Uber, Waymo settle court case for $245M in equity

Credit: Anna Boyle/Art Editor Credit: Anna Boyle/Art Editor

On Feb. 7, autonomous vehicle competitors Uber and Waymo reached a surprise settlement on their fifth day in court, over allegations that Uber had used Waymo’s trade secrets in its autonomous vehicle development. Waymo, owned by Google’s parent company Alphabet, was paid about $245 million in Uber company equity.

After Waymo first filed their suit against Uber in February of 2017, some speculated that the consequences for Uber could be as dire as the end of their autonomous vehicle program or a much larger settlement than the one that closed the case. At the center of the controversy was Anthony Levandowski, a former Google engineer and leader in autonomous vehicle research, whom Waymo accused of leaking company secrets to Uber.

Waymo alleged that, before Levandowski left the company in Jan. 2016, he had downloaded 14,000 confidential files and documents concerning the development of Waymo’s self-driving cars — specifically, the design of Light Detection And Ranging (LiDAR), the spinning cylindrical sensors on top of self-driving cars which they use to “see.” LiDAR emits millions of lasers per second and measures how quickly they take to reflect off of objects in order to determine their distance from the car.

After Levandowski left the company, he started an autonomous trucking company called Otto. In Aug. 2016, Uber purchased Otto in a $680 million deal.

Waymo contended that Uber’s acquisition of Otto was just a front for Uber to use Google’s research, claiming that former Uber CEO Travis Kalanick had been in talks with Levandowski while he was still working for Google.

Uber has maintained their innocence throughout the case. As current Uber CEO Dana Khosrowshahi put it in a statement released last Friday, “we do not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo’s proprietary information in its self-driving technology. We are taking steps with Waymo to ensure our LiDAR and software represents just our good work.”

Uber had decidedly distanced themselves from Levandowski. He was not a defendant in the case, but is currently being investigated by the U.S. Department of Justice for leaking Google’s trade secrets. He was demoted from being the head of the Advanced Technologies Group at Uber last April and fired last May, after failing to turn in requested court documents. Throughout the case, he repeatedly avoided answering incriminating questions by invoking his fifth amendment right.

During the testimony, Kalanick claimed that he reminded a miffed Google CEO Larry Page that “your people are not your [intellectual property],” or IP, according to Gizmodo. His quip embodies two observations about this case: It was a very melodramatic ordeal for both of the Silicon Valley giants, and it may have future implications for companies who are at the frontiers of new technology.

Waymo protected their LiDAR technology using trade secrets, defined by the U.S. Patent and Trademark Office as intellectual property which can give a company a commercial edge over others. Trade secrets are protected by U.S. law, but as Wharton Management Professor John Paul McDuffe points out, they are not typically a reliable way to secure IP. Technology is a hard secret to keep when products using it are available for public consumption. If Waymo’s case can slow down Uber’s autonomous vehicle development, then trade secrets may become more reliable.

Trade secrets may protect IP — but, this comes at a cost. The particulars of how autonomous vehicles work are not known to the public, and have been redacted in the court documents involved in this case. As Santa Clara Law Professor Dorothy Glancey states, making good policy about autonomous vehicles may prove to be a challenge if certain information must be hidden from the public.