Uber and Waymo Settle Trade Secret Dispute
As I blogged about last year, a Google spin-off company sued Uber, accusing it of stealing intellectual property developed by Google'.
Waymo (the spin-off) claimed that Anthony Levandowski, who ran Uber's self-driving car division, downloaded 14,000 files from Google shortly before leaving the company to start his own self-driving truck business.
The allegedly stolen technology relates to lidar — “light detection and ranging” sensors for helping self-driving cars "see" their surroundings.
Uber bought Levandowski's company for a reported $680 million; other sources say $590 million.
Waymo claimed that Uber knew that Levandowski had stolen the documents. Uber denied this. The settlement terms included that Waymo's trade secrets weren't being used in Uber's self-driving vehicles.
Levandowski was fired by Uber after he refused to help the company defend itself from the Waymo lawsuit. As a result, Levandowski lost $250 million worth of Uber equity that he would have been paid if his company met its performance targets.
As the New York Times reported,
After four days of arguments and testimony in Federal District Court here, Uber agreed to provide Waymo, the self-driving car unit under Google’s parent company, Alphabet, with 0.34 percent of its stock. According to Waymo, the settlement’s terms value Uber at $72 billion, meaning the Alphabet unit’s stake is worth about $245 million.
As the Times noted, self-driving vehicles are potentially a trillion-dollar industry.
In an earlier article, the Times reported that Google and Uber originally had a warm relationship. However, Google's then-CEO Larry Page reportedly became "unpumped" and "angsty" when Uber entered the self-driving car business that Google had staked out for itself.
The judge in the case also referred the matter to the Justice Department, though the Times noted that it wasn't clear whether there was a criminal case being brought against Levandowski.
Trade Secret theft can be asserted as a cause of action in both state and federal courts.
In 2016, the Defend Trade Secrets Act created a new federal cause of action for trade secrets. The Act is also closely modeled on the ITSA.
Almost all US states have adopted versions of the Uniform Trade Secrets Act (UTSA), which defines a trade secret as:
information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Misappropriation of a trade secret is a tort (civil wrong) and can also be prosecuted as a crime.
Obtaining a trade secret can give rise to a legal claim when the secret is obtained by improper means, such as via "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means."
Many trade secret cases arise when former employees are alleged to have violated their non-disclosure agreements (NDAs).