Electric car company Tesla Motors will not continue its trade secret suit against rival car maker Fisker Automotive, following an arbitrator's ruling in Fisker's favor.

Fisker Automotive said on Monday that an arbitrator found an interim award in favor of Fisker Automotive and the auto design company which had done work for Tesla last year.

Tesla's communications manager on Monday said that the company will not pursue the case because the arbitrator's ruling was binding.

The case dates back to April of this year, when Tesla Motors filed a suit against famed designer Henrik Fisker's design firm for allegedly taking confidential design information about Tesla's upcoming luxury sedan during a consulting engagement.

Fisker Automotive responded in May when it filed for arbitration. The contract between Fisker and Tesla had a clause that required that any disputes be handled through arbitration in Orange County, Calif., within 90 days, according to Fisker. Tesla filed its suit against Fisker in San Mateo Superior Court.

According to Fisker, the case's arbitrator said that "Tesla's assertion of violations of the Uniform Trade Secrets Act by Fisker were baseless and neither brought nor pursued in good faith."

Fisker Automotive said that it is still on target to release its plug-in hybrid high-end sports sedan by the end of 2009.

The Tesla representative said the result does not affect Tesla's operations. The company raised $40 million in convertible debt on Sunday in an effort to improve its low cash position and accelerate sales of its Roadster electric sports car.