Investors in Nikola (NASDAQ:NKLA) will be happy to hear some good news around the company’s lawsuit against Elon Musk’s Tesla (NASDAQ:TSLA). The two sustainably powered vehicle manufacturers both bear names paying homage to the godfather of electricity; now, Nikola alleges that Tesla’s semi-truck bears tech infringing on Nikola’s existing patents. It looks like with news coming from the NKLA stock camp, the lawsuit will be heating up further.
The legal dispute between the two companies stems from Tesla’s branching out from cars into semi-truck manufacturing. Elon Musk’s plans to get Tesla into the world of trucking is being impeded by claims that it is infringing on existing Nikola patents.
Specifically, Nikola is alleging that Tesla’s windshield, doors, fuselage and other design details infringe on these patents. The company filed a complaint with a California court in early 2018 to air these grievances, stating that the confusion caused by Tesla’s lookalike truck could end up costing Nikola billions of dollars in sales.
Last year, it looked like things were heating up. Tesla and Nikola argued over which patents would make their way to court, and the U.S. Patent and Trademark Office kept Tesla from invalidating some of the patents at hand. However, July saw things fall off; the court asked the companies for dates regarding structuring of a hearing, and neither side responded.
NKLA Stock Back on the Menu With Reinvigorated Tesla Lawsuit
Early this month, a judge gave Nikola an ultimatum: deliver a written cause for the case’s slowing or risk the trial being shelved. The company is in fact responding. It delivered a cause to the court before the Oct. 6 due date.
Today, it appears that NKLA stock stands to benefit from a Tesla trial once again. Investors are pleased to hear that the judge is allowing the company to proceed with its legal dispute against the now Texas-based electric vehicle (EV) giant. Although the judge says the company’s reasons for not responding are “not particularly compelling,” the company now has until January of 2022 to prepare a case walking the court through the patents and the extent to which Tesla is infringing upon them.
NKLA stock holders are likely very excited to hear such news; if Nikola can craft a compelling case from the court, taking down Tesla would make the stock look quite good. Investors would do well to keep an eye on NKLA stock for the time being. As of the market’s close today, NKLA is up nearly 5%; it is seeing these gains after trading below daily averages, with just 9.7 million shares trading hands against an average of 11.6 million.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.