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Uber and Waymo Settle Trade Secrets Suit Over Driverless-Car Technology Uber and Waymo Settle Trade Secrets Suit Over Driverless Cars
(about 3 hours later)
SAN FRANCISCO — Waymo and Uber settled their legal fight on Friday, nearly a year after Waymo first accused the ride-hailing company of plotting to steal important self-driving car technology.SAN FRANCISCO — Waymo and Uber settled their legal fight on Friday, nearly a year after Waymo first accused the ride-hailing company of plotting to steal important self-driving car technology.
After four days of arguments and testimony in Federal District Court here, Uber agreed to provide Waymo, the self-driving car unit spun out of Google’s parent company, Alphabet, with 0.34 percent of its stock. According to Waymo, the settlement’s terms value Uber at $72 billion, meaning the Alphabet unit’s stake is about $240 million. After four days of arguments and testimony in Federal District Court here, Uber agreed to provide Waymo, the self-driving car unit under Google’s parent company, Alphabet, with 0.34 percent of its stock. According to Waymo, the settlement’s terms value Uber at $72 billion, meaning the Alphabet unit’s stake is worth about $240 million.
Waymo had argued that Uber colluded with a former Google engineer to steal technology related to laser-based sensors, a key component in self-driving cars. Uber said it had developed its technology on its own. The settlement closes a legal fight that riveted Silicon Valley. It pitted the most successful company from the dot-com era against this generation’s biggest start-up in a fight over autonomous vehicles — a potentially trillion-dollar industry that is expected to transform transportation.
The dispute started in 2016 after Uber acquired Otto, a self-driving truck start-up founded by Anthony Levandowski, an early member of Google’s self-driving car project. The deal, worth a reported $590 million, came just six months after Mr. Levandowski left Google. The trial also offered a peek into how Silicon Valley really works: the rise of promising start-ups that challenge incumbents; the inner workings of rich, but often chaotic, technology companies; the complicated rivalries among billionaire tech entrepreneurs; and the costly competition for engineering talent.
Mr. Levandowski had begun talking with Travis Kalanick, Uber’s former chief executive, about the possibility of working together on autonomous-vehicle technology while he was still employed at Google, according to evidence presented at the trial. The dispute between the two companies started in 2016 after Uber acquired Otto, a start-up making self-driving trucks that was founded by Anthony Levandowski, an early member of Google’s self-driving car project. Uber agreed to pay a reported $590 million for Otto just six months after it was founded.
Mr. Levandowski was accused of downloading thousands of internal Google files related to self-driving car technology before he left the company. Uber learned of Mr. Levandowski’s actions, but still went ahead with the deal, Waymo claimed. But Waymo — which was spun out from Google in late 2016 — claimed the deal was part of a plan to steal its laser-sensor technology, a key component for operating self-driving cars. Mr. Levandowski had begun talking with Travis Kalanick, Uber’s chief executive at the time, about the possibility of working together on autonomous-vehicle technology while he was still employed at Google, according to evidence presented at the trial.
The trial had gripped Silicon Valley, with prominent technology industry executives and investors testifying in the packed courtroom. During two days of testimony, Mr. Kalanick explained how his relationship with Larry Page, Alphabet’s chief executive, had deteriorated amid growing paranoia at the two companies about their competing autonomous vehicle projects. Mr. Levandowski was accused of downloading thousands of Google files related to self-driving car technology before he left the company. Uber learned about what he had done but still went ahead with the deal, Waymo claimed. That was the basis of Waymo’s claim that Uber had misappropriated eight trade secrets related mainly to lidar — an abbreviation for “light detection and ranging” — sensors that help self-driving cars see the world around them.
Mr. Levandowski, who was fired by Uber over his refusal to cooperate with the company’s legal defense against the Waymo lawsuit, was expected to to testify next week, although he was expected to refuse to answer questions and to exercise his Fifth Amendment right against self-incrimination. The first few days of the trial revealed a number of embarrassing details connecting Uber with Mr. Levandowski. However, Waymo did not deliver on the substantive legal part of the argument that Uber knowingly stole Waymo’s trade secrets for use in its products. The judge, William Alsup, admonished Waymo’s lawyers on Wednesday for not having made much progress on its trade secret misappropriation claims.
Mr. Kalanick stepped down as Uber’s chief executive in June as the company grappled with the fallout from several scandals. His successor, Dara Khosrowshahi, has made it clear that he hopes to change the perception that Uber has been too quick to break rules. Before the trial started, Uber offered to settle with Waymo in exchange for 0.68 percent of the company’s equity, or about $500 million, but its board of directors pulled the offer and allowed Mr. Kalanick to testify, according to two people familiar with Uber’s thinking who were not authorized to speak publicly on the matter.
Reaching a settlement with Waymo clears away a significant legal risk for Uber as it prepares for an expected initial public offering. Although the company insists it did not take any Waymo trade secrets, Mr. Khosrowshahi said in a statement that he regretted the events that led to the litigation. After testimony on Thursday, settlement talks restarted, and Uber offered the lower percentage, these people said. For Waymo, the financial terms were not as important as scoring concessions on not using Waymo’s technology, said a person familiar with Waymo’s deliberations who was not authorized to discuss them.
“My job as Uber’s C.E.O. is to set the course for the future of the company: innovating and growing responsibly, as well as acknowledging and correcting mistakes of the past,” Mr. Khosrowshahi said in the statement. “The prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions.” The settlement included an agreement that none of Waymo’s confidential information was being incorporated in Uber’s autonomous vehicle technology.
For his part, Mr. Kalanick released a statement in which he was not nearly as conciliatory as the man who succeeded him in Uber’s top job. After almost a decade of work on self-driving cars, the Uber stake may be the first substantial money that Waymo has made from the technology. Alphabet was already a major investor in Uber through its venture capital arm, GV. It has also made a billion-dollar investment in Uber’s main rival in the United States, Lyft.
“No trade secrets ever came to Uber,” Mr. Kalanick in the statement. “The evidence at trial overwhelmingly proved that, and had the trial proceeded to its conclusion, it is clear Uber would have prevailed.” Although it settled the lawsuit, Waymo’s court fight may have succeeded in embarrassing a rival while delivering a unspoken warning to former and current employees to be cautious about leaving the company with know-how developed there. It also struck a deal before Larry Page, Alphabet’s chief executive, who rarely speaks in public, had to testify in court next week.
Waymo’s lawyers presented evidence that entertained the throngs of technology reporters gathered to cover the trial including texts and emails between Mr. Levandowski and Mr. Kalanick using chest-puffing terms like “burn the village” and “second place is first” loser. There were also pictures of notes on whiteboards from a brainstorming “jam sesh” led by Mr. Kalanick, declaring, among other things, that “laser is the sauce.”
The settlement helps resolve one of Uber’s many lingering issues from Mr. Kalanick’s tumultuous time as chief executive, which ended in June. His successor, Dara Khosrowshahi, has said he hopes to change the perception that Uber has been too quick to break rules.
The settlement also clears away a significant legal risk as Uber prepares for an expected initial public offering. It is still dealing with a Department of Justice investigation into its business practices. Although the company insists it did not take any Waymo trade secrets, Mr. Khosrowshahi said in a statement that he regretted the events that led to the litigation.
“My job as Uber’s C.E.O. is to set the course for the future of the company: innovating and growing responsibly, as well as acknowledging and correcting mistakes of the past,” he said in the statement. “The prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions.”
Mr. Kalanick released a statement that was not nearly as conciliatory.
“No trade secrets ever came to Uber,” the statement said. “The evidence at trial overwhelmingly proved that, and had the trial proceeded to its conclusion, it is clear Uber would have prevailed.”
The loser in the legal proceeding may be Mr. Levandowski, who was fired by Uber over his refusal to cooperate with the company’s defense. An Uber spokesman, Matt Kallman, said the company had fired Mr. Levandowski in May before Otto could meet any of its performance targets. As a result, he lost out on an estimated $250 million worth of equity in Uber — almost exactly how much Uber paid Waymo.
Judge Alsup referred Mr. Levandowski’s case to the Justice Department, although it was not clear whether a criminal case was being pursued against him. Mr. Levandowski, who received a $120 million bonus for his work on Google’s self-driving car, was expected to refuse to answer questions if he had taken the stand as scheduled next week.