Settlement deal mutually beneficial; DOJ criminal investigation continues
It was supposed to be the clash of the titans. Last year Waymo, the self-driving car company owned by Google’s parent Alphabet, sued Uber for $2.6B over stolen trade secrets, specifically LiDAR sensor technology. The dispute began after engineer Anthony Levandowski left Waymo to found Otto, a self-driving truck company and took 14,000 documents relating to autonomous vehicle technology with him. Less than six months later, Uber paid $680M to acquire Otto… and, allegedly, Waymo’s secrets.
The pre-trial litigation got messy. Text messages between Levandowksi and Uber’s then-CEO Travis Kalanick about their plans “take over the world, one robot at a time” were unearthed and made public. Judge William Alsup, who presided over the case, at one point said that Uber misled the court by hiding one of their sensors based on Waymo’s technology. Uber was supposed to present its sensors to the court so that Alsup could make a determination as to whether Uber was incorporating Waymo trade secrets into its product, but it appeared that Uber turned over an older model of its sensor and concealed its newer model.
In any case, four days into the trial, it’s over. Uber has reached a settlement agreement with Waymo, promising not to use any of Waymo’s hardware or software, and giving Waymo equity worth $245M. Perhaps most importantly, Waymo reserves the right to file a second suit over its software intellectual property—the case that Judge Alsup just dismissed only considered hardware designs.
“While we do not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo’s proprietary information in its self-driving technology, we are taking steps with Waymo to ensure our Lidar and software represents just our good work,” said Uber CEO Dara Khosrowshahi.
The U.S. Department of Justice is conducting a separate, criminal investigation into the trade secrets.
The sudden settlement came as a surprise to observers. Twitter buzzed with rumors. Was it because Larry Page hates public appearances and was scheduled to testify? Why did Waymo take such a haircut on their payout? Waymo was asking for $1B in settlement talks last year. It’s hard to speculate about the reasons behind the closed-door deals, but it’s not uncommon for two separate legal teams to handle settlement negotiations and the trial itself—the right hand does not always know what the left hand is doing.
Like any business agreement, there are aspects to the settlement deal that benefit both parties. Today, the jury was set to see physical designs of the Waymo and Uber sensors so that they could compare the hardware for themselves. That isn’t going to happen: the actual similarities of the two company’s LiDAR modules will no longer be made public—this is surely to Uber’s advantage.
Uber’s CEO was forced to issue an apology letter, adding to a long paper trail of documents and legal proceedings that will only further tarnish the company’s reputation… now the public sphere has added intellectual property theft to the labor rights violations and sexual misconduct allegations already on Uber’s rap sheet. That plays to Waymo’s advantage. On the other hand, Waymo is only getting $245M in Uber equity, far less than the Alphabet subsidiary originally sought. Uber is still privately held, though, so one can only speculate as to how much that will be worth in the event of an IPO. Advantage Uber on the settlement amount.
Finally, Waymo can still sue Uber over software in a suit potentially worth billions of dollars—the axe is still hanging over Uber’s head. That provision is definitely to Waymo’s advantage. Therefore, we should read the settlement as the next stage of a cold war rather than a true armistice. Self-driving cars haven’t been won yet.
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