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The driverless car industry is hot and super-competitive. That’s a given. Here’s what’s not hot if you are Waymo, the self-driving car business that was spun out of Google’s parent company:
Waymo filed a lawsuit claiming that Uber is using its intellectual property that was stolen by one of Google’s former employees, who now happens to be working for Uber.
Waymo claims that while Anthony Levandowski was working for Google, he downloaded 14,000 files from Google shortly before he left to start his own self-driving car company, Otto.
Waymo also claims that a number of former Google employees became employed by Otto and had downloaded other trade secrets before leaving. Those trade secrets included supplier lists, manufacturing details and technical information, according to Waymo.
Uber acquired Otto for more than half a billion dollars several months after Mr. Levandowski (and the others) left Google. Reading between the lines, we can guess that Uber acquired Otto for its driverless car technology.
Waymo was alerted to the possibility that Uber had its technology because one of Waymo’s suppliers inadvertently copied Waymo on an email. The email included drawings of Uber’s circuit board design for laser-based sensor technology for driverless cars. Waymo took note because the “design bore ‘a striking resemblance’ to its proprietary and highly secret design.”
So, while Waymo seems to have some pretty convincing evidence that its proprietary information is in the hands of a competitor, it needs to prove more than that to win its claim that its trade secrets were stolen.
Theft of information is one thing, but whether the information stolen is a trade secret is entirely different matter.
Last year, in a two-part series, I reviewed the Defend Trade Secrets Act (DTSA)[1] and its significance–specifically, the definition of a trade secret and how to protect trade secrets and business confidential information. At the expense of Google and Waymo, that two-part series has had a real-life teachable moment breathed into it. Here is why Waymo must prove more than theft of information and why Google and Waymo may end up fighting each other:
A trade secret is information that is kept under lock and key not just because it is unique to that business, but because its secrecy provides a competitive edge. A trade secret consists of three key elements:
1. The information is not generally known to the public;
2. The information obtains its economic benefit because it is not generally known; and
3. The information is subject to reasonable measures to protect its secrecy.
To prove theft of its trade secrets, Waymo must prove all three elements. In this case, it appears that Waymo will have no difficulty proving the first two elements. Their driverless auto technology is not generally known to the public, or we would have all heard about THAT. And, I think it is reasonable to assume that the technology is valuable because it isn’t generally known. In other words, Waymo’s driverless car technology is valued because it gives Waymo a competitive advantage.
That leaves us with the third element that Waymo must prove, and that is that Google took reasonable efforts to maintain secrecy of its information (that was later transferred to Waymo). Let’s hope that Google had this lock and key part nailed down.
Why? Because even if Waymo proves that the technology was stolen by former Google employees before they left, it must also prove that the technology stolen was subject to reasonable efforts to maintain secrecy. It is not enough to prove that secret technology was stolen.
If the information was NOT subject to reasonable measures to protect its secrecy, then it is not a trade secret. Trade secret, by its definition, includes the requirement that the secret is guarded.
What does reasonable efforts to maintain secrecy mean? What is required? It can mean a number of things are required, for example, having employee agreements that include properly drafted non-disclosure clauses, restricting access to information to only employees with a need to know, classifying information as top-secret or confidential, compartmentalizing access to information, conducting exit interviews to remind departing employees of their continuing obligation of secrecy, monitoring competitors and monitoring key employee downloads of information. There may well be other measures that are standard (and therefore reasonable) in the industry for safeguarding technology.
If Waymo can’t prove that Google took reasonable efforts to maintain secrecy of the information, even if it was stolen, it isn’t a trade secret and they lose that claim. In that case their recourse would be against Google for NOT maintaining secrecy.
That’s where the rubber could meet the road … in a totally unexpected way.
If you are not sure that your business trade secrets are being properly protected, schedule a 20-minute power-house consultation, and let’s make sure that you #CoverYourAssets.
(Susan is a regular Contributor to Huffington Post, and this was also posted there.)
[1] The DTSA was a rare piece of legislation that was largely agreed upon on both sides of the aisle and was signed into law by President Obama on May 11, 2017. Due to its bipartisan support it seems likely to stand, even under the current administration, but no guarantees.
