Suit Filed Against Defunct Lily Robotics

Last week, Lily Robotics, the much-hyped drone startup, had announced it was shutting down due to insufficient funding just a month shy of its scheduled flagship drone camera release.

In late 2015, Lily closed $14 million in funding from a number of investors, including Spark Capital and Winklevoss Capital. The drone startup had recently been seeking an additional $15 million in funding to stay afloat.

But just one day after Lily Robotics’ announcement, the San Francisco District Attorney reportedly filed a civil consumer protection suit against the defunct startup. The suit alleges that the company had intentionally misled its potential customers with its product launch video by using equipment and technology produced by competitors. The launch video, first released back in 2015, was widely shared on social media and is viewed by many to be the source of consumer interest in pre-ordering Lily Robotics’ drone.

The lawsuit alleges that at the time of filming, Lily Robotics did not have a functional prototype. The suit claims that the startup’s two cofounders used GoPro units attached to non-functioning drones to shoot the promotional video’s first-person angles, which supposedly came from Lily Robotics’ camera. The District Attorney also alleges that other parts of the launch video were shot using a DJI Inspire professional drone. In both cases, Lily didn’t disclose that it used other technologies to produce the video.

In addition to the civil suit, the San Francisco DA has filed for a temporary restraining order to prevent Lily Robotics from conducting any business — with the exception of issuing refunds to its customers. The startup had received pre-orders for 60,000 units, totaling $34 million. Funding delays pushed the date to late 2016 and early 2017. All of Lily Robotics’ pre-order customers are expected to receive a full refund sometime within the next two weeks.