Here’s what you need to know about the Uber-Waymo trial, which starts today

Here’s what you need to know about the Uber-Waymo trial, which starts today

Today, after almost a year of legal wrangling, compounding delays, and dramatic and hilarious twists, the jury will begin hearing arguments in Waymo’s bombshell lawsuit accusing Uber of stealing driverless car technology.

The suit centers around the alleged theft of thousands of documents by former Google self-driving engineer Anthony Levandowski. Shortly after Levandowski left Google, he founded Otto, a self-driving truck startup, which was quickly acquired by Uber. Waymo’s lawyers have argued that Uber wound up with those allegedly stolen files and merely masqueraded the process as an acquisition.

In many ways, this case should never have made it this far. Typically, big companies prefer to settle their spats out of court rather than risk the embarrassments of a high-profile trial. But this is not your average lawsuit.

The whole thing started when some dummy at Uber accidentally CC’d Waymo on an email from one of its self-driving tech vendors. The email contained a drawing of a circuit board that looked suspiciously like one of Waymo’s designs. That innocent mistake has since ballooned into a multibillion-dollar clusterfuck. It was recently reported that Waymo sought $1.4 billion and a public apology from Uber, but the ride-hail company rejected it as a non-starter.

So here we are. Not only is this case a rare chance to see two of the tech industry’s heavyweights duke it out in court, but it is also the first big legal battle of the self-driving car era. Experts predict that autonomous vehicles will be both highly disruptive and highly lucrative, so it makes sense that Uber and Waymo (the self-driving unit of Google parent Alphabet) are going to the mattresses over this technology.

In the past week, there have been a plethora of recaps published about the case so far. Rather than bore you with all the nitty-gritty details — What did those text messages between Levandowski former Uber CEO Travis Kalanick say? How many lenses are in Uber’s LIDAR sensor? What the hell is the Stroz report? — I thought instead, we’d pull the camera back and talk about what this means for the budding autonomous vehicle industry and the billions of dollars that are being spent in Silicon Valley to build cars that can drive themselves.

Shhhhhh, secrets

After all, this legal thriller is likely to be, well, pretty boring, as most highly technical court cases can be. Sure, there may be some intrigue, especially if Kalanick testifies. But the trade secrets on which Waymo is hanging its entire case won’t make much of a splash because they won’t be publicly disclosed. Only the jury will get details on the eight secrets, in order to preserve Waymo’s proprietary information from being made public.

So what is this case really about? In background conversations, Uber thinks this is revenge by Waymo for poaching its top engineer during a period in which the tech giant was hemorrhaging talent left and right. Waymo will argue that the case is about the sanctity of its patents and trade secrets (even though the company was compelled to drop its patent infringement claims against Uber) and a fair playing field in the race to develop autonomous cars. They’re both right, but there’s obviously a lot more at stake.

Mostly, it’s about — what else? — money and power.

“What this case says about the autonomous vehicles space is that the stakes (in the form of future revenue streams) are very high, and that companies investing in it will prioritize protecting those investments, including via legal action if necessary,” said Laura Koetzle, a vice president at Forrester.

The trillion-dollar question

Experts predict the self-driving car industry could be worth upwards of $7 trillion. And while that may seem on the surface like plenty of money to go around, the idea of being first to market with these robot cars is too valuable for any company to turn the other cheek when the opportunity arises.

That said, Waymo is worth tens of billions of dollars. Uber is, too. The only demand we’ve heard so far is $1.4 billion from Waymo, so this is money that both sides could actually afford to lose. Or is it? Uber has been a major money loser since its inception and while it still has a significant cash pile, a substantial award for Waymo could eat into that, shortening the company’s runway. Either way, the cost of legal fees are de minimus by comparison.

It’s been more than a decade since the successful completion of the DARPA Urban Challenge that spawned the present race to build self-driving cars. The teams of roboticists and engineers that gathered in Southern California that year have gone on to found and run the top self-driving car teams in the country. Without the DARPA challenge, there would not be a multibillion-dollar self-driving car industry today. Each subsequent year has seen increasing momentum and investments in this highly disruptive technology, with both tech firms and legacy car companies jockeying for position.

From the beginning, Google was seen as having an edge by virtue of its deep pockets and ability to attract top talent. After tapping Chris Urmson from Carnegie Mellon University and Sebastian Thrun from Stanford, for many years, it seemed like Google (now Waymo) had the terrain to itself. But then Uber dropped a megaton bomb in 2015 when it poached 42 employees from CMU, signaling its intent to build its own robot taxis. After all, autonomy was an “existential” crisis for the company’s future, as famously stated by Kalanick. Other major players, like Ford, GM, and Tesla, were also making investments and staffing up. But Uber vastly underestimated the time and effort it would take to reach full autonomy.

“Acqui-hiring”

Enter Levandowski. The star-crossed engineer, who is not a defendant in the lawsuit (Alphabet is suing him in arbitration), started a new LIDAR company on the side before even leaving his perch on Google’s self-driving team, Waymo alleges. And starting in late 2015, Kalanick allegedly began talking with Levandowski about possibly heading up the ride-hail company’s autonomous vehicle program. The goal was to help Uber catch up to Waymo. And Waymo says that Levandowski came bearing gifts in the form of 14,000 of its ill-gotten documents.

Otto, Levandowski’s self-driving trucking company, had only just come out of stealth when Uber announced its acquisition in August 2016. It was yet another example of the unseemly (and ungainly named) Silicon Valley practice called “acqui-hiring.” Instead of buying the company, its products, or potential financial contribution, acquirers purchase teams of smart people (generally engineers) who have a history of working together with the hope that adding these teams to its own might accelerate and advance their own businesses.

“The problem is that talent can walk out the door and leave anytime,” Koetzle said. “Particularly in California, where non-competition agreements are largely unenforceable, this expensive strategy doesn’t work well if you cannot keep the people you’ve just acqui-hired happy (which means you have to worry both about cultural fit and about competitors with deeper pockets). Thus, investors should be cautious about these ‘acqui-hire’ strategies, because the proverbial golden handcuffs of stock options and other time-based financial incentives alone won’t work for areas like autonomous vehicle systems that require long lead times (primarily because the people involved wouldn’t agree to delay their payouts long enough).”

This problem isn’t unique to the autonomous vehicles space, but because the Waymo / Uber case turns mostly on the movement of a single engineer from one company to the other (and what trade secrets he may or may not have taken with him along with all those documents), it places the issue in stark relief, she added.

If Uber loses, it may make companies less likely to take a risk on hiring from competitors, especially if those engineers come with pockets bursting with trade secrets. If Waymo loses, the opposite might be true and we could end up seeing even more mobility among employers, which could cause salaries to increase even more for self-driving car engineers. Given the inflated salaries of many working in the autonomous driving space — $400,000 for engineers, by one analysis — that really boggles the mind.

Yo, Alsup?

Arguably the most interesting player in all may be the white-haired man in the black robe with a soft Southern accent: William Haskell Alsup. The federal judge overseeing the case has been the unspoken star of the coverage so far. Alsup oversaw Oracle’s failed patent infringement lawsuit against Google, famously learning to code in the process. Since then, he’s become a bit of a nerd folk hero, much to his own chagrin. But he’s given mixed messages in his views on this case, which have some signaling that he’ll be the one to watch throughout the proceedings.

At times, Alsup has seemed fearful about setting precedent with this case. “Is an engineer supposed to get a frontal lobotomy before they go on to the next job?” Alsup asked. “The answer’s got to be no, but say they know the recipe for Coca-Cola. They have to forget that before their next job.” Even so, the judge plans to tell the jury that “[e]ngineers cannot…disclose to others specific engineering solutions or information developed by their prior employers” that qualifies as a trade secret, “even those developed or discovered by the engineers themselves.”

During pretrial hearings, Alsup has all but begged Uber to settle this case, while at the same time chiding Waymo’s lawyers for focusing too much on extraneous documents that claim to prove Uber is the devil. The central question of the three-week trial is “not whether or not Uber is an evil corporation,” Alsup said recently.

Uber Releases Results Of Internal Sexual Harassment Investigation

Et tu, Uber?

That may be, but it’s hard to argue this past year has been anything less than utterly reputation-destroying for Uber. From the moment Waymo filed its lawsuit, everything just went to shit for the ride-hailing company. Kalanick’s dalliances with the Trump administration spawned the #DeleteUber hashtag. Meanwhile, Susan Fowler’s bombshell essay about a culture of harassment and toxic-men-enabling-toxic-men was #MeToo before there was a movement. Her story, plus subsequent leaks about possibly illegal software tools to skirt law enforcement and spy on its competitors, eventually led to Kalanick’s ouster, and his replacement by former Expedia CEO Dara Khosrowshahi.

But this trial isn’t about all of that. It’s about trade secrets. Eight of them. And that’s it. Waymo won’t be allowed to raise Uber’s bad reputation to influence the jury, but some argue that the damage has already been done.

“On one hand, Uber’s many missteps and public debacles over the past year and a half puts the company in a difficult situation to come across as being credible,” said Raj Rajkumar, head of the Robotics Institute at Carnegie Mellon University. “On the other hand, those difficulties do not necessarily lead to ‘guilty beyond a reasonable degree of guilt’ and the burden of the proof continues to lie with Google / Waymo. With more leeway for additional discovery, one could potentially expect more revelations to occur.”

During the discovery phase, Waymo was able to compel the release of several damning documents about Uber, including a due diligence report (the aforementioned Stroz report) that Uber commissioned before it acquired Levandowski’s Otto. And the Jacobs letter, written by a former Uber employee, that details a vast network of hacking, spying, and dirty tricks by the ride-hail company in its relentless quest for global dominance. Ex-security staffer Ric Jacobs took a $4.5 million settlement from Uber over his claims about the company’s secrecy measures and has since reversed himself on some of the allegations. Alsup has ruled that his letter is inadmissible, but Waymo included him on its list of witnesses, so ¯\_(ツ)_/¯.

But what about the cars?

As it stands today, this trial is likely to have more of an impact on the way tech companies attract talent than on the development and deployment of autonomous cars. Even if Waymo wins — and many people think that it already has — the best it can hope for is damages (which Uber can afford) and an injunction against Uber from using its stolen LIDAR technology, which is likely to be irrelevant in a few years. That’s probably easy for Uber, which hasn’t even deployed the LIDAR in question.

The optics of two of Silicon Valley’s biggest companies going head-to-head is hard to deny. Meanwhile, Ford, GM, and other carmakers have re-doubled their efforts on self-driving cars. Unlike Uber and Waymo, they have the ability to design, manufacture, sell, and support these vehicles, as well as have their own internal autonomy expertise. “So, while the Waymo-Uber battle rages on, the traditional automakers and suppliers could be the ones winning the war,” Rajkumar said.

Make no mistake: this is a blood feud between two companies that have grown to hate each other. Google was an early and big investor in Uber, but their representative got booted off Uber’s board, and they subsequently become mortal rivals in the autonomous vehicle space.

If Waymo wins, the company would most likely seek an immediate injunction against Uber from using its stolen LIDAR technology. This won’t derail Uber’s autonomous driving tests that much, considering the ride-hail company says it buys its LIDARS off-the-shelf from Velodyne. It would only affect the LIDAR that Uber is trying to produce on its own, and source indicate that Uber is already trying to pivot away from the designs brought over by Levandowski.

But proving Uber was unjustly enriched by Waymo’s LIDAR designs may be extremely difficult to prove, especially considering Uber claims it never installed the LIDAR in question. Alsup denied Waymo’s earlier request for a preliminary injunction against Uber’s self-driving tests, which seems to support that theory. The bar to prove that Levandowski took Waymo’s trade secrets may be low, considering the disgraced engineer is expected to exercise his Fifth Amendment right to avoid self-incrimination during the trial. But the bar to prove that Uber was “unjustly enriched” by these trade secrets is probably very high.

While Waymo may not ultimately prevail in the trial, some would argue that the damage has already been done. Uber fired Levandowski, who has since gone on to form his own religious organization centered around artificial intelligence. Kalanick is out, and Khosrowshai is trying to rebuild Uber into a better, more careful, more contrite global player. And many see Waymo as being light-years ahead of its rivals in the self-driving space. Waymo could win even while it loses.

“This lawsuit really is emblematic of the stakes of who owns this groundbreaking technology,” said Michael Ramsey, a smart mobility analyst at Gartner. “And more than just the business, it’s very much personal… It’s high drama.”

 

Source by theverge..

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