Uber was having a bad month even before Waymo, Google’s self-driving car outfit, filed a bombshell lawsuit accusing the ridesharing giant of swiping gobs of its autonomous driving tech.
Now, on top of political criticisms of CEO Travis Kalanick and accusations of a sexist corporate culture, the company must worry about a legal dispute that could cost it a truckload of money, kill its self-driving research, and even land more than one executive in prison.
The lawsuit, which Waymo filed Thursday, alleges former Google engineer Anthony Levandowski secretly downloaded 14,000 files proprietary technical files before leaving to found self-driving truck startup Otto. Uber acquired Otto last summer and put Levandowski in charge of its self-driving efforts.
“From what we know in the complaint, this seems to be fairly straightforward,” says Shawn Thompson, a former FBI attorney and federal prosecutor who now advises companies on protecting against insider threats, like employee theft. “From a criminal perspective, I would be surprised if the FBI weren’t looking into this.”
Whether there’s truth to Waymo’s allegations is very much TBD. (An Uber spokesperson calls Waymo’s lawsuit a “baseless attempt to slow down a competitor.”) What is certain is that this will be a fascinating and very public test case for the country’s newly strengthened anti-trade secret theft legal regime—and a potential disaster for Uber.
Waymo is bringing this suit under the Defend Trade Secrets Act, a federal law that sailed through Congress last May as the largest expansion of the intellectual property regime in a half-century. (Waymo also accuses Uber of patent infringement and violation of the California Uniform Trade Secret Act.)
Although the law is designed to punish foreign secret stealers, it has three big implications that should worry Uber. First, it allows plaintiffs to ask the court for an immediate, temporary injunction, giving Waymo the power to shut down Uber’s self-driving truck and car experiments until this is sorted. Second, it lets the accuser seek permanent injunctive relief—complicated legalese for forcing Uber to halt any part of autonomous program dealing with the allegedly swiped lidar. Third, the plaintiff can seize the products of its trade secrets, even before the case is decided. In other words, Google could use this legislation to not only temporarily halt Uber’s progress, but take away its toys.
The good news for Uber is that Waymo hasn’t made a move toward those harrowing legal interventions—well, beyond filing its big lawsuit. Waymo has yet to officially apply for that temporary injunction, and it hasn’t attempted to seize Uber’s property, probably because it has to clear a pretty darn high bar to do that.
“It would have to be a situation where someone’s running off to China, beyond the jurisdiction of the court, or someone’s going to destroy something, or they’re going to post the design drawings on the Internet,” says John Marsh, a trade secrets litigator with the law firm Hahn Loeser. “There probably isn’t enough of a factual predicate to justify that extraordinary remedy.” In English: They haven’t shown the proof to warrant the big guns.
But if Waymo’s complaint is to be believed, it does have quite the pile of forensic evidence. (The lawsuit includes details like how many gigs of data Levandowski allegedly downloaded when he plugged an external hard drive into his laptop). So, look to the court. If Waymo wins its civil case, it stands to take a chunk of change off Uber’s hands. The Googlers claim former Otto and current Uber employees netted half a billion dollars from stolen ideas. (Seeing as Uber hasn’t made any money from the self-driving cars it’s still developing, Waymo based that rough figure on how much Uber reportedly paid to acquire the self-driving truck company.)
If Waymo can prove Levandowski’s alleged theft cost it serious money, the law gives the court wide discretion in deciding a final figure. A judge could impose a royalty on Uber’s product, a kind of “Waymo tax” on any future driverless taxi rides you take the in the future. It could also essentially order Uber to divest of Otto and give back its allegedly ill-gotten tech. There are a ton of variables, but the big number could range from a few million to billions of dollars. It all hinges on whether Waymo can prove that Uber acquired Otto solely for its valuable lidar secrets (and that those secrets were stolen).
In sum, a legal loss could devastate Uber’s self-driving car program, and thus the company’s future. Uber’s developing a self-driving car in the hope of cutting out the expensive middlemen, its drivers. But it’s also a defensive move, because if another player—Waymo, Ford, GM, or anyone else in this race—gets there first, they could do the same thing, undercutting Uber’s human-dependent service.
“What would happen if we weren’t a part of that future? If we weren’t part of the autonomy thing? Then the future passes us by basically, in a very expeditious and efficient way,” CEO Travis Kalanick told Business Insider last year. This is an existential crisis.
But the biggest yikes would come from a criminal case. Waymo could refer the case to the FBI, triggering a major federal investigation of trade secret theft and economic espionage. A successful criminal case could mean even more dollars moving from the Uber to Waymo accounts—a large fine, plus restitution. Oh, and maybe prison time for Levandowski: Stealing trade secrets carries up to 10 years. If other former Google employees were involved in the plan, as Waymo alleges in its complaint, they could get dragged into conspiracy charges.
Stealing trade secrets carries up to 10 years in prison.
Oh, and if Uber executives knew what Levandowski allegedly had when they acquired Otto—or if they went as far as to direct him to download those files from Waymo—they could end up serving time, too.
“The thing about Uber is, how much did they know?” says Thompson, the former FBI prosecutor.
Fortunately for Uber, it may be in Google’s interest to let its executives continue to roam free. Companies can be loathe to pass evidence on to the FBI because it means they lose control over the proceedings. The government could subpoena anyone who does business with Waymo and poke around their affairs. Not fun.
So far, Silicon Valley has heard just one part of this epic battle. “There’s ten sides to every story, and there’s got to be more here,” says Thompson. So buckle up: The first driving robot wars have arrived.