Lordstown Motors reaches a $40 million settlement with Karma Automotive

The agreement calls for $5 million to be paid as royalties for using Karma's intellectual property, which Lordstown was accused of stealing.

Lordstown Motors announced on August 15 that it had reached a $40 million settlement with Karma Automotive over a 2020 lawsuit in which the now-bankrupt EV company was accused of stealing intellectual technology. The agreement, awaiting approval from the bankruptcy court, calls for $5 million to be paid as royalties for using Karma’s intellectual property, which Lordstown was accused of stealing.

California-based Karma had filed a lawsuit against Lordstown for allegedly stealing its workers and intellectual property utilized in-vehicle entertainment systems. The trial for that case had been set for September until Lordstown’s bankruptcy forced a postponement.

Lordstown, an EV manufacturer, failed to resolve a disagreement on a promised investment from Foxconn of Taiwan, an iPhone maker, so the business filed for bankruptcy protection in June and placed itself up for sale. 

Lordstown’s debtors asked for the bankruptcy court to approve the deal on or before August 28 in a filing, but a hearing date has not yet been established.

Although the agreement is for much less than the more than $900 million Karma had requested, it guarantees Karma would be paid despite Lordstown’s bankruptcy. Even though Lordstown continues to deny Karma’s claims, it argued that a settlement was required to avoid a pricey and drawn-out jury trial that would have posed a “significant impediment” to its sale process and possibly scared away potential buyers.

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Jaelyn Campbell
Jaelyn Campbell
Jaelyn Campbell is a staff writer/reporter for CBT News. She is a recent honors cum laude graduate with a BFA in Mass Media from Valdosta State University. Jaelyn is an enthusiastic creator with more than four years of experience in corporate communications, editing, broadcasting, and writing. Her articles in The Spectator, her hometown newspaper, changed how people perceive virtual reality. She connects her readers to the facts while providing them a voice to understand the challenges of being an entrepreneur in the digital world.

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