Boeing is demanding more than $25 million in a lawsuit from Virgin Galactic. Boeing accuses the space tourism company of not paying $26 million in bills. Perhaps even worse: Virgin Galactic has two sets of documents containing Boeing trade secrets and refuses to destroy them.
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Specifically, it involves a collection of mathematical formulas that Boeing mistakenly sent to Virgin Galactic, as well as test data about a specific composite material that Virgin Galactic wanted and was allowed to see. The mathematical formulas describe the behavior of aircraft and are the basis for both their design and the programming of professional flight simulators. Boeing considers both sets of documents to be trade secrets. Virgin Galactic refuses to delete the documents and even wants to continue using the information they contain in collaboration with another partner. heise online invited the defendant to comment.
Boeing made these untested allegations in a lawsuit filed on Thursday in US federal district court. Legally, the allegations are breach of contract and misappropriation of trade secrets. The background is the failed collaboration between the two companies. Virgin Galactic needs a new aircraft that will lift the future “Delta Class” space gliders to dizzying heights before their rockets ignite and carry paying tourists close to the edge of space for a few minutes. And hopefully back to earth.
Million order 2022
In February 2022, Virgin Galactic commissioned Aurora Flight Sciences to carry out basic development work. Boeing acquired Aurora Flight Sciences, a specialist in autonomous flight, in 2017. Virgin Galactic's wish was to have a new carrier aircraft as early as 2024 that could fly several times a day for five years. Billing was based on working hours plus material costs. The first phase was expected to cost a maximum of just under $43 million. Aurora then billed around $42.8 million, of which the customer is said to have only paid a good $33.5 million – therefore $9.2 million too little.
In the course of the work, Aurora's experts concluded that Virgin Galactic's schedule for commercial operations in 2024 was unrealistic. Nothing can be done before 2027. The customer was not happy. At the beginning of 2023, those involved agreed on a second order with a maximum cost of around $19 million. Virgin Galactic is said not to have paid the final bill of around $17.2 million.
The data breach
During the course of the collaboration, Aurora says a mishap occurred: In May 2023, it provided Virgin Galactic with two documents that mistakenly contained secret formulas including variable definitions. But that wasn't immediately noticeable. It was only in mid-June that Aurora informed that these were Boeing trade secrets that had to be deleted. The contract requires both partners to immediately delete documents at the request of the other partner, says Boeing. Virgin Galactic takes the position that it is entitled to a license for the formulas, which Boeing denies.
In fact, Virgin Galactic obtained a license for information about the IM7/8552 composite. The aviation company recommended this building material to its customer for the planned carrier aircraft. In addition, Virgin Galactic received a document containing data from thousands of tests of the IM7/8552 material – with the statement that this data was secret and not covered by the license, according to the lawsuit. Months later, Boeing requested deletion. Virgin Galactic not only rejects this, but also claims a license that would allow disclosure to Boeing competitors.
Boeing cannot accept this, which is why it is suing for more than 25 million US dollars plus damages and royalties for the disclosure of trade secrets, confiscation of unfair enrichment and procedural costs. The plaintiff has also requested an injunction that would force Virgin Galactic to delete the data, stop using it and disclose all recipients.
The civil law procedure is called The Boeing Company et Aurora Flight Sciences Corporation v Virgin Galactic and is pending in the United States District Court for Eastern Virginia under case number 24-cv-00456.
Both companies in crisis
This means that two companies that are in different crises are meeting before the US court. 25 years ago, Virgin Galactic announced that it would take tourists into space within eight years. In fact, Virgin Galactic's first commercial flight didn't happen until 2023, three times that time; and then after six flights it was over again. Company co-founder Richard Branson no longer has any fresh money for Virgin Galactic. The company's share price has fallen by two-thirds in the last twelve months.
Boeing began to spiral into crisis as early as 1997. Boeing increasingly withdrew from both aircraft development and manufacturing. Instead, Boeing's management spent $60 billion buying its own shares. This money is missing, for example, for quality assurance and the development of a new generation of aircraft. Instead, Boeing has focused on making the Boeing 737, which will soon be 60 years old, longer and longer.
The crashes of two Boeing 737 Max 8 aircraft in October 2018 and March 2019 led to hundreds of dead passengers and lip service from Boeing, but apparently no comprehensive rethinking. Earlier this year, a virtually new Boeing 737 MAX 9 tore a life-threatening hole. Now the US Federal Aviation Administration (FAA) is taking a closer look and Boeing has to replace its management team.
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