Scale AI sues former employee and rival over alleged corporate espionage
Key Points
- Scale AI files lawsuit against former employee Eugene Ling and competitor Mercur.
- Alleged theft of over 100 confidential documents containing proprietary strategies.
- Ling reportedly tried to recruit a key Scale client and several Scale employees for Mercur.
- The case reflects intense competition and talent turnover in the AI industry.
- Scale seeks damages, legal costs, and an injunction to prevent use of stolen data.
Scale AI, a leading AI data‑labeling firm, has filed a lawsuit against former head of engagement management Eugene Ling and his new employer Mercur, a direct competitor. The complaint alleges that Ling stole more than 100 confidential documents, including proprietary strategies and customer information, and attempted to lure a key client and Scale employees to Mercur. The case highlights the intense competition and talent churn in the AI sector, where companies are racing to secure data, talent, and market share. Scale is seeking damages, legal costs, and an injunction to prevent Mercur from using the stolen material.
Background
Scale AI, known for supplying training data to many of the industry's top AI models, has recently faced a series of high‑level changes, including a multibillion‑dollar investment from Meta, the hiring of its CEO by Meta, and a workforce reduction of 14 percent. Amid this turbulence, the company has taken legal action to protect its proprietary assets.
Allegations Against a Former Employee
The lawsuit targets Eugene Ling, who previously served as Scale’s head of engagement management. According to the complaint, Ling downloaded and took more than 100 confidential documents that detailed internal strategies, customer management processes, and other proprietary information. The filing states that Ling accessed many of these files the day after meeting with Mercur’s chief executive.
Attempted Poaching of Clients and Staff
Scale alleges that Ling used the stolen information to solicit one of its major customers for Mercur. In communications with a customer employee, Ling reportedly suggested that the new company could support the client and asked whether the client was already working with Mercur. The lawsuit also cites evidence that Ling reached out to multiple researchers at the client organization and tried to recruit Scale employees to join Mercur.
Industry Context
The case comes at a time of heightened competition in the AI field, with firms such of OpenAI, Anthropic, Google, Meta, and Microsoft continually seeking to outpace each other through new tools, larger models, and increased funding. The rapid movement of talent and the prevalence of mergers, acquisitions, and quasi‑acqui‑hires have created an environment where sensitive information can easily change hands.
Parallel Legal Actions
Scale’s filing is not an isolated incident. Recent months have seen similar lawsuits, such as the case brought by Elon Musk’s xAI against a former engineer accused of copying confidential data before moving to a rival firm. These actions underscore the growing legal battles over trade secrets and proprietary data in the AI sector.
Relief Sought
In its complaint, Scale requests that the U.S. District Court for the Northern District of California award legal costs and damages, issue an injunction barring Mercur from using the allegedly stolen information, and order the return of all Scale documents in Ling’s possession.
Company Response
A Scale AI spokesperson emphasized the company’s commitment to protecting its innovations, stating that the firm will not tolerate unlawful shortcuts that jeopardize its business.