Waymo LLC v. Uber Techs., Inc. - No. C 17-00939 WHA, 2017 U.S. Dist. LEXIS 73843 (N.D. Cal. May 11, 2017)

Rule:

 "Trade secret" means information that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Facts:

In summer of 2015, while working for Waymo, Anthony Levandowski told coworker Pierre Yves Droz that it would be nice to create a new self-driving car startup; that he had talked with Brian McClendon, an Uber executive involved with Uber's self-driving car project; and that Uber would be interested in buying the team responsible for Waymo's Light Detection and Ranging (LiDAR) technology that helps self-driving cars “see” their surroundings. On December 3, 2015, Levandowski used his company-issued work laptop to search Waymo's intranet for "chauffeur svn login" and "chauffeur svn eee setup." "SVN" referred to Waymo's password-protected repository of design files, schematics, and other confidential information To protect the contents of the SVN repository, Waymo encrypted and authenticated all ingress and egress traffic against a regularly audited list of specific authorized users. Additionally, the SVN repository could be accessed only through specialized software called TortoiseSVN. Levandowski equipped his work laptop with TortoiseSVN, then used that laptop to download over 14,000 files from the SVN repository. The 9.7 GBs of downloaded data included 2GBs from LiDAR subdirectories. He then reformatted that laptop with a new operating system, wiping it clean. He also used his corporate account credentials to export six additional documents pertaining to Waymo and LiDAR from Google Drive to a personal device. Levandowski told Droz he planned to "replicate" Waymo's LiDAR technology at his new company. 

On January 15, Levandowski formed Ottomotto. Later in January, Levandowski admitted to Droz that he had met with Uber to look for investors for his new company. On January 27, Levandowski resigned from Waymo without prior notice. By January 29, internal emails at Uber reflected communications made in confidence by Levandowski or his attorney and shared pursuant to "joint defense agreement" to further investigation for the purpose of obtaining or giving legal advice, "in anticipation of litigation," regarding "due diligence" for the potential acquisition of Ottomotto. On February 1, Levandowski formed Otto Trucking. By March, Uber had directed Stroz Friedberg — a firm specializing in, among other things, digital forensics, intellectual property, and litigation support — to prepare a "due diligence report" on its investigation and analysis of files and electronic media from Levandowski. On April 11, defendants, Levandowski, and their counsel executed a written joint defense agreement. In other words, it seems Uber performed specialized "due diligence" on Levandowski with an eye toward jointly defending against potential intellectual property litigation with Waymo as a result of his move to Uber. In June and July, Sameer Kshirsagar (then a Waymo manager who, among other things, negotiated with LiDAR hardware suppliers) used his corporate account credentials to export five documents from Google Drive. In July, Radu Raduta (then a manufacturing engineer in Waymo's LiDAR department) likewise exported three more documents. In late July, Kshirsagar and Raduta left Waymo to join Levandowski at Otto. In August, Uber bought Otto for approximately $680 million and hired Levandowski to lead its self-driving car efforts. In his new position, Levandowski reported directly to Uber CEO Travis Kalanick. At the time of its acquisition, Otto was working on a LiDAR project called "Spider," which continued at Uber until October 2016. In late October of 2016, Uber abandoned Spider in favor of its current LiDAR project, "Fuji." 

Meanwhile, in summer of 2016, Waymo had become suspicious over the abrupt exodus of employees to join Levandowski and investigated the circumstances of their departures. Around October 2016, Gary Brown, a forensics security engineer at Google, discovered the aforementioned downloading by Levandowski, Kshirsagar, and Raduta. On December 13, Waymo employee William Grossman became an accidental recipient on an email string among employees at Gorilla Circuits, one of Waymo's LiDAR component vendors. The email concerned Otto and Uber but somehow got mis-sent to Grossman. It was also sent to "Uber@gorillacircuits.com," featured the subject line "OTTO FILES," and appended machine drawings of a printed circuit board. Waymo claims the depicted printed circuit board design for Uber closely resembles the design for Waymo's own current-generation LiDAR system, Grizzly Bear version 3 (GBr3).

Waymo filed this civil action for trade secret misappropriation, patent infringement, and unfair competition on February 23 and moved for provisional relief on March 10.

Issue:

Does Waymo’s trade secrets case warrant provisional relief?

Answer:

Yes.

Conclusion:

Re: likelihood of success on merits — Waymo has supplied a compelling record that Levandowski pilfered over 14,000 files from Waymo, and that Uber knew or should have known as much when it brought him on board. In this connection, Waymo's descriptions of its asserted trade secrets follow a pattern of claiming broad swaths of solutions to general competing considerations and engineering tradeoffs rather than the single, specific solution adopted by Waymo. The problem, of course, is that such considerations and trade-offs are known outside of Waymo. Every company in the field can be expected to settle on some specific resolution thereof, and every company's specific resolution may well qualify as a trade secret. But it would be wrong to allow any company to leverage a single solution into a monopoly over broad swaths of other solutions — for example, merely because they all fall on the side of generally favoring a particular consideration over others. To do so would be to allow monopolization of broad scientific or engineering concepts and principles. Waymo's gamesmanship on this score undermines its credibility on this motion. That being said, Waymo has shown at least serious questions going to the merits concerning whether some information within the 14,000-plus downloaded files has been used by defendants and qualifies for trade secret protection. After analyzing Waymo’s offered evidence (most of which were redacted), the bottom line is the evidence indicates that Uber hired Levandowski even though it knew or should have known that he possessed over 14,000 confidential Waymo files likely containing Waymo's intellectual property; that at least some information from those files, if not the files themselves, has seeped into Uber's own LiDAR development efforts; and that at least some of said information likely qualifies for trade secret protection. This is sufficient for Waymo to show serious questions going to the merits of its case.

Re: likelihood of irreparable harm — The root problem remains that, on this record, Levandowski downloaded and retained possession of over 14,000 confidential Waymo files — at least some of which likely contain trade secrets — for the ostensible purpose of using the information therein in his work for a competitor. He can easily and at any time consult that information to further defendants' LiDAR development even if none of the files ever actually pass through an Uber server. Such misuse of Waymo's trade secrets might be virtually untraceable. For example, defendants might claim that any suspicious "breakthrough" in their self-driving car efforts is simply independent development or even the result of Levandowski's brilliance rather than his exploitation of Waymo's confidential information. Indeed, defendants have already carefully crafted a narrative of their self-driving car efforts that conspicuously and incredibly denies any meaningful contribution by Levandowski — even though Uber, in a deal worth approximately $680 million dollars, hired him to lead those efforts. And troves of likely probative evidence have been concealed from Waymo under relentless assertions of privilege that shroud dealings between Levandowski and defendants in secrecy. As this motion has shown, questions on the merits as to even a few asserted trade secrets provoke bitter evidentiary disputes and intense debate. Contrary to defendants' suggestion, it would not be an easy matter — even if Waymo prevails at trial — to simply identify and enjoin parts of defendants' technology that use Waymo's trade secrets. It will be a bone-crushing endeavor. And, even then, it may prove impossible to fully restore the parties to their respective competitive positions as if no misappropriation had occurred. It is far better to instead put in prophylactic measures now to prevent misappropriation (or further misappropriation) to the extent warranted on this record. Other examples of irreparable harm that may befall upon Waymo include any Waymo trade secret used in defendants' technology may be destroyed via disclosure in defendants' regulatory filings. Otto's Nevada submission shows as much. As another example, if defendants use Waymo's trade secrets to accelerate their own progress in LiDAR development, that momentum would improve their ability to attract investors and talented engineers away from competitors — including Waymo itself. That poaching scenario and the harm it entails are, in fact, the subject of Waymo's separate arbitration proceedings against Levandowski.

Re: public interest — Defendants argue that this public interest does not weigh in Waymo's favor because Waymo has not shown likelihood of success on its claims. This order disagrees. As stated, Waymo has shown at least serious issues going to the merits of its misappropriation claims. Inasmuch as Waymo may have rights in valid trade secrets warranting protection until trial — and defendants have not yet shown otherwise — the public has an interest in vindicating those rights. Defendants also argue that the public interest weighs in their favor because allowing Uber to continue developing its technology will lead to more competition and consumer choice in the self-driving car market. But the limited relief granted herein will not stop Uber from continuing to develop its technology. Moreover, safeguards imposed on Uber in response to brazen misappropriation of trade secrets by its executive and engineer would hardly discourage legitimate competition in a field where intellectual property rights are important to innovation.