On Monday, Meta Platforms Inc (META.O) lost a bid to dismiss a lawsuit filed in federal court in Boston alleging that it stole confidential information from artificial intelligence startup Neural Magic Inc.
According to U.S. District Judge Denise Casper, Meta will have to face a trial over allegations that it used Neural Magic’s “breakthrough” algorithms that allow AI systems to process information more quickly.
The court also heard from an expert who claimed Meta owes Neural Magic up to $766 million in royalties.
Meta and Neural Magic representatives did not immediately respond to requests for comment on the decision. The trial is scheduled to begin in September.
Based in Somerville, Massachusetts Two former Massachusetts Institute of Technology researchers founded Neural Magic. According to its website, its investors include venture capital firms Andreessen Horowitz, VMware, Comcast, and Verizon.
In 2020, Neural Magic filed a lawsuit against Meta, then known as Facebook, for allegedly stealing algorithms that allow simpler computers to run complex mathematical calculations more efficiently and allow researchers to use larger data sets.
According to the lawsuit, Meta hired a Neural Magic computer scientist, Aleksandar Zlateski, who provided the social-media giant with the algorithms that form the “heart” of Neural Magic’s technology.
Meta published the algorithms on the open-source website GitHub and thanked Zlateski for solving a “key problem for Facebook’s continued advancement in the world of artificial intelligence,” according to Neural Magic.
Last year, Meta asked the court to dismiss the case, claiming that Neural Magic had failed to identify any protectable trade secrets and that Zlateski had not obtained the information illegally. However, the court on Monday allowed Neural Magic’s case to proceed for all but one of the 41 secrets it accused Meta of stealing.
Casper granted portions of Meta and Zlateski’s request, rejecting Neural Magic’s claims that they violated a non-competition clause or engaged in unfair business practices in violation of Massachusetts law.
The case is Neural Magic Inc v. Meta Platforms Inc, No. 1:20-cv-10444 in the United States District Court for the District of Massachusetts.
