Chinese augmented reality (AR) headset maker Nreal filed on Tuesday a motion to a California court, seeking to dismiss a lawsuit brought by its US-based rival Magic Leap accusing the company and its founder of stealing its technology.

Why it matters: The June lawsuit brought by a US firm against a Chinese company over intellectual property (IP) reflects the broader dispute between the world’s two largest economies over technology theft.

  • Beijing-based Nreal was founded by ex-Magic Leap employee Xu Chi, who left his position at the US firm as a software engineer in 2016.
  • The two companies both manufacture headsets for so-called augmented, or mixed reality, an interactive technology combining a real-world environment with computer-generated images.

Briefing: American AR startup accuses Chinese ex-employee of IP theft

Details: In a motion filed with a federal court in San Jose, Nreal claimed that Alibaba-backed Magic Leap is “filing lawsuits to slow down new entrants in the AR market,” according to a company statement.

  • Nreal stated the lawsuit by Magic Leap was “vague and unsubstantiated,” and that it was brought because the Chinese company was developing a similar device to Magic Leap’s AR headset.
  • In the June lawsuit, Magic Leap alleged Xu exploited its confidential information to “quickly develop” a prototype of mixed-reality glasses and other devices that are “strikingly similar” to its designs.
  • Florida-based Magic Leap did not immediately respond to an emailed request for comment on Wednesday.

“We will fight Magic Leap’s meritless legal claims and will not allow them to distract us from innovating and delivering unparalleled augmented-reality products.”

— Xu Chi, Nreal founder, in a statement

Context: Founded in January 2017, Nreal received $16 million Series A+ from investors including Everbright and Baidu’s online video unit iQiyi in January. The valuation is unknown.

  • The company released $499 AR glasses in January at the Consumer Electronics Show 2019 in Las Vegas.
  • Last week, Apple told a federal court that it had “deep concerns” that two Chinese-born former employees accused of stealing trade secrets would try to flee back to China.
  • Tesla in March accused a former employee of stealing IP worth hundreds of millions of dollars and sharing it with its Chinese rival, Guangzhou-based Xpeng Motors.

Writing about semiconductors and telecommunications.

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