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Author: Tan KW   |   Latest post: Wed, 18 Oct 2017, 10:53 PM

 

Criminal probe of Uber may freeze Waymo trade secrets trial

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A federal criminal probe of Uber Technologies Inc investigating whether the company stole driverless car trade secrets from Waymo could freeze a high-stakes trial between the two companies. 

Depending on the breadth of the investigation, reported earlier Wednesday by Bloomberg, executives or engineers whose testimony is critical to the trial may choose to assert their constitutional right against self-incrimination and refuse to testify. 

Typically the target of the investigation would request a delay and the court would consider putting the trial on hold, according to attorney Jim Pooley, a Silicon Valley-based trade secrets expert who has followed the case. “Everything grinds to a halt in the civil litigation while waiting for the outcome of the criminal case,” he said. 

Any request for a delay due to the criminal investigation would likely come from Uber or its co-defendant Otto Trucking, a startup founded by Anthony Levandowski, the engineer at the heart of the case who pleaded the Fifth Amendment at the outset. Levandowski isn’t named as a defendant in the lawsuit. 

A decision to halt the civil case would be up to US District Judge William Alsup in San Francisco, who last week postponed the trial until Dec 4. The reason for the delay was to give Waymo more time to evaluate a 2016 report commissioned by Uber to vet its hiring of Levandowski. 

A criminal probe isn’t completely surprising, given Alsup asked federal prosecutors in May to investigate the claims in the case. 

Information sharing

That said, most of the pretrial information sharing and testimony has already been exchanged by both sides in the civil litigation, which may allow a criminal investigation to proceed without interfering with the civil suit. Both Uber and Otto Trucking last week opposed delaying the trial, which may also indicate executives at the companies feel they have little to fear from testifying. 

Abraham Simmons, a spokesman for the US Attorney’s Office in San Francisco, said the office doesn’t comment on the existence or non-existence of any investigation. Matt Kallman, a spokesman for Uber, declined to comment. Miles Ehrlich, Levandowski’s lawyer, didn’t immediately respond to an emailed request for comment. 

In its complaint, Waymo, a unit of Alphabet Inc’s Google, accused Uber of building LiDAR systems using designs stolen from Waymo. LiDAR systems use the reflection of laser beams to sense a vehicle’s surroundings so the car can avoid pedestrians, obstacles and other vehicles. The technology is key for Waymo, Uber and any other company looking to move into the autonomous-vehicle market. 

Second shoe

The effect on the civil case of an outcome in the criminal case depends on how much of a “match” there is between the allegations in each, Pooley said. 

“It’s important to note that criminal charges can be based on a mere attempt to misappropriate, or a conspiracy to misappropriation, while in general a civil case requires an actual misappropriation,” he said. “It’s conceivable that there could be a guilty finding in an 'attempt’ criminal case, with little effect on the civil case.” 

The criminal investigation by federal prosecutors into Waymo’s claims is the second shoe to drop, Pooley said. He cautioned that so far, it’s only an investigation, one step of many in the process that could potentially result in charges being filed.  

“This is not the second of two shoes – it’s many shoes, and they may decide not to proceed,” he said, referring to prosecutors. — Bloomberg

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