Drive My Car: Examining Waymo LLC v. Uber Technologies, Inc.

[Kristen Rollerson, Contributing Member 2018-2019]

No, this is not an ode to the Beatles’ legendary song Drive My Car, but instead, this blog serves the purpose of examining the misappropriation of trade secrets.  Courts have struggled with adjudicating the misappropriation of trade secrets due to the various jurisdictions which a case can be brought.  For instance, state and federal laws afford civil protection.  Interestingly, these protections largely rest upon the language of the Uniform Trade Secrets Act (“UTSA”).  With a multitude of avenues, the complaining party has their choice of law which may tip the scale in its favor in litigation.  Most recently, trade secrets involving self-driving cars have entered the realm of litigation. 

BACKGROUND

In the midst of 2017, litigation commenced due to claims of misappropriation of trade secrets pertaining to self-driving cars.  The case involved two prominent tech-companies from Silicon Valley— Uber Technologies, Inc. and Waymo LLC.[1] However, in 2018, a settlement deal was reached pertaining to the acrimonious self-driving car trade secret case, which will result in Uber paying Waymo $245 million in Uber stock.[2]  By doing so, Uber will be making Waymo the owner of 0.34% of Uber’s outstanding equity.[3] 

Waymo LLC began construction of the self-driving car back in 2009 as an affiliate of Google.[4]  Anthony Levandowski, a once top-engineer for Waymo, led the charge of the project.  Waymo alleged that when longtime Google engineer Anthony Levandowski resigned to start his own company, he took thousands of vital technical documents with him.  In fact, blueprints for the lidar laser sensor that he assisted in developing were also included.  The blueprints for the lidar laser sensor was relevant to the litigation because at the time of its initial construction, lidar was not yet commonly known, hence why it was once considered a trade secret.  Lidar, much like radars, sends out radio waves. [5]   These waves emit pulsations of infrared light.[6]  Lidar was also appealing for self-driving automobiles due to its emitted waves  not being viewable by the naked human eye.[7]  Further, these waves measure the distance between the car and nearby objects.[8]  This technology assists the self-driving car with preventing foreseeable collisions with identified objects using the lidar technology.[9]  According to WIRED, “It does this millions of times a second, then compiles the results into a so-called point cloud, which works like a 3-D map of the world in real time—a map so detailed it can be used not just to spot objects but to identify them.”[10]  Furthermore, “[o]nce it can identify objects, the car’s computer can predict how they will behave, and thus how it should drive.”[11]

The most pertinent question to the issue at hand is whether it should be considered theft if Anthony Levandowski had a hand in its creation.  By definition, and intellectual property law, works for hire receive the protections of trade secret law.[12]  The general rule is the hiring party or employer is the copyright owner for works produced in an employee’s scope of duty.[13]  Because trade secret cases are brought as state law claims, the jurisdiction of choice for this case fell under the authority of the state of California.  California defines trade secret as:

(d) “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.[14]

Misappropriation occurs when a trade secret is acquired through improper means.[15] Improper means includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.[16] 

Therefore, Waymo correctly proceeded to litigation due to misappropriation of its trade secrets from former employee Anthony Levandowski.[17]  Apparent signs of improper acquisition occurred once Anthony Levandowski left and created his own business using the same information developed from his previous employer only to turn a profit by selling his imitation creation.

It was then that Uber bought Anthony Levandowski’s startup for the equitable price tag of more than $600 million.[18]  Uber then promoted Anthony Levandowski to overseeing the charge of the self-driving vehicle.[19]  With Anthony Levandowski steering Uber’s crusade, Waymo had suspicions as to whether trade secrets were being disseminated to one of its top competitors.  

Waymo commenced litigation in 2017 to remedy its problem and prevent the furtherance of misappropriation of trade secrets by Uber and/or additional competitors.  Nevertheless, Uber had the last word due to litigation coming to a strong halt because of the foreseeable settlement presented by Uber as a peace offering in its public relations hell storm.

ANALYSIS

Trade Secret Law

Trade secret law is a principal way in which inventions and proprietary information are protected.[20]  Like other areas of intellectual property, trade secret law utilizes a cost and benefit analysis that balances the interests of each party.[21]  As a policy, courts tend to favor rewarding protection for research in addition to new developments.[22]  However, copycats are highly frowned upon in the name of competition.  Therefore, courts balance these interests by narrowing the scope of protectable matter (e.g., customer lists, formulas, inquiry lists, computer data, etc.).[23]  Thus, the two-part test in determining whether a trade secret exists includes whether the alleged protectable matter: (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other person who can obtain economic value from its disclosure or use, and (2) is subject of efforts that are reasonable under the circumstances to maintain its secrecy.[24]  Once a trade secret is recognized, courts then turn to see whether misappropriation of that secret occurred.  In order to determine what was disseminated, the court must decide what of the information was a trade secret, what was improperly acquired, and what remedies to implement.

Misappropriation

As mentioned previously, misappropriation occurs when a trade secret is acquired through improper means.[25]  Improper means can be categorized as theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.[26]  Courts do not consider the definitional list to be exhaustive.  In fact, simple photography has been found to be an improper way of acquiring information.[27]  Further, misappropriations reach beyond the obtainment of information, but it also encompasses the unauthorized disclosure of trade secret information that was made subject to an obligation of secrecy or confidentiality.[28] 

Here, it is certain that some form of misappropriation of information occurred between Anthony Levandowski and Uber.

Lidar Was A Trade Secret[29]

Lidar, a detection system that works on the principle of radar, but uses light from a laser, was an engineered concept protected by Waymo.[30]  As mentioned previously, the blueprints for the lidar laser sensor is relevant to the litigation because at the time of its initial construction, lidar was not yet commonly known, hence why it was considered a trade secret.  Lidar, much like radars, sends out radio waves. [31]  Lidar is critical for the detection of objects and the predictability of behaviors, thus controlling how the car should drive.[32]

The court highlighted that Anthony Levandowski was the common denominator in the transmission of key information.  This notation by the court is important because Anthony Levandowski, the lead engineer who was hired to oversee the initiative, is the link to how information that he alone was privy to was received by Uber.  Although court documents did not go into much detail revealing the process, manner, or how it was stolen, several documents did come to being through Anthony Levandoswki.[33]  Uber then used the information to build its own self-driving car that has the same features, markups, and process as the Google Car provided by Waymo.

Uber Improperly Acquired Lidar

By way of Anthony Levandowski, Uber improperly acquired lidar.  Waymo alleged that then employee Anthony Levandowski unlawfully stole roughly 15,000 technical files pertaining to laser-ranging lidar and other self-driving technologies after his resignation.[34]  It is further alleged that Anthony Levandowski took this stolen property and distributed it to Uber, thus, making Uber culpable of improperly acquiring lidar.

Here, it is possible that Uber could have used reverse engineering to discover lidar and other critical information for the enhancement of its own self-driving cars.  According to the court’s findings, there was sufficient evidence in favor of Waymo that the lidar technology used by Uber was improperly acquired.[35]  It was easily presumed that this information was distributed by none other than Anthony Levandowski.[36]  With Anthony Levandowski being the common factor between Waymo and Uber, the court denied dismissal from the case, allowing Waymo to proceed in litigation and its highly sought-after relief totaling in the billions.

Relief

As litigation was heating up, more evidence came to the forefront of Uber’s acquisition of its information regarding the self-driving car.[37]  An astonishing number of emails including 85 gigabytes worth of documents became the smoking gun for Waymo.[38]  Uber was trapped in a public relation hail-storm and wanted an immediate escape.  Seeing that Waymo was seeking monetary and equitable relief, Uber’s hand was forced.  Uber was in fact facing up to a billion dollars in damages.  To escape the fiery wrath of state and federal law, Uber rightfully decided to settle this case outside the courts.  Uber’s generous payment to Waymo of $245 million in Uber stock is trivial compared to the damages that could have been reached by way of a jury trial.[39] 

In sum, Uber made the right choice of striking a settlement deal with Waymo.  Had Uber not, the courts, to my belief, had sufficient facts to remedy Uber’s improperly acquired information pertaining to the self-driving car.  It holds true that lidar is well-known in the tech-savvy world by now, but during its inception in 2009, it was not.  Lidar was a highly sought-after trade secret Google sought to protect.  With one of their top engineers resigning—who had access to information pertaining to self-driving cars, Waymo was susceptible to infiltration.  Nevertheless, the courts found that Waymo made reasonable efforts to protect its trade secret.   Not only is lidar a technological device, it is also considered a technique for which permits the autonomous car to work.  Uber barely escaped a jury verdict that could bankrupt its company had it not settled out of court.  This is a clear indication of how courts do not like imitation of a competitor’s success by way of theft.


[1] Waymo LLC v. Uber Technologies, Inc., N.D. Cal., 95 PTCJ 464 (02/16/18).

[2] Selena Larson, Uber and Waymo Settle Trade Secrets Lawsuit, CNN Business,  (access here: https://money.cnn.com/2018/02/09/technology/uber-waymo-settlement/index.html ).

[3] Id.

[4] See the official website for Waymo (access here: https://waymo.com/).

[5] Alex Davies, What Is Lidar, Why Do Self-Driving Cars Need It, And Can It See Nerf Bullets?, WIRED, (access here: https://www.wired.com/story/lidar-self-driving-cars-luminar-video/).

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Bleistein v. Donaldson Lithography Co.188 U.S. 239 (1903).

[13] Id.

[14] See Cal. Civ. Code Ann. § 3426.1.

[15] See Cal. Civ. Code Ann. § 3426.1.

[16] See E.I. DuPont DeNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970).

[17] Id.

[18]  Bernie Woodall, Uber buys self-driving truck startup Otto; teams with Volvo, Reuters, Business News, (access here: https://www.reuters.com/article/us-uber-tech-volvo-otto-idUSKCN10T1TR).

[19] Id.

[20] See Cal. Civ. Code Ann. § 3426.1.

[21] Yield Dynamics, Inc. v. TEA Sys. Corp., 66 Cal. Rptr. 3d 1 (Cal. App. 6th Dist. 2007), as modified on denial of reh’g (Sept. 21, 2007).

[22] Mattel, Inc. v. MGA Ent., Inc., 782 F. Supp. 2d 911 (C.D. Cal. 2011).

[23] See Minuteman, Inc. v. Alexander, 434 N.W.2d 773 (Wis. 1989).

[24] Id.

[25] See Cal. Civ. Code Ann. § 3426.1.

[26] See E.I. DuPont DeNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970).

[27]  Id.

[28] Id.

[29] United States Patent and Trademark Office, Trade Secret Policy, (access here: https://www.uspto.gov/patents-getting-started/international-protection/trade-secret-policy).  The policy describes how trade secret law is a principal way in which inventions and proprietary information are protected. 

[30] Oxford English Dictionary. 2013. p. Entry for “lidar.”

[31] Alex Davies, What Is Lidar, Why Do Self-Driving Cars Need It, And Can It See Nerf Bullets?, WIRED, (access here: https://www.wired.com/story/lidar-self-driving-cars-luminar-video/).

[32] Id.

[33] Dkt. No. 1603-4.

[34] See Dkt. No. 1890 at 5:14–7:21.

[35] Waymo LLC v. Uber Technologies, Inc., N.D. Cal., 95 PTCJ 464 (02/16/18).

[36] Id.

[37] See Dkt. No. 1890 at 5:14–7:21.

[38] Id.

[39] Selena Larson, Uber and Waymo Settle Trade Secrets Lawsuit, CNN Business,  (access here: https://money.cnn.com/2018/02/09/technology/uber-waymo-settlement/index.html ).

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