After the sudden end of a dramatic trial, the key takeaways from Waymo v Uber 12 Feb 18
Waymo v Uber was shaping up to be one of the trials of the year when it abruptly came to a halt late last week after the two sides reached a settlement to their trade secret dispute.
Under the terms of the agreement, Uber will give the Alphabet-owned company 0.34% of its equity (which is the equivalent of around $245 million) and has promised that none of Waymo’s confidential information will be incorporated into the ride-sharing company’s hardware or software. “We have reached an agreement with Uber that we believe will protect Waymo’s intellectual property now and into the future,” Waymo trumpeted in a statement.
So who came out on top and what can we learn from this high-stakes courtroom tussle? Here are some of the key takeaways that IP execs may want to reflect on:
A sign of things to come?
One of the things that was so startling about this case from the off was that it was an Alphabet business using its IP rights to go on the offensive. When it comes to IP assertion, the tech giant has litigated very rarely. Google did pursue a patent infringement suit against BT but that was only after the British company had transferred patents to a third party which had then used them to sue the US company. So does the Uber suit point to a more litigious future for Google in the short term?
That might be a stretch, but the Uber case does show the extremely high stakes that are being played for as autonomous vehicle technology continues to be developed by auto sector incumbents and a band of established and start-up tech businesses. That means that any company in this emerging sector should be looking to jealously guard its IP, be it via patents or trade secrets. This, of course, raises the spectre of more legal spats.
“It’s a naïve fantasy to think that if only everyone understood the rules we wouldn’t get cases like this — people’s judgement gets clouded and they miscalculate,” comments trade secrets expert James Pooley. “You see that particularly in fast moving industries where there can be a small pool of talent to recruit from.”
What’s more, as is the case for any emerging technology, there are going to be winners and losers in the race to commercialise autonomous vehicles. The history of the tech sector is full of examples of companies that pioneered a particular innovation, but failed to reap the profits as they were surpassed by hungrier and often more nimble competitors. Those losers will undoubtedly still like to see some sort of return on the millions of dollars they have invested into R&D - which could mean that they look to assert their stockpiles of IP through the courts.
The bottom line, here, is that Alphabet has used its IP as a plaintiff to secure an outcome that helps its business objectives. As its operations continue to expand into new areas and its R&D investments grow, it is unlikely to be the last time this happens.
Even by the standards of trade secrets disputes - affairs frequently riven with emotion that lay bare some of the juiciest aspects of corporate intrigue - Waymo v Uber was a particularly gripping spectacle. In court we had the spectacle of former Uber CEO Travis Kalanick running through his own lexicon of corporate jargon and declarations such as “laser is the sauce”. Before the case even reached court there was a drip-drip of juicy insider tidbits such as those in the Jacobs letter, a 37-page document compiled by the lawyer for a former Uber employee, which detailed various allegedly questionable practices at the company, including how it gathered information on competitors.
It’s disclosures like those that can make litigation so unappealing and often drive the two sides to a settlement. “When they get started trade secret cases are generally fuelled by a lot of emotion, even when the players involved are very big companies,” says Pooley. “Decision makers are aware of what’s at stake and trade secret cases, unlike patent disputes, are about fault.”
Over time, Pooley says, those strong emotions can lessen and the interest in pursuing what can be a high-profile courtroom dispute wanes. That may have been particularly true in this case where Uber CEO Kalanick was forced out part way through and his replacement was presumably less attached to seeing the case through to a bitter conclusion.
“For a business, particularly a high-tech, fast growing company, a lawsuit is about history and what they’re doing is about the future,” Pooley reflects. “Sooner or later the inclination to settle is going to over-take the willingness to fight.”
Neither side landed a knockout blow and both can take some positives out of the settlement.
For Uber it closes a messy dispute which had led to much of the barnstorming start-up’s dirty laundry being aired in public. This settlement gives the new CEO an opportunity to draw a line under what has been a particularly tumultuous time for the company and focus instead on what could be a multi-billion dollar IPO next year. What isn’t certain is how much this dispute has set back Uber’s own self driving project — that will only become clearer once we start to see more autonomous vehicles on the road.
For Waymo, the case has seen star engineer (and former Waymo employee) Anthony Levandowski forced out of Uber, while it has managed to closely guard its technology and ensure that its self-driving rival doesn’t receive a valuable leg-up in the race to dominate the market for autonomous vehicles.
Alphabet reportedly turned down a higher settlement offer to ensure that the agreement included assurances from its courtroom rival that confidential information from Waymo would not be incorporated into Uber’s technology. That should prove far more valuable than a settlement involving an extra few hundred million dollars.
So for those keeping a tally we’ll put this one down to, in English football parlance, a score draw (also known as a tie for our American readers).
Into the C-suite
For the IP cognoscenti, it has been clear for some time that trade secrets have moved up the chain in terms of their importance. That’s in large part due to a 2016 piece of legislation that meant that their theft could be pursued more easily at the federal level.
If the wider corporate community weren’t aware of the risks associated with trade secret theft before, there’s no getting away from it now.
This case has shown that for a much wider range of businesses than ever before, trade secrets can’t simply be the domain of the chief IP counsel – every senior exec from the CEO down should be aware of the risks, particularly when making high-profile hires.
This case has also happened at a time when patent rights in the US have become substantially weaker, so businesses now arguably have far greater incentive to protect more of their IP via trade secrets rather than patent filings. Uber’s and Waymo’s days in court have placed trade secrets firmly on the corporate radar.
What next for Waymo and Uber?
The settlement gives Alphabet a greater financial interest in Uber’s success (Google was an early investor in the ride-sharing business) and draws a line under a messy chapter between two companies that had once been close (Alphabet’s top in-house lawyer had previously sat on Uber’s board).
At a time when IP value creation for several big tech companies is about collaboration rather than assertion might we see a new era of cooperation between the recent courtroom rivals? In a statement Waymo declared that: “We are committed to working with Uber to make sure that each company develops its own technology.” In other words Uber should keep its hands off its competitor’s innovations.
But if Waymo keeps its lead in the development of autonomous vehicles, then the end result might be that Uber is once again forced to the negotiating table, only this time to agree a licensing deal for the search giant’s tech and vast trove of IP.
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