(CN) – The blockbuster Waymo-Uber case over the theft of autonomous vehicle technology settled during trial last month for $245 million in Uber stock, allowing both companies to refocus on launching self-driving cars for the ride-hail market.
But the absence of a verdict in what could have become precedence on how to balance an engineer's right to work for a competitor with a company's right to safeguard its trade secrets means legal questions remain.
"This case presents the right of employees to leave their employment and continue their profession at some other company," U.S. District Judge William Alsup said during a pretrial hearing in San Francisco this past November. "Silicon Valley and the rest of the technical world out there in the United States is very interested to know how we balance these competing factors here."
The saga began when Google spinoff Waymo accused ride-hail giant Uber of stealing its autonomous vehicle technology by hiring away its lead engineer. Waymo said the engineer swiped hundreds of thousands of confidential and trade-secret files before resigning and used them to design a self-driving car for Uber.
Alsup recognized the veracity of Waymo's claims about the data theft early on, ordering Uber to make the engineer return the files. In the end, however, Waymo never proved the missing information had made it to Uber.
But one of the eight trade secrets it said the engineer used at the ride-hail was a negative trade secret: knowledge of what technical approaches don't work that is rarely written down. Waymo said it cost $50 million to find out what didn’t work, and its lessons would benefit Uber immeasurably by knowing where – and where not – to invest.
Thomas Edison "was very careful not to let his competitors know about all the different compounds and materials he tried for a long-lasting light bulb filament," trade-secret expert James Pooley said by phone. "Any of his competitors who found out anything about what hadn't worked or worked less well would have been able to jump in the game and get completely caught up without investing anything."
The debate over what constitutes a trade secret can affect an engineer's ability to work for a competing firm, especially in Silicon Valley where companies routinely poach their rivals' best employees. To secure trade secrets, many tech companies ask new recruits to sign noncompetition agreements generally lasting a year: if an employee goes to work for a rival, their old employer's trade secrets will inevitably be disclosed.
But research shows non-competes can suppress job mobility, innovation and growth. So unlike most states, California prohibits non-competes and the doctrine of inevitable disclosure. An employer in California must instead go to court and show real or threatened misappropriation of trade secrets to get an injunction barring competitive employment.
When the California Legislature adopted the Uniform Trade Secrets Act in 1984, however, it also adopted Congress' comments on the statute, for the first time expanding the definition of a trade secret to negative information.
Employee-mobility advocates criticized the new definition, arguing the classification of negative knowledge as a trade secret conflicts with the long-standing rule that employees can use general skills and knowledge gained on the job at subsequent employers. Some portray it as an absurd demand to unlearn something, forcing engineers to spend months repeating mistakes and squandering resources.