The Waymo intellectual property theft suit against Uber came to a screeching halt last week, just days into the jury trial to determine whether Uber had stolen Waymo’s technology. Uber CEO Dara Khosrowshahi expressed his “regret” for what had taken place and directed his team to settle. Waymo was to provide .034 percent of Uber, which equals approximately $245 million at Uber’s current valuation of $72 billion, or $245 million.
What Was the Tipping Point?
It would appear a few factors were involved in the decision to settle. For one, there was the combination of former Uber CEO Travis Kalanick’s hubris, in which he reportedly asserted repeatedly that nothing of Waymo’s had been taken, and how his testimony differed from testimonies of others.
Then there was the expectation that the shady competitive intelligence effort from within Uber would be regurgitated via testimony of those who participated in the alleged pilfering of IP. Plus, there was the likelihood that Anthony Levendowski, who pilfered Waymo’s technology, would invoke his Fifth Amendment right and decline to testify.
In discussing the 34-page due diligence report, which Stroz Friedberg conducted on behalf of Uber and was revealed in September 2017, we opined how we could not imagine Uber wouldn’t be calling for a settlement meeting. On July 8, the day before the settlement, Eric Friedberg of Stroz Friedberg was called to testify on the content of this due diligence report and that his firm found Waymo’s files in Anthony Levandowski’s possession.
In addition to Friedberg’s testimony, Waymo’s forensic expert, Andy Crain, testified that Waymo could show that Levandowski had copied thousands of Waymo’s files onto his personal computer. Couple this with the testimony of the then-Stroz Fiedberg forensic expert, Melanie Maugeri, and it was clear Uber was heading for a crash into a brick wall—the jury.
Kalanick’s distancing himself from culpability notwithstanding, what the others had to say was far more damning and apparently was enough to convince Uber’s CEO to push the button to settle.
While Khosrowshahi said he believes that nothing of Waymo’s had found its way into Uber’s technology stack, he readily admitted that the actions of some former Waymo employees who may have “left with Google (Waymo) files in their possession, in retrospect raised some hard questions,” reported the New York Times.
For those wondering if this is an isolated incident or whether intellectual property regularly walks out of company doors, they may stop wondering: It happens with great regularity. A famous instance occurred in 2010, when Hilton reportedly paid $75 million to SPG for the theft of SPG’s W-brand. Three executives had departed SPG with reams of notes and presentations that detailed the marketing plan and concept development of the W hotels. In Hilton’s settlement, the company paid millions to SPG and agreed to not evolve a similar brand for three years. Commonality with the Waymo-Uber case: employees departing with the intellectual property of their employer.
Similarly, we recently covered the case involving employees of Micron departing to a direct competitor, United Microelectronics Corporation in Taiwan. As is the case with Waymo and SPG, those Micron employees left with intellectual property.
Companies will be well-served to invest in comprehensive off-boarding, taking the necessary steps to ensure that departing employees know that taking the company’s intellectual property with them for use in a future gig will be prosecuted and reminding them of their NDA or other intellectual property restrictions that may apply. Then, should a departing individual decide to stuff the information in their pants pocket as they walk out the door, the company’s general counsel will have the record of the conversation about intellectual property to use to hammer them in the courtroom.
Similarly, all companies should have new hires sign an attestation that they are not bringing the intellectual property of others with them as they embark on their new gig.