Scale AI Sues Ex-Employee and Rival Mercor Over Alleged Customer Theft
▼ Summary
– Scale AI is suing former employee Eugene Ling and rival Mercor for allegedly stealing over 100 confidential documents containing customer strategies and proprietary information.
– The lawsuit claims Ling attempted to pitch Mercor to one of Scale’s largest clients, referred to as Customer A, before officially leaving his position at Scale.
– Mercor co-founder Surya Midha denies using Scale’s data but admits Ling possessed old documents, stating Mercor reached out to Scale six days prior offering to have the files destroyed.
– Ling stated he had no nefarious intent, never used the documents in his new role, and was waiting for guidance from Scale on resolving the file situation.
– The lawsuit reveals Scale’s concern about Mercor’s competitive threat, particularly as Mercor has been gaining traction by hiring specialized content experts to train LLM data.
Scale AI, a prominent provider of data preparation services for artificial intelligence training, has initiated legal proceedings against a former sales employee and competitor Mercor. The lawsuit centers on accusations that the ex-staff member took confidential documents containing sensitive customer strategies and proprietary details before joining Mercor. Filed this week, the complaint alleges misappropriation of trade secrets and breach of contractual obligations.
According to the filing, Eugene Ling, the former employee, allegedly transferred over one hundred confidential files to a personal storage account. Scale claims these materials included strategic insights related to key clients, including one referred to as “Customer A.” The suit further contends that Ling attempted to introduce Mercor to this major account while still employed at Scale.
In response, Mercor co-founder Surya Midha denied any use of Scale’s proprietary information. He acknowledged Ling may have retained documents but emphasized that Mercor never accessed them. Midha stated the company proactively contacted Scale days earlier, proposing that Ling destroy the files or find an alternative resolution. He expressed disappointment that the situation escalated to litigation.
Scale sought assurances from Mercor, including a full inventory of the documents in question and restrictions on Ling’s involvement with Customer A. The plaintiff asserts that Mercor declined these requests. Ling later commented on social media, expressing regret over the dispute and maintaining he never used the documents in his new role. He described the situation as unintentional and apologized to his current team at Mercor for the disruption.
The identity of Customer A remains undisclosed, though the suit indicates the account represents significant financial value, potentially worth millions. The case highlights growing tensions in the competitive AI data services sector, where client relationships and proprietary methodologies are fiercely guarded.
This legal action signals Scale’s serious concerns about competitive threats from Mercor, which has been gaining traction by employing subject-matter experts, often with advanced degrees, to refine large language model training. Notably, even after Meta’s multi-billion dollar investment in Scale, certain divisions within the tech giant continue to engage Mercor and similar providers.
Recent industry shifts have also seen several of Scale’s major clients, particularly those competing with Meta, sever ties following news of the strategic partnership and leadership changes. The outcome of this lawsuit could influence how companies protect intellectual property and manage employee transitions in the rapidly evolving AI infrastructure market.
(Source: TechCrunch)
