At a glance, 2021 was a good year for Upside Foods—one of the best-funded cultured-meat firms among the dozens of startups vying to brew real meat inside bioreactors instead of raising and slaughtering animals. In May the company—whose investors include Softbank, Tyson Foods, Whole Foods, and Bill Gates—rebranded from its former name, Memphis Meats. In November it opened a 53,000-square-foot pilot production facility in Emeryville, California, becoming one of the few among its competitors to take that significant step toward scale.
But behind the scenes not everything has been going smoothly. Legal documents filed with the District Court for the Northern District of California reveal that Upside has an ongoing lawsuit claiming that a former employee stole thousands of confidential files from the company, including trade secrets. The court documents, which have not been reported on publicly, focus on a small team within Upside that was working on some of the company’s most secretive and forward-looking projects, which unraveled after the departure of company cofounder Nicholas Genovese.
On April 1, 2021, Genovese was asked to attend a performance review meeting with the company’s senior management at a Starbucks. According to Genovese and one other person familiar with the matter, the cofounder was told that he had been fired from the company and was asked to return the key cards granting him access to Upside’s offices. “There was a lot of tension towards that moment,” says Genovese, who cofounded the company in 2015 alongside current CEO Uma Valeti and Will Clem. Upside Foods confirmed that Genovese’s day-to-day involvement with Upside finished in April. “His role at the company has changed to better align with his personal career goals and our longer-term business needs. We are not able to comment further given the confidentiality of personnel issues,” says Jaci Kassmeier, Upside Foods’ vice president of people. Genovese signed a nondisclosure agreement with the startup as part of his departure, and he stressed that his comments were not intended as critical or disparaging of the company.
Before he left, Genovese was the manager of a small but seemingly critical group within Upside. Named Blue Sky—the team’s maxim was “The sky’s the limit”—the three-person skunkworks was responsible for a crucial task: developing a process that could grow cell-based meat with a greater yield and at lower cost than the company’s existing technology. According to legal documents, Blue Sky’s work was going well. “There was so much potential, and we were making incredible progress,” says Genovese.
Shortly before Genovese left, the group broke internal records for biomass conversion efficiency: growing meat from nutrients in a cost-effective manner. Creating lab-grown meat costs hundreds or thousands of times more than conventional meat, so finding a way to grow cells cheaply and quickly is a critical challenge for companies trying to bring products to market. To protect the valuable intellectual property it was developing, Blue Sky’s work was a closely guarded secret even within the company. A physical barrier in the laboratory stopped other Upside employees from seeing what the team was working on, and data generated by Blue Sky was kept separate from other company data.
After Genovese’s departure, Blue Sky began to fall apart. In early April, one Blue Sky employee who had been at Upside since January 2021 left the company, leaving just one member of the team remaining: senior research associate Napat Tandikul. She joined the company in December 2019 as a research associate, and since November 2020 she had been working exclusively on designing a new kind of cultivator: a device, also known as a bioreactor, that is used to grow the animal cells that eventually become the key component of cultured meat products.
On April 11, Tandikul started to download thousands of documents relating to Blue Sky’s work, according to the lawsuit filed by Upside Foods. The haul included thousands of sensitive documents relating to Blue Sky’s work, including the design of the cultivator she had been working on, key business objectives, and testing data. A day later she resigned from the company, the documents say.
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According to the complaint, a forensic analysis of Tandikul’s laptop conducted on behalf of Upside Foods found that over 3,600 files were downloaded from Upside’s computer network between April 11 and April 12, the day she handed in her resignation. She allegedly downloaded 6 GB of documents in total; a digital forensics expert hired by Upside stated in a legal declaration that Tandikul also created a new Gmail account and accessed WeTransfer and Google Drive at around the time of the downloads, which they viewed as “indicative of exfiltration.”
On April 27, Upside lodged a civil lawsuit accusing its former employee of breach of contract and misappropriation of trade secrets, and alleging that Tandikul, who is a citizen of Thailand, planned to leave the United States with the information she had downloaded. In a legal response to the complaint filed on May 21, 2021, Tandikul admitted that she downloaded company documents between April 11 and 12 but denied that she attempted to steal them or to leave the United States with confidential and trade secret information.
The legal filings suggest that Tandikul was frustrated with how the Blue Sky team was handled at Upside Foods. A declaration from Kassmeier referred to an email that Tandikul sent to members of the senior leadership team on February 25. According to the legal documents, Tandikul expressed a desire for additional hires to the Blue Sky team and lamented that Upside set “higher expectations” for Blue Sky than it did for other employees.
Tandikul, whose US visa expired in early June, has now returned to Thailand. In a Zoom hearing before a judge on May 12, Tandikul’s lawyer at the time said that she had to borrow money to purchase a new phone after turning hers over as part of the investigation. Since the complaint was first filed, Tandikul surrendered seven devices and 10 online accounts to a forensic expert for the removal of proprietary information. According to a legal update filed by Upside on December 3, all of these devices have been returned or are in the process of being returned.
Tandikul did not respond to requests for comment. A representative from Upside’s public relations agency says the company has no intention of supporting a criminal case and is satisfied that the confidential documents have been returned.
Lawyers for Tandikul and Upside are now negotiating a potential settlement of the case. One option in these kinds of cases would be to ask the defendant to sign a non-compete clause that would prevent them from working with a competitor for a set period of time, says Robert Williams, who co-heads the Intellectual Property Group at the law firm Bird & Bird. “Such that your knowledge becomes stale and out of date,” he says, “and therefore by the time you join them you are less of a competitive threat than you were before.” Tandikul’s original employment contract signed in December 2019 included a one-year non-compete clause.
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As startups compete to be the first to bring slaughterless animal meat to dinner plates, competitive edge is everything. Between 2016 and 2020, cultured-meat firms attracted $505 million in funding, according to a report from the Good Food Institute, and there's no sign that the money is drying up. In March 2021, US-based startup Eat Just—the only cultured-meat firm to have sold its product to the public—announced it had raised $200 million in a funding round that valued the company at more than $1 billion, according to Bloomberg. Upside Food’s most recent publicly disclosed funding round was a $186 million series B in early 2020.
But as a recent investigation by the Counter made clear, there are still serious doubts over whether the economics of growing in bioreactors can ever make sense. The nutrients needed to grow animal cells are extremely costly, and bioreactors that can reliably churn out huge quantities of high-quality meat slurry haven’t been built yet. The bioreactors in Upside’s pilot facility are currently capable of producing 50,000 pounds of finished product each year in total. In comparison, US slaughterhouses collectively produced nearly 28 million pounds of beef and veal in 2021. The design of these bioreactors—and the cells that will be put in them—are a crucial part of solving the puzzle of lab-grown meat. Get it right, advocates of cultured meat say, and a future of climate-friendly, slaughter-free meat might just be possible.
Forging this future was supposed to be the job of Blue Sky, supposedly one of the most forward-looking programs within a company already pushing the limits of food science. Instead, the lawsuit filed by Upside reveals that this team fell apart with acrimony, intrigue, and one of the first public legal battles over the future of cultured meat.
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