Although it presents a typical fact pattern for a trade secret claim—a former employee allegedly taking proprietary information to his new job at a competitor—Waymo v. Uber Technologies has become the most closely watched trade secret litigation since the passage of the federal Defend Trade Secrets Act of 2016. In February 2017, Waymo, Alphabet’s self-driving car division, sued Uber in federal court in the Northern District of California for trade secret misappropriation, unfair competition and patent infringement.
The case revolves around the alleged actions of Anthony Levandowski, a key engineer on Waymo’s autonomous vehicle team who left to lead Uber’s self-driving car effort and later founder of Waymo. According to Waymo, Levandowski downloaded over 14,000 confidential and propriety files about Waymo’s Light Detection and Ranging remote sensing systems and transferred them to a personal hard drive weeks before resigning in January 2016. The LiDAR system usually sits on the roof of the car and uses a laser to determine how far away an object is from the self-driving vehicle. Levandowski then launched his own self-driving car company, OttoMotto, which Uber acquired in August 2016 for $680 million.
Waymo alleges that with Levandowski’s assistance, Uber used misappropriated documents to develop custom LiDAR systems based on Waymo’s designs. Finding that the evidence indicated that Uber hired Levandowski even though it knew or should have known he possessed the files containing Waymo’s intellectual property, Judge William Alsup granted partial relief to Waymo in the Order Granting in Part Denying in Part Plaintiff’s Motion for Provisional Relief, Waymo LLC v. Uber Technologies, Inc. The order barred Uber from using the documents, prevented Levandowski from working on any LiDAR projects at Uber and required Uber to turn over the downloaded materials and findings from a related investigation. In a separate order, Judge Alsup referred the case to the U.S. Attorney’s Office for potential criminal investigation.
Federal trade secret law provides for both civil and criminal causes of action. See Order Regarding Waymo Subpoena to Levandowski, Waymo LLC v. Uber Technologies, Inc(Subpoena Order). Under the Economic Espionage Act 18 U.S.C. § 1832, trade secret theft is a criminal offense punishable by up to 10 years' imprisonment. Both the party that steals the trade secret and the receiving party can be held liable. Judge Alsup referred both Levandowski and Uber for possible criminal investigation.
This has added further complexity to an already fraught discovery process. Levandowski invoked his Fifth Amendment rights, seeking to prevent Uber from producing documents that might incriminate him. This led Judge Alsup to threaten sanctions against Uber. In response, Uber fired Levandowski. When Waymo then sought to compel Levandowski to produce the documents, Northern District of California Magistrate Judge Jacqueline Scott Corley concluded that Levandowski had properly asserted his privilege and denied the motion. See Subpoena Order.
The evidentiary battles have expanded to include Uber’s law firm. The same corporate counsel who represented Uber in the acquisition of Otto continue to represent Uber in the Waymo litigation, adding further complexity.
According to Waymo, Uber’s law firms have copies of its documents that they acquired during the diligence process for the Otto acquisition, and that knowledge of those documents can be imputed to Uber. Uber and its outside counsel argue that the law firms were prohibited from sharing confidential information with Uber during the diligence process, and that it would be inappropriate to impute their knowledge to Uber under the Ninth Circuit’s ruling in Droeger v. Welsh Sporting Goods Corporation. Counsel has clarified that in the course of representing Levandowski in arbitration proceedings, it may have come into possession of the downloaded documents. Counsel distinguishes this from its work representing Uber in the acquisition and due diligence process. Invoking both attorney-client and Fifth Amendment privilege as it relates to Levandowski, counsel argues that the firm can hold the documents lawfully.
The legal and business community should pay close attention to the district court's resolution of this case.