Waymo vs. Uber Saga Offers Valuable Trade Secret Tips for Businesses

The year’s most dramatic tech legal skirmish is set to get real later on this year, when the Waymo v. Uber trial begins.   In addition to being pretty popcorn-worthy for us IP attorneys, the clash of Silicon Valley heavyweights also provides some key lessons for businesses looking to protect their valuable trade secrets.

First, a little background on Silicon Valley’s made-for-HBO-original robot-car-technology-theft saga:  Ride-hailing service Uber has been developing self-driving car technology for several years now, with the implicit goal of phasing out drivers and replacing them with a fleet of automated vehicles (no more of those pesky wage or labor laws to deal with!).  Lesser-known Waymo is the self-driving car division of search-giant Google (now known as “Alphabet” but which I’ll still call Google since I hate calling it Alphabet) which was established with the same intention of creating a privately held fleet of driverless cars.

Last year, Uber purchased a self-driving truck company called Otto for $680 million.  Otto was co-founded by Anthony Levandowski.  Levanowski previously worked for Google as its, wait for it, self-driving car technology senior engineer.  When Uber naturally made Levandowski the head of its own self-driving technology division, it understandably raised the ire of search giant Google.  But it gets better.  Levandowski has been accused of stealing some 14,000 files (nearly 10GB of data!) from Waymo just weeks before his departure.   In late 2016, Waymo claims it was inadvertently cc’d by one of Uber/Otto’s lidar equipment suppliers on an e-mail meant only for Uber/Otto.  Unfortunately for Uber, this e-mail contained an image of a circuit board from one of Uber’s lidar sensors.   Two weeks later, Waymo filed suit against Uber, alleging (among other claims) misappropriation of trade secrets and patent infringement, and seeking an injunction against Uber’s use of such technology.  Since the circuit board bore a remarkable resemblance to Waymo’s own, Waymo is arguing that the e-mail is damning evidence that Levandowski took the proprietary technology he had developed at Google and brought it over to Uber, which was now exploiting the technology for its own driverless car efforts.  In its complaint, Waymo explains that its particular type of lidar is uniquely cost-effective, giving the company a major competitive advantage.  Waymo further seeks a permanent injunction to Uber’s self-driving car pilot, which would mean pulling Uber’s test cars from California, Pennsylvania, and Arizona.

The stakes couldn’t be higher. If Waymo wins this case, it will give the company a leg up in establishing its driverless cars and technology, a tremendous advantage against a dominant player in the personal ride service industry like Uber, which would then have to continue to develop its own technology through its own efforts.  However, if Waymo loses (and assuming its allegations are true), Uber will be able to use the same sort of technology developed by Google, minus the time, effort, and expense Google put into developing it.

Whichever way this high-tech legal drama unfolds, it already provides some valuable lessons for regular businesses on the value of a company’s trade secrets and the importance of making sure they’re adequately protected against misappropriation or inadvertent disclosure:

  • Have strong employment agreements in place.  Every company should have, or at least strongly consider having, a confidentiality and non-disclosure agreement with key employees (and those privy to or handling sensitive information) in place covering four essential areas: ownership of any inventions, non-disclosure of confidential or proprietary information, non-solicitation of the company’s employees and customers, and a non-compete restricting the employee from competing against the company.  While employee non-competes are highly scrutinized by the courts of nearly every jurisdiction, I always advise having reasonably crafted and tailored restrictive covenants in your employee agreement anyway, particularly if your business is headquartered in Arizona and not in California (where such covenants are automatically void).
  • Take reasonable precautions to secure proprietary information.  Rumor has it that the Coca Cola company spreads the formula for its proprietary syrup across only a handful of key employees, each of which know only part of the actual formula. While your company doesn’t have to go quite that far, you should still take commercially reasonable steps to protect your confidential or proprietary information. Store it in locked cabinets, desks, or rooms with only limited access, restrict access to such information on a “need to know” basis, and mark all such information with conspicuous legends relating to its confidentiality.  Courts will look to what is reasonable under the circumstances and, yes, that may mean adjusting your secrecy measures to keep up with technological changes.  What may have been appropriate for a combo briefcase thirty years ago may now require more advanced security measures like encryption and similar security protocols to ensure confidentiality of messages, authentication of source, and confirmation of delivery to the intended recipient.  It may sound ridiculously basic, but if you don’t treat information you want to protect as a trade secret, it is highly doubtful a court will.
  • Be pro-active with accidental disclosure of trade secrets. It’s crazy to think that a trade secret and corporate espionage case worth potentially hundreds of billions of dollars (and that’s probably conservative) was set in motion at least partly by an e-mail accidentally sent by a third-party vendor.  With that said, accidents can and do happen.  If there is an inadvertent disclosure of confidential or proprietary information, your company should act immediately. Give very clear notice to the recipient of the secrecy of information, letting the recipient know that the information constitutes a trade secret and demanding that they promptly destroy the information, cease any use or further dissemination of it, and even certify it in writing.  A letter scaring the bejeezus out of the recipient will hopefully be effective in not only preventing any further transmittal or use of the material but may prove helpful if litigation proves necessary in showing a court that your company took the disclosure of your trade secrets seriously, placed the recipient on notice, and took reasonable steps to protect that proprietary information in the aftermath of the unintended release.
  • Have new employees certify to not using former employers’ information.  On the flip side, companies in Uber’s position should always require employees to verify in writing that they will not be using any trade secrets or knowledge acquired in confidence from previous employers in their work with the new employer.  While not full proof, it will at least educate the employee that they should not be engaging in possible espionage and will also help to show a court the lack of intent to misappropriate a competitor’s trade secrets.  Although, in this case, it certainly seems that Uber may have acquired Otto (and by extension the services and proprietary know-how Levandowski acquired from Google) with just this purpose in mind.

Ben Bhandhusavee is the Managing Attorney for BhandLaw, a Phoenix business and technology law firm that works with start-up companies, creative intellectual property matters, and complex business and technology transactions. Ben can be reached at (602) 678-2970 or by e-mail at bbhand@bhandlaw.com