Judge Says Uber Can Tell Jury Waymo’s Lawsuit is a Sham

SAN FRANCISCO (CN) – A federal judge signaled Wednesday that Uber will get to tell a jury that a closely watched trade-secrets lawsuit is a sham, filed to eliminate the Silicon Valley ride-hailing company as a competitor from the nascent but potentially flush driverless car industry.

“They want to make sure nobody knows why they filed it,” Uber attorney Karen Dunn said of the plaintiff in the case, Google spinoff Waymo.

The tentative ruling by U.S. District Judge William Alsup came at a final pretrial conference in San Francisco ahead of an October trial over whether Uber and its former engineer Anthony Levandowski colluded to steal Waymo’s trade secrets to design driverless cars for Uber.

Alsup’s decision hinged on a Waymo email Dunn referenced in court, which discussed “taking action” to block Uber from acquiring Otto, a driverless vehicle competitor Levandowki set up days after he resigned from Waymo in January 2016.

Dunn backed up her argument by describing a second email in which Waymo engineer Sasha Zbrozek told Waymo’s lawyers that the 14,000 proprietary files Levandowski downloaded from Waymo’s server before leaving to lead Uber’s driverless car project were “low value” and that Levandowski’s access of the server was normal. Zbrozek administered the server from which Levandowski stole the files, and Waymo’s lawyers questioned him during their forensic investigation of the theft.

Waymo sued Uber and Otto in February, accusing Levandowski of taking the files to use at Otto and cutting a deal to sell the fledgling company to Uber for over $500 million. Waymo claims Uber bought Otto to get Waymo’s technology after its own driverless car efforts stalled.

After the Zbrozek email was produced this month, the defendants accused Waymo of suing to eliminate Uber as a competitor and said it knew the files didn’t contain any trade secrets yet claimed they were the “crown jewels” of its trade secret armada to justify its game-changing lawsuit.

“The jury might conclude that from the time it took you to get your act together to bring this lawsuit that maybe Sasha was correct that they were low-grade secrets,” Alsup told Waymo’s attorneys, referring to the fact that Waymo waited nine weeks to sue after concluding its investigation. “If these were the ‘crown jewels,’ you would’ve been in court the next day.”

Zbrozek’s name was again mentioned in the 4-hour hearing when Uber moved to exclude evidence at trial regarding its assertions of privilege over a due-diligence report it was ordered to give Waymo.

The report, commissioned by Uber to decide whether to acquire Otto, purportedly relates to the 14,000 stolen files. Waymo has been demanding it since filing its lawsuit, insisting it would prove Uber knew about the theft early on. But it only received it two weeks ago after Uber, claiming privilege, opposed producing it and the Federal Circuit denied a subsequent appeal by Levandowski to keep it out of Waymo’s hands.

Alsup tentatively denied Uber’s motion, but said if Waymo gets to tell the jury about Uber’s assertion of privilege, Uber gets to say Waymo “stonewalled on Sasha saying you had a weak case on trade secrets.”

The defendants claim Waymo hid Zbrozek’s identity, and Otto claims it only received the Zbrozek email after multiple motions to compel Waymo to produce documents related to its investigation.

“Both of you have an argument you acted in good faith,” Alsup said, “so if it’s good for the goose, it’s good for the gander.”

Alsup also said he planned to put Zbrozek on the stand to testify about the server and the safeguards Waymo put on it, after Uber objected to presenting the jury with a report about them from Waymo’s expert Lambertus Hesselink. Hesselink confirmed that Waymo took reasonable measures to protect its trade secrets, including implementing trade secret-level protections on its server, according to a brief by Waymo.

In its objection, Uber urged Alsup to exclude the report because Hesselink based his opinion on the declaration of a Google engineer who had admitted to having no personal knowledge of the server outside of what Zbrozek had told him.

Also Wednesday, Alsup indicated he would grant Uber’s motion to exclude testimony and evidence from Waymo’s damages expert Michael Wagner. Uber’s attorneys said Wagner, a certified public accountant, attorney and engineer, had been struck as a damages expert by multiple federal judges, a fact that seemed to displease Alsup. A document filed by Uber after the hearing indicated Wagner was struck by seven judges in eight cases between 2007 and 2015.

The judge took particular issue with Wagner’s failure to apportion the $1.86 billion in damages he identified for a single trade secret, and with Waymo attorney Melissa Baily’s defense of his methodology.

Apportionment requires that damages awarded for patent infringement reflect the value attributable only to a patented feature, not to unpatented ones.

“I suggest to you that Waymo didn’t spend $1.86 billion coming up with that,” Alsup told Baily, who insisted that it did.

“The Federal Circuit can sort this out,” Alsup concluded. “Maybe.”

Trial is currently set for Oct. 10.

A hearing on Waymo’s motion to delay the case until December is set for Oct. 3.

Baily is with Quinn Emanuel Urquhart & Sullivan in San Francisco. Dunn is with Boies Schiller Flexner in Washington.

 

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