AI-powered freight management technology provider Freightmate AI requested a California court dismiss a lawsuit Flexport brought against it and two former employees.
On Tuesday, legal counsel for Freightmate AI and co-founder Bryan Lacaillade each filed motions to throw out the complaint alleging that the company stole trade secrets from Flexport upon its founding last year.
The lawsuit, filed March 12, claimed that Freightmate is “a product of theft, not ingenuity…built on information and documents brazenly stolen from Flexport.”
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Flexport alleged that Lacaillade and co-founder Jason Zhao secretly conspired to form Freightmate in stealth mode in January 2024, just months before both employees left the company.
Lacaillade’s rebuttal called out what he called a “lack of evidence of actual wrongdoing” by he and Zhao in founding Freightmagic, saying that Flexport was “fully intent on slowing down what it views as an upstart competitor” as part of an otherwise “flimsy lawsuit.”
Among Flexport’s accusations, the digital freight forwarder said Lacaillade left to launch Freightmate’s operations upon leaving in May, with Zhao staying behind for another month as he saved more than 70,000 confidential Flexport documents to his personal storage without authorization.
“Days before leaving, but after establishing Freightmate as a co-founder and principal with Lacaillade, Zhao downloaded and exfiltrated Flexport’s internally developed and copyrighted Flexport Platform source code,” the initial suit alleged. “Within weeks, Freightmate launched a competing product. Freightmate then boasted about ‘partnering with over three times the number of freight forwarders that [it] anticipated by this time,’ a feat virtually impossible to achieve so quickly without Flexport’s stolen information.”
Flexport says Freightmate AI debuted its first product on or about June 27, more than three weeks after Zhao left the freight tech firm.
In its complaint, Flexport did not accuse Zhao of sharing any of Flexport’s trade secrets or source code with Lacaillade at any point, nor did it allege that Lacaillade retained the secrets following his resignation.
The lack of either accusation are central points to Lacaillade’s argument for the case’s dismissal, calling them “gaping holes” in the Flexport case.
“It’s no surprise that Flexport has failed to describe with the requisite level of specificity those trade secrets Mr. Lacaillade isn’t even alleged to have possessed, misused or disclosed,” the motion read. “And to connect the far-distant dots, Flexport invites this court to accept an otherwise sanctionable allegation that Defendants, collectively, ‘must have misused Flexport’s intellectual property,’ because there’s simply no other explanation for Freightmate’s ability to develop a product or sign up new customers so quickly.”
The other response from Freightmate’s counsel disputes that the company offers a competing product to Flexport’s freight management system (FMS).
In a letter to Flexport on Dec. 19, two months ahead of the lawsuit, Freightmate AI’s counsel argued that the company’s software-as-a-service model, which offers an AI-assisted solution for automating, aggregating and validating freight documents, was distinct from Flexport’s own service.
“The mere presence of AI-mediated elements in both companies’ products does not establish a similarity between Freightmate’s product and Flexport’s FMS,” said the letter.
The plaintiff alleged that in the letter, the defendants admitted that they secretly ran confidential documents from Flexport “through ChatGPT to better understand how generative AI digitizes analog shipping documents.” However, Freightmate says these accusations cannot serve as a basis for Flexport’s trade secret claim because the company did not allege that the shipping documents, were among the trade secrets referred to in the complaint.
According to Freightmate’s motion, the letter said the Flexport shipping documents included bills of lading, shipping instructions, packing lists and arrival notices.
“Flexport’s ‘proprietary datasets and algorithms that allow Flexport to make and provide data-driven shipping services, shipping operations, and logistics planning services’ would not plausibly include third-party shipping documents of the type routinely shared between a shipper and consignee,” said the Freightmate motion.
Additionally, the December letter acknowledged that Flexport’s customers were shippers, where as Freightmate AI’s were freight forwarders.
Beyond the trade secret misappropriation allegations, Flexport contends that all three defendants infringed its source code copyrights. In its defense, Freightmate says Flexport does not—and cannot—allege that it had the legal right or practical ability to stop Zhao from downloading the source code because he was not an employee when he downloaded the code.
The digital freight forwarder also accused both Zhao and Lacaillade of breaching their contract with Flexport, a claim the latter said should be dismissed by the court because the complaint fails to identify what “proprietary information” the Freightmate co-founder allegedly used in violation of his contract.
