Jury Likely to Hear of Uber’s Defiance in Fight With Waymo, Judge Says

SAN FRANCISCO (CN) – A federal judge signaled Wednesday he would allow a jury to hear that Uber defied court orders to return confidential files allegedly stolen from Waymo by an engineer to develop autonomous cars for Uber, and delayed revealing that its lawyers and an investigation firm had been sitting on them for a year.

In indicating that he may allow Waymo to tell the jury about Uber’s conduct at an upcoming trade-secrets trial, U.S. District Judge William Alsup cautioned multiple times that he had not yet decided whether he would ultimately order such relief. He also said he will delay ruling until after the Federal Circuit resolves an appeal over the files.

“That’s the relief I think is more likely to do some good,” Alsup told Waymo’s lawyers, who had moved to hold Uber in contempt for failing to produce the files.

“You will be a good witness,” he continued, speaking to Uber attorney Arturo Gonzalez. “You’ll be right up there explaining this story to the jury.”

Waymo sued Uber in February, claiming its former engineer Anthony Levandowski downloaded 14,000 files from its server just before he resigned in January 2016 to set up a competing company called Otto.

Uber announced the following August that it had acquired Otto for $680 million, three months after Otto launched publicly. Waymo claims Levandowski met with Uber’s senior executives days before he resigned, and that Uber purchased Otto to acquire Waymo’s technology so it could get self-driving cars to market first.

Analysts predict autonomous cars will eventually replace driver-operated ones completely, and that companies late in developing them will flounder. Ex-Uber CEO Travis Kalanick agreed with that assessment last year, telling Business Insider: “If we are not tied for first, then the person who is in first, or the entity that’s in first, then rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber’s, then Uber is no longer a thing.”

Urging Alsup on Wednesday to hold Uber in contempt for its purported stonewalling, Waymo attorney Charles Verhoeven said Uber violated a March expedited discovery order directing it to turn over the 14,000 files and a May preliminary injunction ordering Uber to pressure both Levandowski and its agents to do the same.

Waymo, which was spun off from Google’s self-driving car program and is owned by their parent company Alphabet, also wants Uber held in contempt for not disclosing earlier that Levandowksi destroyed, allegedly at Kalanick’s direction, five discs containing information he took from Waymo.

Verhoeven said the court’s deadlines for returning the files and disclosing their destruction have long passed. His client wants Uber sanctioned for not doing enough to pressure digital forensics firm Stroz Friedberg and law firm Morrison & Foerster to return them.

Uber hired Stroz to conduct a due-diligence investigation on Levandowski’s departure from Waymo in order to decide whether to acquire Otto, while Morrison & Forrester advised Uber during the acquisition. It is also representing Uber in the Waymo case.

Waymo has insisted throughout much of the case that both firms reviewed copies of the stolen files during the due-diligence review and that they still have them. And at oral argument Wednesday, Verhoeven revealed Waymo had recently learned that Stroz imaged Levandowski’s electronic devices and in March 2016 sent a copy of the images to Morrison & Foerster.

A year later, Morrison & Foerster began reviewing the materials on behalf of Levandowski, who it was representing in a related arbitration dispute, Verhoeven said. Levandowski retained separate counsel shortly thereafter.

“If you’re aware you have stolen material, you need to disclose it, you need to produce it,” Verhoeven said. “They didn’t tell us intentionally until they were forced to when we battered them down after a dozen motions.”

Gonzalez, who practices with Morrison & Foerster in San Francisco, insisted Wednesday that the firm doesn’t have the files Levandowski downloaded from Waymo. He acknowledged his firm has other materials Levandowski gave Stroz for its investigation, both of which a federal magistrate has ordered produced.

Levandowski appealed that order to the Federal Circuit, and Gonzalez said Uber will produce the materials if that court orders it to do so.

Stroz attorney Melanie Blunschi confirmed at the three-hour hearing that Stroz would produce the documents if the Federal Circuit affirms the lower court’s order.

“It’s true you mislead the court, you mislead the judge time and time again, and it wasn’t until I sent out the order that MoFo [Morrison & Foerster] came clean,” Alsup told Gonzalez. “I know Mr. Gonzalez, he’s an honorable guy. Maybe his firm did this, maybe Uber did it, but I’m inclined to let the jury know what happened here.”

Gonzalez replied voiced raised: “The notion that MoFo ever had stolen documents is completely baseless. There will never be a day, never, no matter what the Federal Circuit rules, that MoFo was hiding, or for that matter, Uber was hiding, 14,000 documents.”

In a brief, Waymo claimed Uber had made only a “lukewarm and equivocal” effort to persuade Stroz to return the stolen files to Waymo, in the form of a June 12 letter it sent to Stroz stating that it “wants” the firm to return them but that it can’t force it to do so.

Because Alsup’s May 15 preliminary injunction directed Uber to use “the full extent” of its authority to compel its agents to return the files, Waymo said Uber should have tried harder to convince Stroz to comply by threatening to cut business ties. Waymo called “absurd” Uber’s contention that it can’t force Stroz to return the files due to its contract with Levandowski – who prohibited Stroz from sharing them with third parties – arguing they are Waymo’s property.

Uber countered in a reply brief that it had done everything it could to persuade Stroz to return the files, including threatening to fire Levandowski from his job leading Uber’s autonomous car program if he didn’t give Stroz permission to produce them. Levandowski refused, and Uber fired him in May.

Uber insists it can’t force Stroz to produce the files. It says if it had threatened to withhold business from Stroz, and Stroz had breached its agreement with Levandowski because of it, Uber would have exposed itself to tort liability for intentional inducement of breach of contract.

“Waymo seeks to hold Uber in contempt for matters that are beyond Uber’s authority – which is not what this court’s order required,” Uber’s brief stated.

Also Wednesday, Alsup heard separate motions by Uber to strike four of Waymo’s nine claimed trade secrets and its supplemental initial damages disclosures, as well as to bar its damages claims and more than a dozen witnesses it disclosed after a court-ordered deadline.

Uber attorney Karen Dunn said Waymo failed to provide in its initial disclosures computations of each category of claimed damages, and suggested it failed to do so because it doesn’t have a damages case. She argued that its damages claims should be barred for missing the disclosure deadline.

“In this case the plaintiff has disclosed absolutely nothing,” she said. “This is severe prejudice on something they could be claiming billions of dollars on.”

Waymo’s lawyer Melissa Bailey countered that Uber hadn’t given her client the information required to create damages models until a day before the hearing. She added that the nascent nature of the market means Waymo needs Uber’s information to create the models.

“Waymo’s information alone obviously is not sufficient to develop full-fledged damages models,” she said. “We can’t do a complete computation and analysis without that information.”

Alsup said he would postpone ruling on damages until Waymo finalizes its theories, which will include unjust enrichment and reasonable royalties theories, according to Bailey.

The judge did say he would take judicial notice of how many times Uber had “blown off” court-ordered deadlines.

The trade-secrets portion of the hearing was closed to the public.

In its motion to strike Waymo’s trade secrets, Uber called the secrets too “vague and overbroad” to allow it to prepare its defense for trial. Waymo shot back in its own brief that it has evidence proving Uber incorporated Waymo’s trade secrets into its autonomous car designs, and accused it of trying to hide its misconduct from the jury.

Trial is set for Oct. 10.

Verhoeven and Bailey are with Quinn Emanuel Urquhart & Sullivan in San Francisco; Blunschi with Latham & Watkins, also in San Francisco; and Dunn with Boies Schiller Flexner in Washington.

 

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