San Francisco-based drone developer Lily Robotics Inc. is facing some tough times: It’s not only shutting down after failing to deliver its product but also being faced with a lawsuit alleging “false and misleading representations and unlawful business practices.”
According to a Jan. 12 update from founders Antoine Balaresque and Henry Bradlow, Lily is planning to shutter the company after three years and offer refunds to customers who pre-ordered the “throw-and-shoot camera,” which Lily described with the following process: “All you have to do is throw it in the air to start shooting. It flies itself and uses GPS and computer vision to follow you around.” In addition, Lily said the drone would be waterproof and “ultra-compact” and would be able to shoot HD video and photos.
Lily, which says it was founded in September 2013 “in the basement of a UC Berkeley robotics lab,” grabbed funding in spring 2014 from investors Shana Fisher and SV Angel. Now, citing “ups and downs” over the past year, the founders say in their update that the company has been “racing against a clock of ever-diminishing funds.”
“Over the past few months, we have tried to secure financing in order to unlock our manufacturing line and ship our first units – but have been unable to do this,” the update says.
“We are very sorry and disappointed that we will not be able to deliver your flying camera and are incredibly grateful for your support as a pre-order customer,” it adds. In turn, Lily says it will be rolling out refunds to its customers over a 60-day period.
In a Jan. 12 lawsuit from “the people of the state of California” against Lily Robotics, the plaintiffs claim the following: “false advertising based on false and misleading promotional video that it used in order to induce consumers to purchase its camera drone, violations of the Consumer Legal Remedies Act, theft by false pretenses by using the false and misleading promotional video and other false representations to obtain money from pre-order customers, and violations of the Federal Trade Commission regulations governing shipping representations and delays.”
The lawsuit alleges that a promotional video released by Lily actually used footage taken by a DJI Inspire drone.
“In fact, none of the video in the promotional video was shot by a Lily Camera,” the suit says.
“By the end of 2015, the promotional video had more than 30 million views, garnering Lily Robotics more than $34 million in pre-order sales – more than 60,000 units from more than 200 countries,” the plantiffs claim.
The suit says the company used the DJI drone because it “knew that it did not have a product that could do what was going to be advertised in the promotional video.”
The lawsuit further alleges that Lily Robotics continued to rack up pre-orders for its drone until Oct. 7, 2016, even though it had been long been announcing delayed shipment dates, which the company “did not have a reasonable basis for.” In a Tweet on Dec. 12, 2016, Lily said it expected to deliver U.S. orders later that month until early 2017 and international orders later in the year.
“Lily Robotics knew or should have known shortly after launching its pre-sale campaign that it could not make and ship enough Lily Cameras to fulfill the orders by the dates it said it would, yet it continued to tell its customers it could for months and months afterward,” the lawsuit continues, adding that the company did say it would offer refunds to customers and include a 30-day return policy on the drone.
In the suit, the plaintiffs seek a civil penalty of $2,500 for “each violation of business and profession code section 17500” and “each violation of business and profession code section 17200.” In addition, they are asking Lily to “restore to every person in interest all money and property which was acquired by [Lily] through its unlawful conduct.”
The Lily founders, which note that their customers’ money will automatically be refunded, add in their update, “Thank you for believing in our vision and giving us the opportunity to get this far. We hope our contribution will help pave the way for the exciting future of our industry.”