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Waymo Steps Ahead in Trial Versus Uber

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The Waymo-Uber case, slated to run for about three weeks just got more interesting as key witnesses started to testify. Taking the stand first was former Uber CEO Travis Kalanick, who testified minus his usual flamboyance.

Kalanick was first grilled by Waymo attorneys, after which Uber attorneys allowed him to present its story. There was also a bit of grandstanding as Waymo played the famous “greed is good” clip from the movie Wall Street, as it was referred to by former Waymo employee, Anthony Levandowski in a text message to Kalanick: “here’s a speech you need to give ;-)”.

The Waymo Story

The Waymo story is that Kalanick contacted key Waymo engineer Levandowski to steal trade secrets related to its self-driving technology that he then transferred to a trucking company called Otto founded for the purpose so it could be taken over later by Uber. This way, intellectual property passed without authorization from Waymo to Uber, where it was then used to enrich Uber’s own self-driving program.

The Uber Story

Waymo parent Google (now Alphabet) was an early investor in Uber and the two had an arrangement to the effect that Google self-driving technology would be used in Uber cars. Somewhere along the line, there were rumors that Google did the double-cross, making plans to launch its own ride hailing service, plucking Uber out of the market.

At that time, Kalanick contacted Google’s Larry Page to confirm the rumor while also apprising him of his plans to start his own effort, which didn’t go down so well with Page. Uber had to jump into the market as quickly as possible, so it started hiring people to do the job.

Levandowski was one of several people Uber hired and Google had manufactured a conspiracy theory about trade secret theft because what Uber acquired was knowhow that an employee had internalized during the course of his employment at the company, which couldn’t be construed as trade secrets.

The Facts Uncovered So Far

To establish the foundation, Waymo showed that Uber considered self-driving technology to be instrumental to its future success and the inability to acquire it an existential crisis.Moreover, Uber’s self-driving car program was lagging years behind Waymo’s and Levandowski’s particular expertise in the LiDAR vision system for self-driving cars would speed things up for Uber.

Kalanick agreed that he met Levandowski in December, while he was still at Google and discussed his move over to Uber. He also said that Levandowski wanted to set up his own company while Kalanick wanted to employ him. So they chose a course of action that would satisfy them both. This means that the plan to acquire Otto was hatched before the company itself was formed.

Earlier, the judge allowed Waymo to introduce into evidence a Uber-commissioned internal due diligence report from forensics firm Stroz Friedberg that included an interview with Levandowski. In the interview, Levandowski was asked whether he downloaded, copied, or exported various materials to his laptop. He replied that he had taken “trade secrets” but not any intellectual property.

Kalanick professed a lack of knowledge about an indemnity clause that was part of Uber’s agreement to acquire Otto. The indemnification covered Levandowski for any claims brought against him for any ‘Bad Acts,’ including trade-secret theft, committed before the acquisition. Kalanick said he signed the agreement without reading because he was busy and didn’t have anything to add when confronted with a Jan. 28 2016-email from a Uber executive asking him if he told Levandowski that he’d be indemnified.

Numerous messages between the two and otherwise showed Kalanick in negative light: for instance, "We need to think through the strategy to take all the shortcuts we can find" and "Cheat codes. Find them, use them" seemed to confirm Google’s contention that Kalanick and Uber were willing to misappropriate Google technology.

Notes from a meeting showed that Kalanick wanted Levandowski to bring “IP” and “pound of flesh.”

Later Kalanick also said, "Burn the village” to which Levandowski replied, “Yup.” Kalanick couldn’t recall what he meant by the comment, although testimony from other Uber employees shows that they were instructed to delete all email and text messages to and from Levandowski from their devices, so the directive could have referred to that. Kalanick also testified that he and Levandowski used a Snapchat-like messaging service called Telegraph so some conversations wouldn’t be on record.

When asked directly by a Uber attorney,to what extent, Levandowski was hired for trade secrets, he replied, “To no extent at all."

Kalanick and Levandowski aren’t defendants in Waymo’s lawsuit.

Conclusion

A good bit of the evidence in the case could have been disallowed on account of being hearsay, but the Judge may have allowed it in evidence because Waymo has to prove the case using hostile witnesses and also because Levandowski, a key witness in the case has been refusing to testify on the ground of his own incrimination. It’s extremely likely that he’ll do the same before the jury.

The evidence uncovered so far doesn’t look so good for Uber. Google likely didn’t play fair as regards the self-driving arrangement between the two, but it probably didn’t do anything illegal either since it looks like Uber didn’t have an enforceable agreement with it. Even if it did, it will be hard to justify stealing trade secrets in retaliation.

Uber’s story may not stand up because the evidence shows that Levandowski took not just what he was carrying in his head but also what he downloaded to his computer. Whether it constitutes trade secrets is a matter yet to be proved (just because he calls it trade secrets doesn’t make it so). Since he is refusing to testify, the jury will be influenced against him.

Uber’s only hope seems to be to raise a doubt in the mind of jurors. A doubt that Waymo’s case against its much smaller former partner was intended to push it out of business and Uber’s attempt to fight back by poaching key people is being quashed by the tech titan.

Kalanick’s comments about Google’s Page are telling: “He was upset that we were taking his people” and “it was confusing because I said we are taking your people. People can work where they want. But your people are not your IP.”

Both Waymo and Uber are startup companies with a future in self-driving technology. Some publicly trading companies involved in this market include Waymo parent Alphabet (GOOGL - Free Report) , NVIDIA (NVDA - Free Report) , Intel (INTC - Free Report) , Baidu (BIDU - Free Report) and Apple (AAPL - Free Report) .

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