Intellectual Property

The Uber-Waymo Case: Self-Driving... To A Settlement

IP lawyers once again see that the most important skill we can develop is the ability to help our clients settle their cases.

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So a story I began telling with my first IP-dedicated column on these pages has come to what some trial devotees will feel is a premature end. As was widely reported once the news broke, Uber buried the hatchet with Google’s Waymo just days into their trade secret trial over self-driving car technology. As part of the settlement, Uber agreed to give Google a minute stake of its not-yet publicly traded equity, along with a firm promise not to use any of Waymo’s technology in its automated driving offerings. For its part, Google avoided the risk of a potentially embarrassing loss in front of a San Francisco jury, and took the opportunity to remind its existing high-value engineers of the perils of leaving the mothership for greener pastures.

There has already been a lot of commentary on what this result means for both companies, as well as for current and existing Silicon Valley employers and employees dealing with the opportunities and challenges presented by a free flow of talent from company to company. At minimum, what Google has demonstrated is that if the technology is important enough — or if the departing employee raises enough hackles because of how they leave or where they are going — Silicon Valley’s titans will not sit idly by while the stewards of their substantial R&D investments head to a competitor. Likewise, Uber’s missteps in the way it hired away a Google engineer who decided to take 14,000 confidential files with him suggest that even the most celebrated unicorns have to undergo a maturation process when it comes to poaching talent.

As any existing or former Biglaw partner knows, industry leaders don’t usually take kindly to losing talent — especially to competitors. While the legal industry has been spared a lot of bare-knuckle brawling over departing partners for the most part, the Uber case suggests that technology companies are not necessarily willing to extend the same niceties. Accordingly, there is every expectation that technology companies will take as a lesson learned from this dispute the importance of adhering to strict hiring controls when it comes to bringing on talent from a competitor. Similarly, companies in a position where key talent is departing will need a stronger focus on securing critical files and information, as close to the employee’s departure as possible.

We can leave the details of those endeavors to the employment lawyers and HR departments. For IP lawyers, the Waymo-Uber case was a prime example of both the potential and limits of trade secret litigation waged by companies of equally unlimited resources. For one, the challenge of proving actual misappropriation was confirmed. In fact, the referral of the case to the U.S. Attorney’s Office suggests that government resources may be needed to truly get to the bottom of misappropriation claims. Add in a District Court judge eager to streamline the case for trial while not giving the parties unlimited time for discovery, and it becomes clear that civil trade secret cases are challenging for trade secret owners to prove up — particularly when the alleged trade secrets themselves are a bit amorphous to start, or shift as discovery reveals what information the alleged violator actually used.

In contrast, patent cases present a more static target. The patents at issue are known to both parties, and while the infringement allegations in a patent case can shift during discovery, the patents-at-issue in a case tend to stay the same. If anything, the number of asserted patents and claims can be reduced for trial, but there is less uncertainty in a patent case relative to a trade secret case about what is actually at issue. The fluidity of trade secret claims, however, can put pressure on all sides of a case — including the judge, who often needs to decide at some point in a case when to call a halt to any further shifts in the plaintiff’s theories of the case. For his part, Judge Alsup garnered much praise for his handling of the Uber case, and it was a testimony to his case management that the case actually went to trial in a reasonable timeframe.

At the same time, once Uber was willing to self-enjoin itself, it was clear that the raison d’etre of the case no longer really existed — making settlement the likely outcome. In fact, most trade secret cases are forward-looking only to the extent that the misappropriation is likely to continue, making the presence of an imposed or accepted injunction a key settlement catalyst. In short, once the injunction is secured, there is simply less to gain for trade-secret plaintiffs. The Uber case is simply another data point in favor of that hypothesis.

Ultimately, the Uber case generated a lot of public interest, both because of the notoriety of the participants and the expected importance of the technology at issue. Once again, we saw that major IP cases involving household names often end in bloody draws, with each side aiming to declare victory after wisely settling their dispute. In Uber’s case, the reality that the company’s future depends on finding a solution to the costly problem of needing to pay drivers has not changed. For Google, owning a fraction of Uber will likely prove less important than having demonstrated that it values its homegrown technology and won’t sit idly by while a competitor encroaches on its employees and know-how. As IP lawyers, we once again see that the least-talked about — but frequently most important — skill that we can develop is the ability to help our clients settle their cases. The road to victory still needs a steady hand at the wheel.

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Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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