Updated: Firefly Board Member Sues to Stop Alleged Virgin Galactic “Fishing Expedition”

firefly_space_systems_logoA member of Firefly Space Systems board of directors has filed suit in Los Angeles to overturn an arbitrator’s judgment that he turn documents over to rival Virgin Galactic in a dispute between Virgin and its former vice president of propulsion.

Patrick Joseph (P.J.) King filed the action on Tuesday in a case involving Tom Markusic, who left Virgin Galactic to form Firely with King in early 2014.

“After Dr. Markusic left Galactic, [Richard] Branson sued his ex-employee the the Arbitration, falsely accusing of Dr. Markusic of breaking his former employment agreement by ‘stealing’ what apparently is nothing more than standard open-source technical information which is available in the academic literature, that Galactic claims are someone ‘trade secrets'”, the suit reads.

“Under the guise of this false claim, Galactic has launched an astonishingly broad fishing expedition to discover the proprietary and trade secret information of what it perceives to be a new competitor, Firefly,” the suit continues. “Galactic has obtained from the Arbitrator in its against Dr. Markusic broad third party subpoenas and discovery orders which would result in disclosure of Firefly’s trade secret information, even though Galactic has not identified — in violation of California law — the nature of its purported stolen trade secrets, and despite the fact that neither Firefly nor its officers and directors have had any opportunity whatsoever to be heard on the protocol of protection of any materials that would be disclosed.

“This is a classic abuse of trade secret litigation: a plaintiff with no bona fide claim misusing the arbitration process to gain access to a competitor’s proprietary information. This abuse is particularly egregious here, where orders which could cause an invasion of trade secret information by a competitor are being used by an Arbitrator who has no jurisdiction over the offended third parties.”

The lawsuit states that King is not a party to the employment agreement signed by Markusic with Virgin Galactic. King, who is a former Virgin Galactic ticket holder, never consented to resolve disputes or allegations by Branson’s company through arbitration, the motion adds.

Markusic served as Virgin Galactic’s vice president of propulsion until early 2014, when he left to found Firefly. Markusic had overseen the development of Virgin’s Newton family of liquid-fuel engines, where are designed to power the company’s LauncherOne small satellite launcher. The rocket will be air-launched from a Boeing 747.

At Firefly, Markusic and his Firefly team are developing a reusable ground-based launcher named Firefly Alpha that will serve the small satellite market. Firefly Alpha and LauncherOne have nearly identical payload capacity to low Earth orbit with similar pricing.  Virgin Galactic recently announced an increase in LauncherOne’s size and capacity.

The arbitrator, Louise LaMothe, also has order Firefly board member Michael Blum to turn over a range of documents relating to the company. Blum is a financial backer of Firefly and a former Virgin Galactic ticket holder.

I’ve reached out to Virgin Galactic for comment. I will update the story when I receive a response.

Updated:  I received the following response from Virgin Galactic:

Virgin Galactic filed a private arbitration against a former employee, Tom Markusic. In that arbitration, Virgin Galactic has asserted serious claims and allegations against Mr. Markusic, including claims regarding Virgin Galactic’s proprietary information and his formation of a competing company (Firefly) while he was a Virgin Galactic employee.

We generally do not comment on legal and employee disputes that occur over the course of business and do so now only because Mr. Markusic and his company have caused this dispute to become public.

We regret that Mr. Markusic has allowed his company’s cofounder and shareholder PJ King to disregard and attack the arbitration rulings.

We believe in fair competition and support the growth of the commercial space industry, and we feel strongly about the protection of our intellectual property and proprietary business information.