Red Cat v. Matus & Vector Case 2:25-cv-00646 Doc 55
Red Cat v. Matus & Vector Case 2:25-cv-00646 Doc 55
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Christina M. Jepson (Utah Bar No. 7301) Adam R. Rosenthal (Pro Hac Vice)
Corey J. Hunter (Utah Bar No. 18964) SHEPPARD MULLIN RICHTER
PARSONS BEHLE & LATIMER & HAMPTON LLP
201 South Main Street, Suite 1800 12275 El Camino Real, Suite 100
Salt Lake City, Utah 84111 San Diego, CA 92130
Tel: (801) 532-1234 Tel: (858) 720-8900
Fax: (801) 536-6111 Fax: (858) 509-3691
[email protected] [email protected]
[email protected]
Victoria W. Hubona (Pro Hac Vice)
SHEPPARD MULLIN RICHTER
& HAMPTON LLP
321 N. Clark Street, 32nd Floor
Chicago, Illinois 60654
Tel: (312) 499-6300
Fax: (313) 499-6301
[email protected]
Attorneys for Plaintiffs
1
Red Cat/Teal respectfully request a hearing on their Motion for Preliminary Injunction as soon
as possible. Lead counsel for Plaintiffs is in a jury trial in Orange County, CA from September
3, 2025 through October 10, 2025, and respectfully requests the hearing be scheduled the weeks
of October 20th, October 27th, or November 3rd.
2
Defendants’ arguments in their respective Oppositions to Red Cat/Teal’s Motion for
Preliminary Injunction overlap in numerous places or specifically reference the other
Defendant’s Opposition argument. In light of this, to be considerate of the Court’s time, and to
limit unnecessary duplication, Red Cat/Teal have divided their Replies as follow: (1) the Reply
to Matus’s Opposition covers, as it relates to legal actions for a “Temporary Restraining Order”
or a “Preliminary Injunction,” the elements (aside from irreparable harm) needed to be shown;
and (2) Reply to Vector’s Opposition covers irreparable harm.
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premised on a demonstrably false statement that Vector and Red Cat/Teal are not competitors in
the First-Person View (“FPV”) drone space. Yet, the companies are actively competing for the
same FPV military drone contracts. Second, Vector and Matus are brazenly causing Red
Cat/Teal imminent harm at this very moment. By taking advantage of their illegal scheme,
Defendants are actively marketing and selling a competitive FPV drone. And third, Vector’s
on Red Cat/Teal’s Motion for Preliminary Injunction. Defendants know an evidentiary hearing
will further expose their illegal scheme to (a) sabotage Red Cat/Teal’s business, (b)
misappropriate Red Cat/Teal’s trade secrets, and (c) tortiously interfere with Red Cat/Teal’s
relationships and opportunities to expand their drone offerings. At this very moment,
Defendants are using their unfair advantage to illegally compete with Red Cat/Teal by marketing
and attempting to sell Vector’s Hammer drone at the expense of Red Cat/Teal’s FANG™ drone.
Vector’s Opposition rests on the disingenuous claim that it and Red Cat/Teal are not
spheres, Vector argues that its newly introduced Hammer FPV military drone does not compete
with Red Cat/Teal’s business. This claim - which is central to Defendants’ argument for why the
Court should not enjoin their unlawful conduct - fails for two separate and independent reasons.
First, even if, arguendo, Red Cat/Teal were only just now entering the FPV drone space,
the fact remains that Matus (who resigned from Red Cat/Teal to join Vector as its co-founder and
Chief Technology Officer (“CTO”) under the false pretense that Vector would not be designing
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and selling drones) is violating his enforceable restrictive covenants. Due to Matus’s significant
role and responsibilities at Vector and Vector’s competition in the same business as Red
Cat/Teal, Vector should be precluded from entering the drone market for the entirety of Matus’s
non-compete period. See Mouldings, Inc. v. Potter, 315 F. Supp. 704 (M.D. Ga. 1970) (finding a
new hire’s non-compete applied to the individual former employee and his new company).
Second, the competition between the two companies is not theoretical. It is undisputed
that Red Cat/Teal and Vector are currently competing for the same Department of Defense
(“DoD”) contracts seeking FPV drones. (Decl. of G. Hitchcock (“Ex. A”), ¶ 19). Desperate to
avoid the consequences of its actions, Vector falsely claims that Red Cat/Teal do not have an
FPV drone of their own. This is despite Red Cat/Teal’s Verified Complaint and their Motion
detailing the existence of FANG™: Red Cat/Teal’s very real FPV drone. (ECF 1, ¶¶ 93, 99-100;
ECF 2, pp. 6, 16). When Red Cat/Teal filed their lawsuit and Motion on August 4, 2025, they
appropriately represented that FANG™ was in the final stages of development and would soon
enter the market. True to its word, after months of development, and notwithstanding the
setbacks caused by Defendants’ chicanery, Red Cat/Teal are actively taking DoD orders for
FANG™. (Ex. A, ¶¶ 15-17). It is undisputed that since filing this lawsuit, Red Cat/Teal have
finalized their FPV drone and are competing for the same U.S. military contracts for which
Vector competes - which is precisely what Red Cat/Teal’s Motion for Preliminary Injunction
warned would happen. (See ECF 2, pp. 6, 16; Ex. A, ¶¶ 15-17, 19).
Curiously, Vector frames sales competition against Hammer only based on some
unspecified military “procurement” allegedly “six to nine months away.” (ECF 30, p. 13). This
representation barely scratches the surface of the myriad currently active sales opportunities
available for military FPV drones. Indeed, sales opportunities for military drones, including FPV
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drones, cover, inter alia, grant applications, military bid contracts, governmental agency
requisitions, law enforcement sourcing calls, and U.S. ally requests. (ECF 2, p. 6; Ex. A, ¶ 20).
Even Vector admits the sale of Hammer is not limited to the alleged procurement where it
“anticipates a 100-unit government order.” (ECF 30, p. 5). In any case, Hammer and FANG™
are currently and actively competing for the same contracts during what is referred as the
“sweeps period” (which takes place annually in August and September), with contract winners
planned to be announced by September 30, 2025. (See Ex. A, ¶¶ 16, 19). Moreover, it is
implausible for Vector’s other drones, such as Mace, to be marketed in singular silos (such as
only for the unspecified military “procurement”). (See ECF 30, p. 15; ECF 30-2, ¶ 21).
Vector’s efforts to distance itself from serious allegations related to its illegal competition
with Red Cat/Teal mirrors Vector’s and Matus’s now-familiar pattern and practice in executing
their illegal scheme. Defendants have no qualms about making material misrepresentations to
Red Cat/Teal. For example, Defendants represent that Vector did not first consider “producing
drones of its own at scale until April 2025.” (ECF 30, p.4; ECF 30-2, ¶¶ 10, 12; see ECF 29, p.
11; ECF 38, ¶¶ 29, 46-49). This statement, made by Vector’s co-founder and CEO, is
demonstrably false. A December 1, 2024 email exchange between Matus and Mr. Yakulis
establishes that five months before he first “considered” competing in the drone industry (as he
now claims), the two co-founders were actively scheming on how to leverage Red Cat/Teal’s
connections while Matus was still an executive at Red Cat/Teal, to aid Vector’s plans to build its
own drones. (See Decl. of V. Hubona (“Ex. B”), ¶ 2). With the backdrop of discussing their
attendance at an upcoming Red Cat/Teal holiday party (where Mr. Yakulis was only invited with
the understanding that he and Vector would not be designing and building their own drones) and
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in response to learning a key military contact for Red Cat/Teal would be at the party, Mr.
Yakulis responds to Matus, “OK great. Cant [sic] wait man. And it will be good to meet him in
person... thanks for the heads up. I want to learn about the coming FPV program of record.
If Defendants had not even begun considering manufacturing a drone until April 2025 (as
Defendants claim in their declarations), then there certainly should not be any evidence that five
months prior (while Matus was still employed at Red Cat/Teal), the two Vector co-founders
actively planned for Vector to compete in the drone market. Why would Vector make such a
bold misrepresentation about its plans vis-à-vis designing and building its own drone? (See ECF
30-2, ¶¶ 10, 12; ECF 38, ¶¶ 29, 46-49). The answer is simple: manufacturing and selling its own
drones have always been a core part of Vector’s business plan. Defendants just kept this
Current and Continuing Unfair Competition. At this very moment, Red Cat/Teal and
Vector are competing to be awarded military contracts during the “sweeps” period. (Ex. A, ¶¶
16, 19). This is neither “speculative” nor “theoretical,” as Vector claims. This is evidence of
real, imminent, and irreparable harm.3 Exploiting Red Cat/Teal’s sensitive business
3
Vector’s assertion that Red Cat/Teal seek only money damages (in turn, debasing their
irreparable harm) in their Civil Cover Sheet and Complaint is a diversion. All plaintiffs filing a
lawsuit must identify a damages amount in their Civil Cover Sheet regardless if they are seeking
an injunction or not. Vector cannot manipulate requisite filing procedures to claim Red Cat/Teal
acquiesced money damages will make them whole again. In any case, Red Cat/Teal’s Verified
Complaint features causes of action under which Red Cat/Teal are seeking monetary relief and
not injunctive relief. Red Cat/Teal were never required to file a complaint with only claims that
seek the same relief. Further, unlike in Route App, Inc. v. Heuberger (as cited by Vector) where
the plaintiff’s complaint identified a specific $4,150,050 amount as quantifiable damages, no
such claim exists here because Red Cat/Teal’s irreparable harm cannot be redressed by monetary
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Defendants cut the line to compete and gain a foothold in the market. This neutralizes Red
Cat/Teal’s competitive edge and distorts fair competition, especially as reputational leverage is at
stake. Fair competitive balance cannot be restored by the price of a contract. Defendants’
unearned acceleration undermines years of Red Cat/Teal’s investment, erodes market credibility,
and allows Defendants to unfairly position themselves using Red Cat/Teal’s confidential insight
and connections. The damage to trust, goodwill, and strategic positioning is neither easily
quantifiable nor compensable through monetary relief. And, the irreparable harm does not just
stop when the sweeps period ends. See Xantrex Tech. Inc. v. Advanced Energy Indus., Inc., No.
CIVA07CV02324WYDMEH, 2008 WL 2185882, at *16 (D. Colo. May 23, 2008) (unpub.)
(finding irreparable harm where defendant stood to gain a “head start” in the marketplace based
on plaintiff’s work, money, and trade secrets). Vector’s own admissions (i.e., it “anticipates a
100-unit government order” and plans to compete for the PBAS program, and its business would
be “destroy[ed]” if prevented from selling drones for a year) affirm it will continue to compete
for buyers while undercutting Red Cat/Teal in the process. (ECF 30, pp. 5, 7, 15).
competitive advantage and business relationships, which are and will continue to be threatened if
Matus is permitted to continue to head and work for a competitor. With Vector and Red
Cat/Teal directly bidding against each other for defense contracts, Matus, as Vector’s co-founder
and CTO, cannot sever his understanding of Red Cat/Teal’s business as Red Cat’s former CTO
and Teal’s former CEO. This undermines the integrity of the competitive process.
damages alone. No. 2:22-CV-291-TS-JCB, 2022 U.S. Dist. LEXIS 133506, at *7 (D. Utah July
26, 2022) (unpub.).
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To benefit Vector, Matus also continues to leverage the business relationships and
contacts he developed as a Red Cat/Teal executive, including DoD connections that Red
Cat/Teal built at considerable expense and effort. Such exploitation is apparent where he
planned to scope information from one of Red Cat/Teal’s military contacts and admitted he
attempted to broker a deal with Orqa on behalf of Vector - after sabotaging the Red Cat/Teal
partnership with Orqa. (See ECF 38, ¶¶ 25, 53-55). This harms Red Cat/Teal’s relationships and
further un-levels the competitive environment. As Vector continues to actively build and sell its
catalogue of drones, Matus will leech off of Red Cat/Teal’s relationships to tilt the playing field
in Vector’s favor. Matus even reveals that as recently as August 11, 2025, he showcased
Hammer to military personnel and spoke about Red Cat and FANG™ with a Red Cat/Teal
military contact who is helping the Army select companies for the procurement of FPV drones.
(See ECF 38, ¶¶ 53-55). Maintaining the status quo and preventing the harm to Red Cat/Teal’s
strategic business relationships, and the value of said relationships, require injunctive relief.
The harm caused by Vector’s interference with Red Cat’s employee relationships and
non-compete agreements also remains ongoing. The loss of important Red Cat employees was
the first domino in a toppling run that continues with no end in sight.4 This is not just a matter of
spending additional funds to replace a handful of employees. Most of these employees were
engineers who worked on and were intimately familiar with the design and development of Red
4
Matus’s claim he notified Red Cat’s Chief Revenue Officer (“CRO”) about Vector hiring Red
Cat employees but did not contact the employees himself underscores Matus’s efforts to
maintain his and Vector’s improper scheme by continuing to misrepresent to Red Cat/Teal that
he was complying with his contractual obligations. (ECF 29, p. 21; ECF 38, ¶ 40; Ex. A, ¶ 4).
Matus ignores his breach by soliciting employees to leave Red Cat’s employment and
Defendants’ tortious interference with these employees contracts and relationships with Red
Cat/Teal. In March 2025, Red Cat/Teal were not aware Vector was a competitor. Matus also
does not explain how, whether through fact or legal authority, such an exchange contests Red
Cat/Teal’s irreparable harm. This does not defeat Red Cat/Teal’s irreparable harm; it supports it.
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Cat/Teal’s drones. (ECF 1, ¶ 149). Their knowledge and team cohesiveness serve as a
launchpad for Vector’s precipitous climb in the military drone market (e.g., Vector’s rapid
Red Cat/Teal of innovation through their drone refinement and development. Qualified new
hires are not easy to find, and even where certain positions are replaced, these new employees do
not have the historical work flows and Red Cat/Teal knowledge and familiarity to hit the ground
running. The damage to Red Cat/Teal’s innovation and the perversion of the competitive
playing field continues each day and compounds, further necessitating injunctive relief.
Abuse of Red Cat/Teal’s Reputation and Goodwill. Matus admits, despite allegedly
accepting an offer of employment from Vector on July 4, 2024, he waited at least 145 days (until
November 26, 2024) to inform Red Cat/Teal of his plan to leave, after the Army selected Red
Cat/Teal for the SRR Tranche 2 program. (See ECF 38, ¶¶ 32, 34). Under the purported guise of
wanting to help Red Cat/Teal close the deal, he remained seated in the ideal position to study and
absorb Red Cat/Teal’s information and strengthen advantageous relationships created on Red
Cat/Teal’s dime. And, of course, he wanted Defendants to capitalize on the credit Matus would
receive if the SRR Tranche 2 program was awarded to Red Cat/Teal. Instead of tendering his
resignation immediately upon the Army’s selection of Red Cat/Teal, Matus waited for Red Cat
to publish its press release announcing the award and quoting Matus, and then, seven days later,
Matus’s knowledge of Red Cat/Teal aside, Defendants knew the invaluable advantage
5
See RED CAT PRESS RELEASE, Red Cat Announces Production Selection for U.S. Army Short
Range Reconnaissance Program, https://ir.redcatholdings.com/news-events/press-
releases/detail/160/red-cat-announces-production-selection-for-u-s-army-short-range-
reconnaissance-program (posted Nov. 19, 2024); (ECF 38, ¶ 34).
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they would have in competing for drone contracts where, as newcomers in the competitive
military drone market, their reputation is built off public perception that Matus (as Red Cat’s
former CTO and Teal’s CEO) played a significant role in obtaining the SRR Tranche 2 program
on behalf of Red Cat/Teal, and now as CTO of Vector, is the wunderkind behind its
technological advancements in the drone space. The non-compete agreement was executed, in
part, to protect against a competitor unfairly profiting off of Red Cat/Teal’s reputation and
goodwill. Doors (that would otherwise remain closed) open for Vector based on Red Cat/Teal’s
reputation and goodwill. Red Cat/Teal are harmed each time Vector is afforded an opportunity
to compete because those opportunities are not earned on Vector’s own merits, but instead on the
credibility, innovation, and track record that Red Cat/Teal built - precisely the unfair advantage
the non-compete was designed to prevent. Vector even had Matus, who Vector unbelievably
claims had no input or involvement in the design or building of Hammer, showcase Hammer to
Army officials who are well aware of Red Cat/Teal. (See ECF 38, ¶¶ 53-55). Defendants are
illegally riding on the coattails of Red Cat/Teal’s reputation and goodwill, and, unless the Court
argument that none of Red Cat/Teal’s trade secrets stand to be damaged misses the mark. Vector
ignores Matus’s threatened misappropriation and inevitable disclosure. Matus was fluent in Red
Cat/Teal’s operations, approach, and trade secrets (including, inter alia, business plans, strategic
initiatives, business opportunities, partners, and drone design and development). He is unable to
flip a switch and cordon off his knowledge of Red Cat/Teal. Vector’s categorization of this
22). This knowledge is the product of Matus’s privileged, business-critical experience at Red
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Cat/Teal. His CTO and co-founder roles at Vector create the optimal conditions begging for
Matus’s Red Cat/Teal insight, whether deliberately or inadvertently disclosed. Vector does not
dispute that Matus works at Vector in the same role where he performs the same job duties (e.g.,
overseeing the design, development, manufacturing, marketing, and sales of said drones). (See
ECF 1, ¶ 35 ECF 2, p. 7). Vector also shows no signs of slowing down its drone business. To
the contrary, despite allegedly only deciding to enter the drone business in April 2025 (a
demonstratively false statement, infra), Vector claims its business would be “destroy[ed]” if it
were to be enjoined from selling its drones for a year. (ECF 30, p. 15). If Vector were simply a
warfare-as-a-service company, and not a military drone company like Red Cat/Teal, its core
business will not be impacted if the Court grants Red Cat/Teal’s Motion.
Defendants misappropriation is also evident in the fact that a few weeks after Matus and
Mr. Yakulis discussed Vector’s plans to submit a drone for military contract, Matus completely
wiped his Red Cat/Teal laptop, erasing his digital footprint and ensuring Red Cat/Teal could not
identify, among other things, Matus’s transfer and exportations of Red Cat/Teal’s data, and the
storage devices he connected to the laptop. (See Ex. B, ¶ 2; ECF 2, p. 12, ECF 38, ¶ 41).
Vector’s cited caselaw is inapposite.6 Matus cannot help himself but to use confidential
information and trade secrets gained from Red Cat/Teal to influence Vector’s business decisions
and products. He continues to threaten misappropriation in violation of the DTSA and UTSA.
See Perez v. Stone Castle LLC, No. 1:14-CV-66 TS, 2014 U.S. Dist. LEXIS 75640, at *6 (D.
Utah June 2, 2014) (finding an injury’s hypothetical nature passes muster where Congress felt
6
See Novus Franchising, Inc. v. Brockbank, No. 1:16-CV-00078, 2016 U.S. Dist. LEXIS
122655, at *49 (D. Utah Sep. 8, 2016) (unpub.) (applying Minnesota law to determine if trade
secrets were misappropriated); Microbiological Research Corp. v. Muna, 625 P.2d 690, 700
(Utah 1981) (finding no trade secrets where information was already in the public domain).
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credulity. Why would Vector’s Chief Technology Officer allegedly not have any input or
involvement in the design, building, and manufacturing of its first actual technological creation?
Moreover, the representations Matus was not involved in FANG’s™ development and FANG™
was only a “concept” that “never went anywhere” are simply wrong. In fact, in June 2024,
Matus himself introduced FANG’s™ prototype to the world. (See Ex. A, ¶ 10). Matus is well
aware of FANG’s™ (and Red Cat/Teal’s other drones’) design and plan serving as the base of
the now final drone, which designs and combinations worked and did not work (i.e., “negative
knowledge”), and strategic decisions to optimize the drone. (See ECF 2, pp. 7-9; Ex. A, ¶ 9). To
develop FANG™ after the Orqa deal did not go through, Red Cat/Teal relied on their progress
on FANG™ made with Matus’s help while he was still at Red Cat/Teal. (See id. at ¶¶ 9, 13).
With this information in hand, Matus’s thorough understanding of the design and
development of Red Cat/Teal’s other drones, and a team of Red Cat/Teal engineers now working
for Vector, Defendants were able to fast-track Hammer’s development standing on a foundation
of Red Cat/Teal’s hard-earned intellectual capital. Such unjust acceleration cannot be undone,
This is not just past harm. Each and every time Defendants market or sell Hammer (as they are
actively doing), they erode the value of Red Cat/Teal’s trade secrets and innovation and dampen
Red Cat/Teal’s competitive vitality – neither of which have any calculable price tag.
CONCLUSION
For the foregoing reasons, those set forth in the Motion for Preliminary Injunction, and
those that will be presented at the anticipated evidentiary hearing, Red Cat/Teal respectfully
request the Court grant Red Cat/Teal’s Motion for Preliminary Injunction.
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CERTIFICATE OF SERVICE
I hereby certify that on September 4, 2025, a copy of the foregoing document was filed
via the Court’s CM-ECF, which serves a copy on all counsel of record.