Scale AI, a leading provider of AI data-labeling services, has filed a lawsuit against its former head of engagement management, Eugene Ling, and his new employer, competitor Mercor. The legal complaint, filed in the U.S. District Court for the Northern District of California, accuses Ling of downloading over 100 confidential documents, many detailing a key customer strategy, shortly after meeting with Mercor’s CEO
Accusations of Corporate Espionage
Scale alleges that Ling attempted to poach several of its employees and even tried to recruit that key customer—referred to in court documents as “Customer A”—to Mercor while still employed at Scale. Communications captured in the filing reportedly included messages like, “I’m staying within the data space… excited about how this new company can support you.
Mercor’s Response
Mercor’s co-founder, Surya Midha, has denied benefiting from Scale’s data, stating they “are intentionally running our business in a different way.” He acknowledged that Ling had older files on his personal Google Drive, which Mercor claims they never accessed. Mercor reached out to Scale prior to the lawsuit, offering that Ling destroy the files or find a resolution, but Scale declined.
Potential Repercussions and Industry Context
Scale is demanding damages, legal costs, and seeks a court order barring Mercor from using the documents while requiring their return. The case highlights growing concerns over intellectual property protection in the fiercely competitive AI sector, where data labeling underpins much of model training and development
