(CN) - A federal judge in Utah ruled Tuesday in favor of the founder of a drone company over accusations that he misappropriated trade secrets and sabotaged his former employer before starting his own business.

U.S. District Judge Ted Stewart denied a temporary restraining order and preliminary injunction to Red Cat Holdings, finding that the robotics and drone technology company failed to provide evidence supporting that its former chief technology officer, George Matus, caused Red Cat irreparable harm.

Red Cat Holdings claims in an August suit that Matus stole trade secrets and sabotaged its business before leaving the company and co-founding Vector Defense, a similar drone company. The company sought an injunction against Matus and Vector to prevent them from manufacturing drones, or otherwise competing in the industry, for the next year, as well as punitive damages, among other things.

But while Red Cat claimed an injunction would prevent unfair competition and erosion of business advantage, Stewart, a Bill Clinton appointee, found Tuesday that "plaintiffs allege only speculative assertions that defendants gained an improper head start in the marketplace, and the supporting facts are disputed."

Stewart was also not convinced that Red Hat's reputation and market goodwill was being harmed by Matus and Vector.

"They make conclusory assertions that defendants are using their sensitive business information, strategic plans, submission approach, and strategic relationships, to cut in line, causing harm to plaintiffs' competitive edge and reputation," Judge Stewart wrote in in his decision. "Plaintiffs provide no evidence of this. Furthermore, there are significant factual disputes underlying whether the parties are competing."

Attorney Paul Sampson, of Wilson Sonsini Goodrich & Rosati, representing Vector Defense, said in an email to Courthouse News that Vector was pleased with the decision.

"The court correctly found that Red Cat and Teal 'failed to present evidence' supporting their allegations, including and importantly that Vector 'misappropriated any of Red Cat/Teal's trade secrets.' We remain confident that discovery will fully vindicate Vector and demonstrate that these claims are unsupported and without merit," he said.

Alongside accusations of trade secrets misappropriation, Red Cat Holdings also brought its initial complaint claims of breach of contract, breach of fiduciary duty and violation of the Computer Fraud and Abuse Act.

Matus maintains that the accusations that he stole trade secrets are simply false because he did not contribute to the development of any drones that directly compete with Red Cat Holdings' existing tech. 

Matus founded his first company, Teal Drones, while still in high school in 2014. He eventually sold Teal Drones to Red Cat Holdings in 2021 for $10 million, though he would remain the company's CEO and serve as chief technology officer to Red Cat Holdings, according to court filings.

In its complaint, Red Cat Holdings claims that Matus used his elevated positions in the company to start Vector Defense, with three other co-founders, while still serving in those positions. 

Matus announced that he was leaving Red Cat Holdings in 2024 and would join Vector Defense, court documents show. 

"Through Matus's knowledge, Vector will not have to endure the same trial and error as Red Cat/Teal to build its drones," the plaintiffs claim in their complaint. "Instead, Vector leapfrogged the investment of capital and man-hours, and now, through Matus, holds a built-in blueprint on ideal drone composition ready to adapt to new and different features."

Red Cat Holdings also wrote that Matus was also responsible for negotiating a potential business deal with a Croatian drone company to sell first-person-view drones when the deal inexplicably collapsed. It argues that Matus wanted his new company to get the deal instead.

Red Cat Holdings also claims that Matus then solicited Red Cat Holdings' employees to work for Vector Defense, though Matus says he merely referred the Red Cat Holdings employees to Vector Defense's CEO, he wrote.

Matus has countered that Vector Defense's drones don't compete with those offered by Red Cat Holdings. Matus also says that he was not involved in the development of Vector Defense's Hammer drone, a small, single-use FPV drone that he says is much different from Red Cat Holdings' Black Widow drone. 

Attorneys representing Red Cat Holdings did not immediately respond to requests for comment. 

Vector Defense announced last month that it secured a major, multi-million dollar contract with U.S. Special Operations Command.

Source: Courthouse News Service