New Evidence Could Blow Open the Uber/Waymo Self-Driving Lawsuit

Frank
July 3, 2018
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Today, after three weeks of legal hemming and hawing, the Northern District of California finally made public a potentially key piece of evidence in the rollicking, roiling, rolling trade secrets lawsuit between self-driving Alphabet spinoff Waymo and ridehailing company Uber.

That evidence is the Jacobs Letter, a 37-page rundown of truly outrageous allegations about Uber’s business practices, put to paper by the lawyer for former Uber employee Ric Jacobs. Originally sent to Uber’s lawyers as part of a dispute between the company and Jacobs, it’s now at the center of Uber’s legal fight with Waymo. Whoops.

And while the letter’s contents most definitely have not been proven true, they include some tremendous new assertions: that former Uber CEO Travis Kalanick himself directed trade secret theft; that the company employed spies to trail competitors’ executives; that it illegally recorded a call with employees about sexual assault allegations; and that it used a meme-filled slideshow to teach employees how to hide implicating documents from nosy lawyers.

So we—like you, presumably—have a few questions.

In February, Waymo sued Uber for trade secret theft. It alleged longtime Google engineer Anthony Levandowski secretly downloaded thousands of files, resigned, and used the ill-gotten intellectual property to start his own self-driving truck company, Otto. Uber bought Otto in August 2016 (for a reported $680 million) and put Levandowski in charge of all its autonomous driving efforts. Waymo argues that Uber knew Levandowski had stolen its IP, then used that info to accelerate its own R&D.

After months of discovery, the case was supposed to go to trial in early December, wrapping up in time for holiday hot chocolates and trips to European snow chalets (for the lawyers, probably). Instead, in late November, the US Attorney’s Office made the very unusual move of sending William Alsup, the judge overseeing this case, a new piece of evidence. (Legal experts speculate the government lawyers did this as a sort of courtesy, because Alsup had flagged the trade secrets theft case for them back in May—another unusual move. The US Attorney’s Office confirmed this week it’s investigating the case.)

Who knows? An Uber spokesperson writes: “While we haven’t substantiated all the claims in this letter—and, importantly, any related to Waymo—our new leadership has made clear that going forward we will compete honestly and fairly, on the strength of our ideas and technology.”

Earlier this month, new Uber head lawyer Tony West told the company security team there was “no place” for competitor surveillance at Uber, and that anyone involved in that kind of shady behavior should “stop it now.”

During pretrial hearings a few weeks ago, Jacobs took the stand and walked back some of the claims in the letter, including the allegation that an Uber team stole trade secrets from Waymo. “I don’t stand by that statement,” he said, explaining that his lawyer had written the letter, and that he had reviewed it in a rush while on vacation.

Ric Jacobs is a former Uber global threat operations employee who left the company this spring, after telling top Uber execs he was uncomfortable with his team’s ethically and legally dubious practices. The document portrays him as a whistleblower.

Uber says that’s not true, and its employees testified Jacobs was demoted for performance issues, resigned after he was caught downloading documents, then used trumped-up charges to extract a big payout in “consulting fees” on his way out the door—$4.5 million, plus another $3 million for his lawyer. Is Jacobs an extortionist? Would Uber pay that much to a bad actor? The letter only tells his side of the story.

The letter says the Strategic Services Group was made of spies who allegedly handled human intelligence collection and stole data and info from competitors. It says Market Analytics members acquired trade secrets, competitive intelligence, code, and details on the operations of competitors’ apps—sometimes directly at the behest of then-CEO Travis Kalanick.

The letter also recounts some very sketchy (and, remember, alleged) fraud-like espionage behavior. Jacobs’ lawyer writes that SSG infiltrated Facebook groups and WhatsApp group messages for anti-Uber protestors, Uber drivers, and taxi operators. It alleges the Market Analytics team remotely accessed confidential corporate communications from a competitor, impersonated rider and drivers on the competitors’ platforms, and used the competitors’ data to “steal” drivers and riders for its own service. This sounds like—but is not necessarily—a reference to Uber’s “Hell” project, which used secret software to track rival Lyft’s drivers. (That program is reportedly being investigated by the FBI). The letter also alleges Uber stole a taxi driver database containing 35,000 records.

During a pretrial hearing this month, one Uber employee testified that a vendor had passed along a taped conversation between executives at Didi Chuxing and Grab (Uber competitors from China and Singapore, respectively). The letter describes a similar (but maybe not identical?) situation, wherein, at the personal direction of Kalanick, “multiple surveillance teams infiltrated private-event spaces at hotel and conference facilities” where executives were staying, to record private conversations.

Quoth the letter: “To date, Jacobs is aware Uber still benefits from at least on well-place [sic] [human intelligence] source with access to [REDACTED] executives and their collective knowledge of [REDACTED] on-going business practices.” Yeesh.

The Jacobs letter details a complex system of shielding documents from eventual lawsuits, using forwarding techniques and strategic marks on draft documents to assert attorney-client privilege. It also alleges Uber employees used non-attributable devices, wiped clean after each use, and ephemeral messaging apps like Wickr and Telegram to communicate about things they’d rather not have regulators and lawyers see. (Experts note there are perfectly good reasons to use such devices and anonymizing techniques.) The letter says one Uber official trained the company’s autonomous driving unit to “impede, obstruct or influence the investigation of several ongoing lawsuits against Uber.”

The letter alleges an Uber employee “developed a training using innocuous legal examples and the ‘lawyer dog’ meme to produce a slide deck that taught the ThreatOps team how to utilize attorney-client privilege to impede discovery.”

Among the creepiest allegations: Uber did not tell employees it was recording them during a call about the sexual harassment allegations. Recording a phone call without the consent of all parties involved is illegal in California.

“Like a ‘scalp’ collected, the Market Analytics team proudly has a [REDACTED] nailed to the wall in their workplace to signify their successful theft of [REDACTED] trade secrets,” the letter says. Twitter’s best guess: a pink Lyft mustache.

Again, it’s unclear whether any of these allegations are true, or why Jacobs had his lawyer write the letter in the first place. Still, Waymo will undoubtedly use the details here to argue Uber had established protocols to conceal its alleged trade secrets theft.

Whatever the truth, the letter will have an immediate effect: The court has found Uber should have definitely turned over this 37-pager during the discovery process. And that’s a problem.

“To use a legal term, Uber is in deep doo-doo,” says Peter Toren, a former federal prosecutor who specializes in trade secret litigation.1 “Judge Alsup is not going to be pleased with this at all.”

Alsup already has already been very impatient with Uber’s lawyers. Now, he could impose monetary sanctions on Uber, charging them court costs and/or Waymo’s bills associated with the trial delay, which could add up to hundreds of thousands of dollars. He could also allow the Waymo team to draw “adverse inferences” from Uber’s omission—to argue that, because Uber couldn’t produce ephemeral messages and hid documents, it’s fair for the jury to assume that they were filled with nefarious dealings.

Finally, the Jacobs letter could be used to supplement other lawsuits in the galaxy of those filed against Uber—or to launch entirely new ones. “To the extent that somebody now has a cause of action they may not have had before, it gives them evidence,” says Toren. Waymo lawyers are not the only ones reading the Jacobs letter. And they won’t be the only ones with questions.

1 Story updated at 20:15 ET on Saturday, December 16 to clarify Peter Toren’s title.

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Frank’s source: https://www.wired.com/story/uber-waymo-lawsuit-jacobs-letter/

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