Waymo Struggling in Trade Secret Fight v. Uber

To sum up the latest chapter of the Waymo v. Uber trade secret litigation: Waymo basically embarrasses itself.  Uber pretty much wins. Let’s take a look:

Waymo / Uber Background

Waymo is a technology company focused on self-driving cars. It’s a Google spin-off.  Uber is, well, Uber. Anthony Levandowski (“AL”) was one of Waymo’s star engineers. In the summer of 2015, while working at Waymo, AL spoke with an Uber executive. Uber expressed interest in buying the division of Waymo responsible for certain systems used in self-driving cars. In December 2015, AL downloaded more than 14,000 files from Waymo’s servers to his laptop. He subsequently transferred those files to an external hard drive. On January 15, 2016, AL formed a company called Ottomotto. During this time, AL had various talks with Uber about collaborating. AL met with Uber about finding investors for his new company. In April, AL and Uber signed a joint defense agreement. In June and July, two other Waymo employees used their corporate login credentials to access and export several documents. Those employees then left Waymo to join AL at Ottomotto. In August, Uber acquired Ottomotto for approximately $680 million and hired AL to lead its self-driving car efforts. In the summer of 2016, Waymo grew suspicious after other employees left to join AL in his new venture. In December 2016, as often happens, some wires got crossed: Someone at Gorilla Circuits, one of Waymo’s component vendors, accidentally copied a Waymo employee on an email thread intended for Ottomotto and Uber. According to Waymo, the email thread revealed that Uber/AL were building similar technology. On February 23, 2017, Waymo filed a lawsuit against Uber, AL and his companies, principally alleging theft of trade secrets. On March 16, Waymo moved for provisional relief, essentially requesting a preliminary injunction. Here’s how it went down:

Waymo’s Whining: A Bad Litigation Strategy

As a preliminary matter, Waymo – or rather, Waymo’s counsel – did a great deal of whining and taking inconsistent positions.  The Court was unimpressed.   For example: At the outset of the litigation, Waymo demanded expedited discovery and an expedited injunction hearing. The Court point blank told Waymo’s counsel:

You’re the one that wants this on a hurry-up basis … you can’t have everything. So … we either have the hearing on May 3rd, but you’re not going to get a full deck of cards … because it’s all expedited. It’s impossible to get everything. Or we can push it off two months and you’ll get 25 percent more.

In response, Waymo’s counsel insisted on keeping the early hearing date. At a subsequent oral argument on Waymo’s motion for provisional relief, Waymo’s counsel argued – somewhat inexplicably – that the Court couldn’t possibly rule on the limited record in front of it. Waymo complained that there hadn’t been enough discovery yet and argued that the Court would have to draw all sorts of inferences in its favor, or else it would be terribly unfair. The Court was underwhelmed. This was par for the course. Significant swaths of the Court’s order are basically the Court dressing down Waymo and its lawyers, throwing their statements back in their faces and basically laughing at their failure to grasp basic legal concepts. It gets better.

The Merits:  Waymo’s Alleged Secrets

Let’s get to the merits. One of Waymo’s claims was for patent infringement. The Court summarily rejected Waymo’s patent infringement claims as too weak to support provisional relief. Then the Court turned to the real issue: Waymo’s supposed trade secrets.

On likelihood of success: There was no dispute that AL had taken 14,000+ documents. There was no dispute that Waymo used reasonable efforts to maintain the secrecy of those files. The only real question: Do the 14,000+ files at issue constitute trade secrets?   This required some extensive analysis. As often happens in trade secret disputes, the plaintiff – here Waymo – dramatically overreached in asserting some 121 trade secrets at issue. As the Court noted, “Waymo has overreached in attempting to claim ownership over general principles and approaches in the field.” Ouch.

The Court was just getting started.  In order to make it’s point, the Court took a particular example from Waymo’s papers (literally, the first asserted trade secret). Waymo claims a “system comprising a plurality of light sources confingured to emit a plurality of light beams, wherein the [redacted] between the plurality of light sources [redacted].” The Court refers to this broadly asserted trade secret as nothing more than a “litigation gimmick” and then proceeds to conduct a lesson on the science of optics. The Court’s conclusion:

Waymo’s supposed trade secret is nothing more than Optics 101. General approaches dictated by well-known principles of physics, however, are not “secret,” since they consist essentially of general engineering principles that are simply part of the intellectual equipment of technical employees. They are therefore not protectible as trade secrets.

Nonetheless, in spite of Waymo’s overreaching and generally bad lawyering, the Court stated the obvious: AL took more than 14,000 documents with him when he left Waymo. Those documents likely include at least some information that qualifies as a trade secret. So the Court ordered the following relief:

1. Uber has to make sure it doesn’t use any of the stolen materials.
2. Anybody with the stolen materials has to give them back.
3. Uber has to remove AL from any role related to self-driving cars.
4. The defendants have to do a forensic analysis to see who accessed what.
5. Uber has to create a log of communications with AL related to self-driving cars.

Recapping: Uber Basically Wins

So let’s recap: AL left Waymo and took 14,000+ documents with him. Then AL basically teams up with Uber. Waymo spends probably millions of dollars in attorneys’ fees, takes inconsistent positions, embarrasses itself repeatedly, and makes absurd allegations about trade secrets that turn out to be basic science. And in the end, Waymo gets a court order that can only be described as brilliant and humiliating. And the order basically says, “Give Waymo back their stuff if you have it and take Anthony off the self-driving car project.” The bottom line:  Uber gets to keep pushing forward with its self-driving car initiative.  Clearly, not the result Waymo was hoping for.

The Takeaways:

• Uber Has Better Lawyers: Uber’s lawyers badly outclassed counsel for Waymo. The Court’s order makes it clear: Waymo overreached and took a bunch of inconsistent positions. Uber – and certainly Uber’s lawyers – come out of this round looking much better than their adversaries. It’s not the least bit surprising that Boies, Schiller & Flexner is representing Uber and doing a fantastic job in some potentially ugly circumstances.
• More Absurd Trade Secret Claims: Bluster and overstatement have become standard practice in trade secret litigation. People like to complain about frivolous lawsuits. You know what I see more of than anything else? Frivolous claims about trade secrets. To be clear, there are probably some trade secrets in those 14,000 documents. But claiming Optics 101 is your trade secret? That’s just absurd and makes you look foolish. Quinn Emanuel has some fantastic lawyers.  They should know better.
• The Everything and the Kitchen Sink Approach: Most trade secret plaintiffs go with the everything and the kitchen sink approach: “Your honor, they took everything and everything they took constitutes a trade secret! They stole like ten thousand trade secrets!”  That’s a very bad approach. Quality trumps quantity. Waymo’s case could have been much stronger if it had focused on, you know, actual trade secrets as opposed to dozens of generic categories and certain widely known scientific principles.

Uber isn’t out of the woods on this one yet.  But they certainly won this round.  The case is Waymo v. Uber, 2017 WL 2123560 (N.D. Cal. May 15, 2017).

Jonathan Pollard is a competition lawyer based in Fort Lauderdale, Florida.  He has extensive experience litigating non-compete, trade secret, trademark and unfair competition claims.  He has appeared recently in Inc. Magazine, Bloomberg, the Wall Street Journal, FundFire and on PBS News Hour.  His office can be reached at 954-332-2380.