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Meta Platforms, previously known as Facebook, has reached a settlement in a lawsuit filed by Neural Magic, an artificial intelligence (AI) startup. Neural Magic had accused Meta of unlawfully appropriating its trade secrets. The resolution was detailed in a filing submitted to the Boston federal court. The terms of the settlement were confidential, and both parties requested the court to dismiss the case with prejudice, indicating that it cannot be reopened.
Neural Magic, headquartered in Somerville, Massachusetts, is backed by notable investors such as VMware, Comcast, Verizon, and venture capital firm Andreessen Horowitz. In 2020, the company initiated legal action against Meta, alleging that the tech giant had stolen algorithms integral to enabling conventional computers to efficiently perform complex mathematical computations. These algorithms were also instrumental in allowing research scientists to work with larger datasets in the realm of machine learning.
According to Neural Magic, its technology played a pivotal role in advancing various sectors, including healthcare, cancer screening, e-commerce, and data analysis. The heart of the complaint rested on Meta’s hiring of Neural Magic’s computer scientist, Aleksandar Zlateski. The lawsuit claimed that Zlateski brought along the proprietary algorithms when he joined Meta, which Meta subsequently published on the open-source platform GitHub. Additionally, Meta publicly acknowledged Zlateski’s contribution to solving a critical issue, furthering its advancements in the field of artificial intelligence.
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Meta contested the validity of Neural Magic’s trade secrets, asserting that they lacked legal protection. The tech giant also defended Zlateski’s involvement, stating that he had not improperly obtained the alleged trade secrets. However, in a significant ruling, U.S. District Judge Denise Casper denied Meta’s request to terminate the case prior to trial. She permitted the inclusion of testimony from an expert who estimated that Meta could owe royalties of up to $766 million.
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The impending trial, initially scheduled for the following month, was averted due to the settlement. Both companies have refrained from disclosing the specifics of the agreement, but Neural Magic’s CEO, Brian Stevens, expressed enthusiasm about redirecting the company’s focus entirely towards the application of its core technologies. Representatives from Meta did not immediately provide a comment in response to the settlement.
The lawsuit spotlighted the ongoing concerns surrounding intellectual property theft within the tech industry. Neural Magic’s allegations raised questions about the ethical boundaries of hiring employees from competing companies and the responsibility of corporations in safeguarding proprietary information. While the settlement concluded this particular legal battle, it has also drawn attention to the broader implications of technology-related lawsuits and the necessity of clear guidelines for trade secrets and innovation.
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