founded. The lawsuit alleges that the former employee, Zhongji Li, downloaded trade secrets relating to Tesla’s autonomous humanoid project named Optimus. The former employee, the lawsuit claims, then formed a company called Proception and used these trade secrets to develop and market a prototype of a robotic hand six months later.

Tesla moved for a preliminary injunction, leading to this opinion.

Likelihood of prevailing. The court found that Tesla had raised serious questions going to the merits of its lawsuit—but it had not shown that it was likely to prevail. Thus, the fate of the preliminary injunction would turn on other factors.

The court first found that Tesla had identified the trade secrets at issue with sufficient particularity at this stage of the proceedings. Tesla brought its lawsuit under both the federal Defend Trade Secrets Act as well as the California Uniform Trade Secrets Act. Critically, the court noted, the California act requires a plaintiff in a trade secrets case to serve on the defendant, at the outset of the case, a designation of its trade secrets with “reasonable particularity.” Helpfully for Tesla, the court noted, the Ninth Circuit held in August that the federal and California standards were not coextensive—that is, Tesla could move forward at this stage even if it could only identify the trade secrets with the “sufficient particularity” required by the federal act. Under that standard, the court found, Tesla easily made the grade, as it identified “eight detailed categories” of highly sensitive Optimus documents at issue in the case—including among other things engineering specifications, schematics, product roadmaps, strategy documents, and source code. Tesla would easily survive this first threshold.

But while Tesla adequately identified the trade secrets at issue, it failed to demonstrate that the former employee actually misappropriated those secrets. Prior to his departure, Tesla alleged, the former employee accessed—and in some cases, downloaded to his own Tesla workstation—a raft of information about the Optimus robotic hand project. Tesla argued that the former employee had no legitimate need for this information because, at the time he accessed these files, he was no longer working on robotic hands at Tesla and had since been assigned to a team working on the robot’s chest. But the former employee provided “two plausible and reasonable explanations” for the access events, the court found—first, that he had deep knowledge of the hand-sensor technology and was fielding questions from colleagues who were working on the Optimus hand, and second, that he was also working on the Optimus foot sensor, for which some of the technology overlapped. Because Tesla did not adequately rebut these explanations, the court noted, it had shown only “serious questions” about the former employee’s conduct, but not a likelihood of ultimately prevailing.

Nor did it matter that the former employee actually retained some of these documents after leaving Tesla, the court found. Tesla was only able to identify 21 files that the employee actually took with him to his new startup. Some of them were merely image and thumbnail caches files, the court noted—documents that can easily be generated in the background even if the file they relate to is never actually downloaded or viewed. Another document, created by a third party but allegedly containing Tesla’s trade secrets, raised more of a red flag—but here, too, the court found, there were “at best serious questions going to whether this document contained Tesla’s confidential information and whether Li’s downloading of the document was improper.”

Finally, the court also found that Tesla did not adequately prove that the former employee actually used these 21 files to his advantage at his new company. Tesla argued that the “implausibly fast” timeline of the development of Proception’s hand, along with the similarity of the Proception hand to the Optimus hand, supported an inference that the former employee used those documents at Proception. But while Tesla designed a hand as part of a fulsome humanoid robot using customized, bespoke parts, the court noted, the former employee and his new company “developed only a prototype hand only and used many off-the-shelf components to speed development.” Moreover, the court noted, expert testimony would be required in order to determine whether the two hands were “significantly different or overlapping.” Weighing both the timeline and lack of similarity evidence, the court noted, Tesla had once again shown “serious questions, but not a likelihood of success” as to whether the former employee used any Tesla trade secrets at his new company.

Irreparable harm. The court offered a mixed ruling on whether Tesla showed irreparable harm from the former employee’s conduct. On the one hand, the court noted, Tesla had failed to show any likelihood that its trade secrets had actually been used to develop Proception’s robotic hand. However, assuming Tesla ultimately prevailed on its claims of misappropriation, the court noted, it had adequately shown that irreparable harm would follow because of its loss of “competitive standing” with Proception. “While loss of competitive standing may not always be irreparable,” the court noted, “in the case of a nascent industry—such as the nascent self-driving car industry in Waymo or autonomous humanoid robots in this case—it would likely be futile to attempt, after the fact, to estimate the monetary value of injury suffered from the loss of Tesla’s competitive position” in the industry. Thus, Tesla satisfied the irreparable harm burden.

Balance of the equities. Because Tesla showed only the existence of serious questions going to the merits, as opposed to a likelihood of prevailing, the court noted, the balance of equities would have to be the determining factor. Here, the court found, the former employee and his startup company had the better argument. The problem for Tesla, the court found, was that Tesla’s requested preliminary injunction was far too broad. Indeed, Tesla did not just ask the former employee to cease using or disclosing any of the trade secrets he might know—rather, the court noted, Tesla sought any order “halting [Proception] from shipping any robotics product or disseminating any technology or confidential information about any robotics product to third parties.” This broad request, the court noted would stop Proception from shipping any robotics product or even from conducting further research with any third-party. “In effect, Tesla asks this Court to order Defendants to go dark until further order of this Court,” the court noted. This was disproportionate to any potential harm to Tesla, the court found. Thus, the motion for a preliminary injunction would be denied.

The Case is No. 5:25-cv-04963-SVK.

Judge: Keulen, S.

Attorneys: Angelique Kaounis (Gibson, Dunn & Crutcher LLP) for Tesla, Inc. Jaideep Venkatesan (Bergeson, LLP) for Proception, Inc.

Companies: Tesla, Inc.; Proception, Inc.

Cases: TechnologyInternet Trademark CaliforniaNews GCNNews