Tesla Sues Former Engineer for Allegedly Stealing Trade Secrets to Launch Competitor Robot Startup

In a high-stakes legal battle that underscores both the immense valuation of robotics innovation and the fragility of intellectual property in Silicon Valley, Tesla has filed a federal lawsuit against a former engineer, Zhongjie “Jay” Li. The complaint, lodged on June 11, 2025, in the U.S. District Court for the Northern District of California, accuses Li of misappropriating critical trade secrets tied to Tesla’s Optimus humanoid robot project, and then leveraging that illicit advantage to found a rival company, Proception Inc.

Jay Li’s tenure at Tesla spanned from August 2022 to September 2024, during which he worked on one of the most sensitive components of the Optimus program: advanced robotic hand sensors. Tesla asserts that, in the weeks before his departure, Li downloaded proprietary files—encompassing design schematics, source code, and testing data—onto two personal smartphones. Shortly after resigning, he established Proception, a Y Combinator–backed startup based in Palo Alto, which publicly demonstrated humanoid robotic hands within five months—hands that Tesla alleges possess “striking resemblance” to those Li had developed at Tesla.

The timing of these events adds weight to Tesla’s accusations. According to the lawsuit, Proception was formed just six days after Li left the company, and within half a year had produced prototypes eerily similar to Tesla’s in-house efforts. Moreover, internal communications obtained by Tesla’s legal team include a warning email from August 2024, reminding Optimus engineers of the company’s strict policies regarding confidential data—and that any misuse would trigger full forensic investigations.

For Tesla, Optimus represents more than an R&D project; it embodies a multibillion‐dollar bet on the future of humanoid robotics. Elon Musk has publicly referred to Optimus as potentially “the most valuable product” in Tesla’s pipeline, signaling both the ambition behind the endeavor and the punitive stakes should its secrets be exploited. Assembling a truly dexterous robotic hand has long been considered one of robotics’ most formidable challenges, often likened to the “holy grail” of automation due to the complex interplay of mechanical precision, sensor integration, and AI‐driven control systems.

In its legal filing, Tesla is demanding compensatory and punitive damages while seeking an injunction to block Li and Proception from further use of the alleged misappropriated trade secrets. The company’s attorneys emphasize that what Proception claims to have achieved in mere months would normally require “years, hundreds of employees, and billions of dollars of investment.”

This lawsuit also mirrors Tesla’s prior litigation history, which includes legal action against former employees who moved to rival firms. In 2019, Tesla went to court over the alleged theft of its Autopilot source code; in 2021, it sued over logistics and manufacturing secrets leaked to Zoox. These cases reflect a consistent—and increasingly aggressive—approach to defending its intellectual property.

The ramifications of this case extend well beyond Tesla. It arrives at a moment when both established firms and startups are vying intensely to develop humanoid and general-purpose robots for applications spanning manufacturing, logistics, and personal assistance. The financial stakes are substantial: resolution of similar tech-IP cases has previously resulted in hundreds of millions of dollars in payouts.

Proception remains tight-lipped regarding the allegations. Tesla’s complaint identifies law firm Gibson Dunn & Crutcher as its counsel, while representatives for Li and Proception have yet to respond publicly.

Viewed from a broader perspective, Tesla v. Li is poised to set a critical legal precedent in the domain of robotics trade-secret litigation. If Tesla prevails, it may embolden other companies to adopt rigorous IP-protection strategies and aggressive exit protocols. Conversely, the case underscores the uneasy tension between employee mobility in tech industries and the competing drive to defend proprietary innovation.

Ultimately, this lawsuit underscores a pressing truth of the robotics revolution: in a sector where hardware, AI, and sensors converge in exceedingly intricate ways, even a single breakthrough component can hold extraordinary commercial value—sometimes edging into the billion-dollar realm. As Tesla and Proception prepare for a protracted legal duel, their dispute may influence not only the pace of humanoid robotics development but also how emergent IP norms shape the future of high-tech entrepreneurship.