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US startup accuses ex-engineer of copying headset for China firm

It's the latest accusation from a US firm of IP theft by China-linked entities

San Francisco

MAGIC Leap Inc, a US startup that makes a headset to project digital objects onto the real world, has accused one of its former engineers of stealing its technology to create his own augmented reality device for China.

In a lawsuit filed on Monday, Magic Leap alleges that Xu Chi, who left in 2016, exploited its confidential information to "quickly develop a prototype of lightweight, ergonomically designed, mixed-reality glasses for use with smartphones and other devices that are strikingly similar" to the Florida-based startup's designs.

The lawsuit marks the latest accusation from an American firm of intellectual property theft by Chinese companies, a perennial sore point that has helped escalate tensions between the world's two largest economies.

With more than US$2 billion in financing, Magic Leap is one of the better-funded startups delving into so-called augmented or mixed reality, a technology that gives users the illusion that fantastical, three-dimensional digital objects exist in the physical world.

Mr Xu, who founded Beijing-based Hangzhou Tairuo Technology Co, also known as Nreal, unveiled his own augmented reality glasses at a major Las Vegas trade show in January, touting them as lighter than the Magic Leap One, Forbes has reported.

Apart from Magic Leap, Facebook Inc, Microsoft Corp and Alphabet Inc's Google are also developing products for virtual or augmented reality.

It remains to be seen whether anyone can turn the area into a big money-spinner.

Magic Leap released its headset last August after seven years of secretive work and more than US$2 billion of investment.

The startup alleges that Mr Xu plotted during his roughly 13 months working there to launch his own competing company in China and "neglected his work duties" to acquire proprietary information.

"Whereas Nreal purported to develop its Nreal Light product in under two years, Magic Leap developed its technology after extensive investment of time (multiple years), money (hundreds of millions of dollars spent on research and development) and human resources (hundreds of engineers)," according to the complaint.

Mr Xu is accused in the suit of breach of contract, fraud and unfair competition. Nreal is also named a defendant.

Representatives at Nreal had no immediate comment on the lawsuit, while Mr Xu did not respond to a message sent to his LinkedIn account.  BLOOMBERG