An epic litigation was about to begin this week between augmented reality players Magic Leap and Nreal, the small startup from China accused by the former of stealing business secrets. A legal battle ensued, all of that could change.
If you're looking at the case, the reason is that Nreal's co-founder and CEO, Chi Xu, worked as a software engineer at Magic Leap in 2015. Later he created Nreal and exposed the world to the Nreal Light in front. Things went smoothly for Nreal until Magic Leap dropped its legal bomb in the U.S. courts and accused Xu of stealing trade secrets, copying brands, and violating contracts.
The first two weeks of 2020, just a few days before the first court meeting between Magic Leap, Nreal, and the court, were scheduled to occur on January 1
"The parties submitted ADR certificates on January 8, 2020 after a meeting and discussion on January 3, 2020," said one submitted by Magic Leap and by Magic Leap co-signed January file The team of lawyers from Nreal. "The parties have agreed on private mediation and are currently discussing the timing of such mediation."
Alternatively, the business behind the scenes could lead to hardening of positions, which could possibly lead to an even greater litigation. In this case, judge Lucy Koh (from Samsung v Apple), who is presiding over the case, has set a trial date for the jury to be October 2021.
Why is that important? Well, Apple, Facebook, and Samsung are not yet officially launching commercial AR hardware, and Microsoft's HoloLens 2 is fully focused on businesses. Previously, despite some mixed reviews, it looked like Magic Leap had garnered a lot of attention to pave the way for mainstreaming AR headsets with Magic Leap One.
But as industry observers and consumers alike are demanding a smaller, portable AR form factor that better matches the look of sunglasses, for example, competition has increased as other victims are demanding some of the high-end graphics and the interactivity of headsets like the Magic Leap One for something lighter, more portable and cheaper than Magic Leaps price tag for $ 2,295.
Include the Nreal Light, whose developer version looks (usually) like a pair of sunglasses, costs $ 1,199 for the developer version, and has a consumer version that connects to Android smartphones for $ 499 ,
The pressure on Magic Leap has shown that the company had to hand over its patents as collateral to JPMorgan Chase as it seeks a new round of funding. With the HoloLens 2, which will ultimately be delivered to customers and draw a large part of the company's interest in high-end AR and the future financing of Magic Leap, the legal step of the Florida startup against a former employee is still questionable at the present time Surprise.
Nevertheless, Magic Leap can conduct a lost fight, win, lose or unwind at this point. Nreal is only a company operating in the growing ranks of AR Wearable Makers. There are already two other startups based in China – 0glasses (RealX) and Pacific Future (Am Glass) – with products that look and work just as well, if not better than the Nreal Light, and in strikingly similar packages and too affordable prices] Sure, the companies mentioned above are concentrating on the Asian market for now, but some of the Chinese investors behind these startups are no longer satisfied with simply playing locally. As China's ByteDance and its now worldwide success story with apps in TikTok prove, Chinese startups are increasingly willing to challenge the best tech startups in the West on almost every front. AR is currently one of the most active sectors in China in terms of rapid software and hardware development, iteration and distribution.
At this point, Magic Leap can take a loss. Nreal is just one company operating in the growing ranks of AR wearable manufacturers.
The Magic Leap One has been on the market for almost a year and a half, and there isn't even a hint that it's a cheaper, smaller version of the device is intended for mainstream users. This is particularly surprising as Magic Leap focuses on entertainment partnerships with franchises such as Star Wars, Game of Thrones, and a healthy selection of AR games and apps for passive content consumption.
Even if Magic Leap manages to secure new ones In the next 12 to 24 months, there will be more and more aggressive AR challengers who will take the bankers' patents and produce an affordable, non-developer version of the device. The Rumors are true Apple, possibly a little later this year.
Although this litigation may be important to the Florida-based startup for several reasons, it is probably in its intent to have a solution implemented sooner rather than later in the long term. By the end of 2021, when the trial would take place, the AR landscape is likely to be completely different and much more competitive. For its part, Nreal has flatly rejected Magic Leap's claims, which makes an agreement seem unlikely unless there is a significant change on the part of at least one of the parties involved.You must become self-employed before setting fire to the legal machine and one possibly set in motion a costly chain of events that is unlikely to end before 2022.