Uber, in Trouble Again, For Allegedly Stealing Trade Secrets from Waymo

Uber has a bit of a history of asking for forgiveness instead of permission when it comes to the law–a trend which hasn’t worked out particularly well for them. This has come back to bite them again in the case brought against them by the Google owned self-driving car project Waymo.

After an engineer, Anthony Levandowsky, allegedly left Waymo with thousands of confidential files he set up a firm which Uber promptly purchased for $680M. It’s no surprise Uber was interested in what he was offering, they have long been developing their own self-driving technology. Among this technology is a laser navigation tool known as Lidar.

Just about a week ago, the judge handling the case-Judge William Alsup-ruled that Levandowsky knew or should have known he was in possession of this confidential material and barred Uber from using any of the technology brought by Levandowsky in their products. The judge’s order states that Waymo has produced “compelling evidence” that Levandowsky and Uber had planned the acquisition of Levandowsky’s firm before he had even left Waymo. The order also says that the evidence showed that Uber hired Levandowski even though they “knew or should have known that he possessed over 14,000 confidential Waymo files.” Judge Alsup’s order requires Uber to not to allow Levandowski to work on their Lidar project or use the files he downloaded for the duration of the lawsuit. It also requires them to return all the files to Waymo by this Wednesday, May 31st. Despite all this, the ruling has still been hailed as something of a victory for Uber. Waymo didn’t get their ultimate wish-shutting down Uber’s Lidar project entirely until the lawsuit is resolved. The court also didn’t consider some of the things claimed by Waymo as true trade secrets-not surprise given that Waymo had listed 121 potential trade secrets that were allegedly stolen. What’s more, while Waymo has succeeded in receiving an injunction on the issue of trade secret misappropriation, they have failed to do so on their second cause of action for patent infringement.

Despite this, the ruling is a huge blow against Uber’s self-driving car program. As the case goes on, it could get worse for both Uber and Levandowsky. Federal trade secret law includes potential repercussions in both civil and criminal law. Levandowski himself invoked his Fifth Amendment right to not incriminate himself when attorneys representing Waymo questioned him.

The trade secret rulings here are the meat of this order and the problems for both Uber and Levandowski. In this two-part article, let’s look at how civil and criminal trade secret law works and how it was applied in reaching this order.

How Civil Trade Secret Law Works

Waymo’s lawsuit against Uber is firmly in the realm of civil law. Thus, it is civil trade secret law that was used in reaching this ruling. Waymo’s lawsuit alleges violations of both the California Uniform Trade Secrets Act and the Defend Trade Secrets Act.

California’s Uniform Trade Secrets Act is one of the many nearly identical state laws handling trade secrets based on the Uniform Trade Secrets Act. Every state except New York, North Carolina and Massachusetts. It’s worth noting that near identical is not identical and many states have small but meaningful differences in their approach to trade secrets.

The Defend Trade Secrets Act is a federal law passed by the Obama administration in May of last year. It serves to extend the Economic Espionage Act of 1996 (basically federal criminal law applying to trade secret theft) to include a civil cause of action nearly identical to the Uniform Trade Secrets Act.

So what exactly is a trade secret? Any information can qualify so long as it fulfills certain criteria. First, the information must be more valuable for the very reason that it secret-if it isn’t actually secret it is basically impossible for this to be the case. Second, its owner must have taken reasonable steps under the circumstances to make sure it stays secret.

Where something that qualifies as a trade secret is misappropriated, that violates civil law. The California version of the Uniform Trade Secret Act (CUTSA) treats misappropriation as acquiring a trade secret through improper means or from somebody you know or have reason to know got the secret by improper means. It also includes using or disclosing a trade secret you acquired or at least should know was acquired by improper means. Improper means include, but aren’t limited to theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage. However, improper means never includes a situation where you figure out the trade secret on your own.

Mr. Levandowski left Waymo with confidential files his employment agreement clearly said were not his to take. The evidence shows that there is at least a strong chance Uber bought Levandowski’s firm knowing exactly what it was getting. This means that there is a strong case against both for misappropriating Waymo’s trade secrets. While not all of the things claimed as trade secrets by Waymo, as with most trade secret cases exactly what those secrets are is heavily redacted to maintain their secrecy, enough satisfied the test described above to put both Levandowski and Uber in hot water.

Injunction Against Uber

The order has granted a preliminary injunction against Waymo with the effects described above. A preliminary injunction is an order stopping a party to a lawsuit from doing something before the lawsuit even really gets underway.

In order to receive a preliminary injunction a party needs to show a likelihood that they’ll win, the potential that they will be harmed in a way money can’t fix, a public interest in such an injunction, and that they will be more harmed by the lack of an injunction than the party it’s brought against will be harmed by the injunction itself.

We’ve seen that there’s a pretty good case here for trade secret misappropriation. However, likelihood of success was where Waymo lost on their patent infringement arguments for the injunction-they simply didn’t have enough evidence.

In terms of irreparable harm, the technology in question has the potential to change who controls the burgeoning market of self-driving cars going forward. This is something of incalculable value and thus no simple money damages could properly address it. There is also a clear public interest in both protecting intellectual property rights and preventing unfair competition via potential corporate theft.

However, it is the balance of harms element that really led to the limitations that led to some calling the ruling an Uber victory. As serious as the harm would be to Waymo if the Lidar project used their trade secrets to advance their technology, shutting down Lidar altogether for the multiple years it will take for the lawsuit to resolve would kill Lidar altogether. This is extreme in the opposite direction, thus why the judge chose to simply prevent Lidar from using any of the secrets they may have misappropriated.

What Does This Mean For Uber and Levandowski?

The process of ensuring that none of Waymo’s documents, and the information contained therein, makes its way into the Lidar project is no mean feat and will certainly slow down Uber’s progress; giving Waymo a leg up on its competition. It also means that, at least for now, Uber may have spent nearly three-quarters of a billion dollars on nothing. The order also indicates a strong chance of success for Waymo in their trade secret action against Uber. This could lead to an enormous money judgment against Uber in the future.

As bad as it is for Uber, it’s much worse for Anthony Levandowski himself. The judge in this case has already referred his situation to the US Attorney’s Office, recommending criminal charges against Levandowski. This is an uncommon move on the part of this judge and could ultimately lead to up to fines of up to half a million against Levandowski and up to a decade in prison. Later this week, we’ll look into exactly how the criminal side of trade secret works. However, suffice it to say, Levandowski is facing down some serious charges.