Uber’s non-disclosure of the contents of a letter likely to significantly damage its case against Alphabet’s Waymo

This legal case, between Alphabet Inc’s Waymo and Uber, is likely to set a legal precedence. It is also likely to lead to further complications for its former CEO, Travis Kalanick.

In a damning disclosure, one of Uber Technologies’ attorney has testified that the company’s former CEO along with some board members were aware of the contents of a letter which alleges that employees had stolen trade secrets; despite this knowledge, the document was withheld in the high-stakes lawsuit.

This admission, that the letter was not produced in the lawsuit, has drawn a sharp retort from U.S. District Judge William Alsup, who is overseeing the case; further he has directed that U.S. prosecutors investigate the matter which raises the possibility of criminal charges.

“On the surface it looks like you covered this up,” said Alsup to Uber in court. “It seems like there are so many bad things that Uber has done in this case. Usually it’s more divided.”

The case revolves around Alphabet Inc’s Waymo complaint that Uber has stolen the company’s data concerning the designs for its self-driving car. Given the stakes involved, Alphabet is seeking hefty claims.

Uber has denied that it used Waymo trade secrets in its autonomous vehicle program.

Incidentally, Uber has recently received a multi-billion dollar investment from the SoftBank Group Corp which goes some way to demonstrate confidence in its long-term prospects.

This letter of admission, from former Uber security analyst Richard Jacobs, alleges that Uber trained its employees to steal trade secrets and hide their activities by using communications programs with disappearing messages and a separate computer system.

At the hearing in San Francisco federal court, Uber’s in-house attorney Angela Padilla testified she did not disclose the letter to Uber attorneys and an outside law firm that were defending Uber in the Waymo lawsuit.

“There was no effort to cover this up,” said Padilla while adding that she takes “full responsibility” for not circulating the letter more widely.

She said the allegations in the letter had seemed “quite fantastical” to her.

In his 37-page letter, former Uber security analyst Jacbos testified in court that his lawyer had sent a 37 page letter to Padilla describing a group within Uber, called marketplace analytics, was created with the purpose of acquiring trade secrets, code base and competitive intelligence.

The letter was also sent to the U.S. Department of Justice.

In his testimony, Jacobs described an intelligence operation inside Uber to research competitors and gather data about them, and use technology to avoid a paper trail.

On Wednesday, Padilla made it clear that Uber perceived Jacobs’ letter as a tactic, by a disgruntled former employee, to secure money from it.

“We felt that Jacobs was trying to extort the company,” said Padilla.

Significantly, it turns out Uber decided to settle the matter with Jacobs and paid him $4.5 million, which includes a year-long consulting contract as well as a $3 million fee to his lawyer.

“That is a lot of money,” said Alsup. “And people don’t pay that kind of money for BS. And you certainly don’t hire them as consultants if you think everything they’ve got to contribute is BS.”

Padilla answer to this argument was, Uber weighed the distraction of a drawn-out legal battle with Jacobs, as well as security concerns for employees named in the letter.

The bulk of the testimony surrounding the usage of communication apps used by Uber’s employees revolved around apps which did not store messages, such as Telegram and Wickr.

Uber’s current CEO, Khosrowshahi weighed in on the matter on Wednesday, by tweeting that he had changed the communications policy in September.

Henley mentioned that the group that Jacobs alleged had stolen trade secrets data from Uber’s competitors is now focused on protecting Uber’s data from its peers.

Categories: Creativity, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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