**Scale AI Sues Mercor for Alleged Trade Secret Theft**
Scale AI Inc. has initiated legal action against competitor Mercor, claiming that the startup and a former employee misappropriated trade secrets to gain new clients. The lawsuit, filed in a federal court in San Francisco, accuses Eugene Ling, Scale’s former head of engagement management, of downloading over 100 proprietary customer strategy documents to a personal Google Drive while in contact with Mercor.
According to the complaint, Ling allegedly met with Mercor’s CEO, Brendan Foody, during his tenure at Scale, and discussions about Scale’s business strategies and products took place between Ling and other Mercor employees. Surya Midha, a co-founder of Mercor, stated that the company is currently investigating the matter. “While Mercor has hired several individuals who previously worked at Scale, we have no interest in Scale’s trade secrets and are intentionally operating our business differently,” Midha remarked. He added that Ling had informed them about the old documents in his personal Google Drive, which they have not accessed, and they are now looking into the situation. Mercor reached out to Scale six days ago, offering to have Ling destroy the files or find an alternative resolution, and they are awaiting a response.
This lawsuit underscores the intense competition within the AI industry. Established in 2016, Scale has been a prominent player in providing data labeling and annotation services essential for developing AI models. However, it has faced increasing competition recently. Joe Osborne, a spokesperson for Scale, emphasized, “Scale has become the industry leader based on our ideas, innovation, and execution. We will not permit anyone to take unlawful shortcuts at the expense of our business.”
In June, Meta Platforms Inc. completed a significant $14.3 billion investment in Scale, acquiring a 49% stake in the company. Following this investment, several of Scale’s major clients, including OpenAI and Alphabet Inc.’s Google, have reportedly reduced their engagements with the startup. Notably, OpenAI has turned to Mercor to fulfill its requirements for specialized data.
The lawsuit claims that Mercor recruited Ling to strengthen its relationship with one of Scale’s large clients, asserting that a substantial portion of the documents Ling allegedly stole was related to this unidentified customer. The complaint also states that Ling contacted the customer on behalf of Mercor while still employed at Scale, and he continues to work on that account.
The case is officially titled Scale AI Inc. v. Mercor.io Corporation, 25-cv-07402, in the US District Court for the Northern District of California (San Francisco).
**FAQ**
**What are the main allegations in the Scale AI lawsuit against Mercor?**
Scale AI alleges that Mercor and a former employee stole trade secrets by downloading proprietary documents to gain business advantages, including contacting Scale’s clients while still employed at Scale.