Scale AI, which helps tech companies prepare data to train AI models, filed a lawsuit Wednesday against one of its former sales employees and rival Mercor. According to a copy seen by TechCrunch, the lawsuit alleges that Mercor hired employees “stole over 100 confidential documents about Scale’s customer strategies and other unique information.”
Scale sues Melkor for misappropriation of his occupational secrets and sues former employee Eugene Lin for breach of contract. The lawsuit also alleges that the employee was trying to sell Mellocor to one of the Scale’s biggest clients before officially quitting his previous job. The lawsuit calls the company “Customer A.”
Mercor co-founder Surya Midha denied that his company used data from the scale, but admitted that Ling may have owned some.
“Melkor hires many people who have left Scale, but they don’t care about Scale’s trade secrets and actually operates their business in a different way. Eugene has informed us that we have never accessed it and that there are old documents on our personal Google Drive, which we are now investigating.”
“We reached out to Eugene six days ago, six days ago, when we offered to destroy the files or get them to reach another resolution. We are now waiting for their reaction,” Mida said.
Scale argues that these documents include the specific data that allows Mercor to serve Customer A, as well as the most important clients of several other scales.
Scale provided Mercor with a complete list of files in the drive, hoping that Ling would prevent him from working with customer A. It alleges in the lawsuit that Mercor refused. Lin didn’t respond to requests for comment immediately, but he later wrote to X:
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“When the scale reached for some files I had on my personal drive, I asked if I could remove them. However, Scale asked not to do anything with them, so I’m still waiting for guidance on how to solve this role. This.”
There are scarce clues in litigation about customer identity. If a rival of scale wins this customer, it says it would be a “Mercoal worth millions of dollars.”
Whatever the details of this lawsuit are, it shows one thing. Scale is fully concerned about the threat of Melkor to pursue legal action. As TechCrunch previously reported, even billions of dollar investments in the scale of meta, TBD Labs, the core unit within the meta, responsible for building AI Superintelligence, still uses Mercor and other LLM data training service providers.
Mercor is rising in the field of LLM training. This is because they are often known for hiring content specialists who train PhDS in their specialties, often PhDS.
In June, Scale announced that Meta had invested $14.3 billion in a 49% stake on the scale and was hiring its founder. Shortly afterwards, some of AI’s biggest data customers, a competitor of Meta’s efforts, reportedly cut their relationship with it.
Updated with comments on Eugene Lin’s social media.
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