Karma Automotive sues revived DeLorean Motors, claiming stolen intellectual property

Karma Automotive is suing DeLorean Motors Reimagined, alleging it stole the luxury electric vehicle company's intellectual property.

The lawsuit, filed Aug. 8 in U.S. District Court for the Southern District of Texas, names DeLorean Motors CEO Joost de Vries, COO Alan Yuan, Vice President Neilo Harris and Chief Marketing Officer Troy Beetz as defendants. The lawsuit also named DeLorean Motors Reimagined and Reimagined Automotive as defendants.

The suit alleges that the high-ranked executives started Reimagined Automotive while "some or all" of the defendants were still employed at Karma. According to the suit, Karma was in the process of negotiating a partnership with DeLorean Motor Co. to electrify the reinvented DeLorean vehicle when the defendants formed their new company and took confidential Karma materials. The suit alleges the defendants "actively concealed information from Karma to keep Karma from pursuing the project or from finding out what individual defendants were doing."

The suit said the defendants then left Karma and, as Reimagined Automotive, finalized a deal with DMC to form DeLorean Motors Reimagined. The lawsuit said the defendants used Karma's "trade secrets and other confidential or proprietary information."

In a statement obtained by Automotive News, de Vries said: "The potential Karma/DMC project died due to Karma's inability to fund or produce deliverables necessary to even move forward talks with DMC. DeLorean Motors Reimagined is a completely new entity with a completely new fully electric vehicle unrelated to the low volume replica project. We anticipate the Court seeing through this baseless litigation in short order."

The suit alleges that by entering the deal with DMC, the defendants breached their contract and "fiduciary" duties. In doing so, the lawsuit says the defendants violated the Defend Trade Secrets Act and the Texas Uniform Trade Secrets Act and committed fraud.

Karma attorney Jesse Coleman told Automotive News that "Karma does aggressively protect its intellectual property rights, including its trade secrets" but declined to comment further on the case.

The lawsuit comes after the San Antonio City Council approved a $562,500 incentive package for DMC in April that paved the way for the company to apply for $1.25 million in tax refunds for setting up its headquarters in the city. The package requires DMC create 450 jobs by the end of 2026, paying an average salary of $145,600.

Karma, based in Irvine, Calif., and funded with Chinese investment, was founded in 2014 and has experienced several management setbacks in recent years.