Where The Rubber Hits The Road: Will Waymo Sue Google If Uber Employees Have Stolen Technology?

  • By Susan Burns
  • 28 Feb, 2017

The driverless car industry is hot and super-competitive. That’s a given. Here’s what’s not hot if you are Waymo, the self-driving car business that was spun out of Google’s parent company:

Waymo filed a lawsuit claiming that Uber is using its intellectual property that was stolen by one of Google’s former employees, who now happens to be working for Uber.

Waymo claims that while Anthony Levandowski was working for Google, he downloaded 14,000 files from Google shortly before he left to start his own self-driving car company, Otto.

Waymo also claims that a number of former Google employees became employed by Otto and had downloaded other  trade secrets before leaving. Those trade secrets included supplier lists, manufacturing details and technical information, according to Waymo.

Uber acquired Otto for more than half a billion dollars several months after Mr. Levandowski (and the others) left Google. Reading between the lines, we can guess that Uber acquired Otto for its driverless car technology.

Waymo was alerted to the possibility that Uber had its technology because one of Waymo’s suppliers inadvertently copied Waymo on an email. The email included drawings of Uber’s circuit board design for laser-based sensor technology for driverless cars. Waymo took note because the “ design bore ‘a striking resemblance’  to its proprietary and highly secret design.”

So, while Waymo seems to have some pretty convincing evidence that its proprietary information is in the hands of a competitor, it needs to prove more than that to win its claim that its trade secrets were stolen. 

Theft of information is one thing, but whether the information stolen is a trade secret is entirely different matter.

Last year, in a two-part series , I reviewed the Defend Trade Secrets Act (DTSA) [1] and its significance--specifically, the definition of a trade secret and how to protect trade secrets and business confidential information. At the expense of Google and Waymo, that two-part series has had a real-life teachable moment breathed into it.

Here is why Waymo must prove more than theft of information and why Google and Waymo may end up fighting each other:

A trade secret is information that is kept under lock and key not just because it is unique to that business, but because its secrecy provides a competitive edge. A trade secret consists of three key elements:

1. The information is not generally known to the public;

2. The information obtains its economic benefit because it is not generally known; and

3. The information is subject to reasonable measures to protect its secrecy.

To prove theft of its trade secrets, Waymo must prove all three elements. In this case, it appears that Waymo will have no difficulty proving the first two elements. Their driverless auto technology is not generally known to the public, or we would have all heard about THAT. And, I think it is reasonable to assume that the technology is valuable because it isn’t generally known. In other words, Waymo’s driverless car technology is valued because it gives Waymo a competitive advantage.

That leaves us with the third element that Waymo must prove, and that is that Google took reasonable efforts to maintain secrecy of its information (that was later transferred to Waymo). Let’s hope that Google had this lock and key part nailed down.

Why? Because even if Waymo proves that the technology was stolen by former Google employees before they left, it must also prove that the technology stolen was subject to reasonable efforts to maintain secrecy. It is not enough to prove that secret technology was stolen.

If the information was NOT subject to reasonable measures to protect its secrecy, then it is not a trade secret. Trade secret, by its definition, includes the requirement that the secret is guarded.

What does reasonable efforts to maintain secrecy mean? What is required? It can mean a number of things are required, for example, having employee agreements that include properly drafted non-disclosure clauses, restricting access to information to only employees with a need to know, classifying information as top-secret or confidential, compartmentalizing access to information, conducting exit interviews to remind departing employees of their continuing obligation of secrecy, monitoring competitors and monitoring key employee downloads of information. There may well be other measures that are standard (and therefore reasonable) in the industry for safeguarding technology.

If Waymo can’t prove that Google took reasonable efforts to maintain secrecy of the information, even if it was stolen, it isn’t a trade secret and they lose that claim. In that case their recourse would be against Google for NOT maintaining secrecy.

That’s where the rubber could meet the road … in a totally unexpected way.

 

If you are not sure that your business trade secrets are being properly protected, schedule a 20-minute power-house consultation , and let’s make sure that you #CoverYourAssets.

 

(Susan is a regular Contributor to Huffington Post, and this was also posted there.)



[1]  The DTSA was a rare piece of legislation that was largely agreed upon on both sides of the aisle and was signed into law by President Obama on May 11, 2017. Due to its bipartisan support it seems likely to stand, even under the current administration, but no guarantees.



WORK WITH ME!

More Posts from Susan's Blog

Blog

By Susan Burns 28 Feb, 2017

The driverless car industry is hot and super-competitive. That’s a given. Here’s what’s not hot if you are Waymo, the self-driving car business that was spun out of Google’s parent company:

By Susan Burns 19 Feb, 2017

Recently, there was a trademark spat between Adidas and Tesla. The story piqued my interest because   the big players make mistakes that are instructive for small businesses (only on a grander scale)—and because it illustrates the importance of brand identity and underscores why it’s smart to register your mark.

In a nutshell, here’s what happened: Tesla filed with the US Patent and Trademark Office (USPTO) to register its Model 3, three-bar logo as a trademark. If the registration had been for the purpose of using the mark on a car, there would not have been a problem. BUT, Tesla registered to use its three-bar “E” on clothing. Adidas, a company known for rigorous policing of its brand identity, challenged Tesla’s right to register the mark as confusingly similar to the Adidas three-bar logo. Tesla withdrew its application. Adidas protected its three-bar brand identity.
By Susan Burns 28 Oct, 2016

The Trans-Pacific Partnership (TPP) is the largest regional trade agreement in history, between the United States and 11 other Pacific Rim countries. Following in the footsteps of the North American Free Trade Agreement (NAFTA) between the US, Mexico, and Canada, the TPP expands upon this to establish new rules for global trade by eliminating 18,000 tariffs, promoting an open internet, disciplining state-owned enterprises, and establishing environmental and worker protection. Its aim is to increase Made-In-America exports, grow the US economy, support higher-paying US jobs, and strengthen the middle class.

 

You've probably heard references to the TPP in recent campaign coverage. It is the result of years of trade negotiations, and has been hailed as a hallmark victory for the Obama administration. However, the agreement is still in limbo, pending ratification by Congress--a delay that hardly comes as a surprise. And, both presidential candidates for the major parties have come out against the TPP. Given this, the future of the TPP is up in the air.

 

Supporters hope for a vote during the lame-duck session, but the TPP's passage could very likely depend on the next presidential administration. In the meantime, we are left to consider the implications of passage of this agreement, as well as its impact on NAFTA, a pre-existing trade agreement of a similar nature.

 

The TPP is a piece of legislation I have been closely following, and recently had the opportunity to moderate a panel entitled, "The Impact of TPP on NAFTA: Opportunity for Strengthening Ties -- Or Recipe for Disaster." Panel members included Aristeo Lopez of the Mexican Embassy, Laura Sierra of Alston & Bird, Nicholas Guzman of Drinker, Biddle & Reath, and Greg Kanargelidis of Blake, Cassels & Graydon.

 

The American Bar Association Section of International sponsored this event with the intention of presenting US, Mexican, and Canadian standpoints on the TPP and the impact of its passage on NAFTA. What followed was a thoughtful and informative discussion, and although the topic is highly complex, I thought I'd share some highlights with you.

 

Ms. Sierra explained some of the political context surrounding the TPP, including that the US has historically been pro-trade, and this is the first time since 1992 that trade has been a significant issue in presidential election year politics. US FTAs are modeled after NAFTA. The agreement eliminates a significant number of tariffs that would be beneficial to US businesses, but there are dissenting voices. Some of the concerns include employment issues, the manipulation of currencies by various countries, and opposition in specific industries such as auto, segments of agriculture and pharmaceuticals and biologics whose concerns were not addressed in the agreement. For example, intellectual property protection for biologics is not included in the agreement.

 

Mr. Lopez pointed out the benefits of NAFTA--growth in trade between Mexico and the US, especially--and explained that the TPP is intended to expand upon this growth, with attention to subjects that were treated less comprehensively in NAFTA. Another goal of TPP, in Mr. Lopez' view, is to strengthen Mexico's ties to NAFTA and other FTA partners, allowing Mexican goods to reach new markets.

 

Mr. Kanargelidis noted that the TPP is not intended to replace or override NAFTA, but that the two agreements can co-exist. He pointed out US, Mexican, and Canadian businesses can operate under the clauses of whichever agreement is most favorable to them in a given transaction. For example, the "de minimis" value threshold is 10% under TPP, and only 7% under NAFTA.

 

An audience member posed the question of whether TPP shipments will be exempt from US Merchandise Processing Fees (MPF) like NAFTA shipments are. Mr. Guzman explained that even though TPP does away with "ad valorem" fees, US Customs might find another way to collect MPF that is compliant with the agreement. He also described the TPP's "focused value" methodology for determining goods' origin, which might be more stringent than NAFTA methods.

 

Opponents to the TPP often cite concerns about the Investor-State Dispute Settlement (ISDS) provision, which outlines the mechanism by which agreement disputes can be settled. Mr. Lopez explained that the TPP’s ISDS provisions are more transparent than those found in NAFTA.

 

At the conclusion of the panel, Ms. Sierra suggested that a full renegotiation of the TPP is unlikely, given that the agreement was difficult to reach in the first place, and that several countries have already ratified it. However, we might see some side letters that result in alterations to the text pertaining to certain issues. Panelists agreed that the TPP will pass. It’s a matter of time and final form.

 

The TPP has been negotiated between 12 countries who together form about 40% of GDP, and 1/3 of world trade. The agreement is of an unprecedented scope, and the implications of this agreement are huge. We will soon know if it can pass during the lame-duck session before the election, which is fast approaching!

 

To learn more about the TPP, visit this site . The full text of the agreement can be found here .

 

Sources:

Granville, Kevin. “The Trans-Pacific Partnership, Explained.” The New York Times. 20 August 2016. Web.

 “The Trans-Pacific Partnership.” Office of the United States Trade Representative. Executive Office of the President. 2016. Web.
By Susan Burns 08 Sep, 2016

In July, we reviewed the Defend Trade Secrets Act (DTSA) that passed in Congress by a sweeping majority, and was signed into law by President Obama on May 11—a rare piece of legislation that was largely agreed upon on both sides of the aisle!

In this post, “Trade Secrets: Part Two,” I want to emphasize the importance of understanding what a trade secret is, regardless of whether it is under the DTSA or state law. Surprisingly, many businesses I work with rely heavily on trade secrets for their economic livelihood, and they don’t know it. Not knowing and not tending to that little gold mine of yours can mean a significant financial hit to your business in many ways, not the least of which is losing your competitive advantage.

So, what are the components of a trade secret, and how do you protect it? Think of it in threes: the three key elements of a trade secret and three steps to protect it.

More Posts
Share by: