The real fight between Uber and Google over what 'may be the most lucrative business in history' is

Publish date: 2024-07-10

The lines from one of Uber's court filings are more than mere hyperbole. Two of the largest companies in the self-driving-car sector have been mud-slinging since Waymo, a recent spin-out of Google, sued Uber in February.

On Wednesday, the technology giants will finally face off in court over Waymo's bid to stop Uber's self-driving-car research in its tracks.

Uber has sought to frame the development of this technology as "existential" to the future of its ride-hailing business. A court order forcing it to stop its research could derail its efforts to catch up with the progress that other companies have made, Uber says.

At Wednesday's hearing, each side will lay out its case in front of Judge William Alsup, a federal judge famous for learning about the Java computer language while he presided over the Oracle v. Google case a few years ago.

There have already been several eyebrow-raising twists in this case, including accusations that Uber may have hidden evidence from the court and an Uber executive pleading the Fifth Amendment to avoid self-incrimination.

Here's what you need to know about what has happened in the case so far and about the arguments the companies will likely make during Wednesday's big court hearing.

First, rewind to February

The dispute between the companies kicked off in February when Waymo, the self-driving-car division that spun out of Google in December, accused Uber of stealing its trade secrets and intellectual property and of infringing on patents related to its lidar systems.

Lidar is the key piece of technology in self-driving cars that allows them to "see" what's ahead on the road. The lidar industry is lucrative and competitive, and many tech and automotive companies are working to develop in-house technology to get a leg up on the competition.

Those files included plans for Waymo's proprietary lidar system, according to the company.

Levandowski left Waymo in January 2016, weeks after downloading the files, Waymo says. He went on to start Otto, a startup focused on self-driving trucks, which Uber acquired six months later. Levandowski became the head of Uber's self-driving-car efforts until he had to step aside from the position because of the lawsuit.

Waymo says one of Uber/Otto's suppliers for lidar equipment accidentally sent it an email late last year. The lidar designs in the email "bore a striking resemblance to Waymo's unique lidar design," Waymo says.

Two weeks later, Waymo filed a preliminary injunction motion to bar Uber from using any of its trade secrets and intellectual property or infringing on its patents while developing its self-driving vehicles.

The case of the 14,000 missing files

Since Waymo asked the court to put a stop to Uber's research, the two sides have been involved in a messy back-and-forth about three key points: the 14,000 files, the lidar designs, and the timeliness of it all.

Despite not being named in the lawsuit — Waymo sued Uber, Ottomotto, and Otto Trucking — Levandowski hired attorneys and pleaded the Fifth Amendment more than 400 times in six hours when Waymo tried to depose him. He also tried to use it to prevent the name of the firm that did the due diligence report, Stroz Friedberg, from being revealed in court, but a judge ruled against him.

On the surface, it's a bad look for the company, since Levandowski hasn't let Uber search any device that it doesn't own that he could've accessed while working from home, nor has he answered any questions in his deposition that would show he never used them at his new employer.

But Uber is sticking by its claim that the 14,000 files never made it to Uber's servers and that "merely hiring" him isn't enough to show it's guilty of using misappropriated trade secrets and infringing on Waymo's patents. (Waymo still believes he could've referenced the files at home for his designs.)

Instead, Uber's main defense against the charges of intellectual-property theft and patent infringement is that its lidar systems aren't using the technology at all.

And that's where things get complicated.

Meet Spider

In its rebuttal to claims, Uber said the lidar design it was building, nicknamed Fuji, had very little to do with Levandowski and Waymo's intellectual property because it was developed independently for many years by an engineer in Pittsburgh.

However, Waymo claims that Uber has been involved in a "cover-up" because there's a second "secret device" called Spider.

Spider was a different lidar system that Uber was working on until October, when Levandowski became convinced that it wasn't working and the team switched to Fuji. Levandowski had helped to consult with the lead engineer on the project after leaving Google but before joining Uber.

While Waymo's expert has found similarities between Waymo's device and Spider, Uber has argued that a nonworking prototype can't be found in violation of patents if it has been sidelined from development and never placed on a car.

The complicated triangle between Spider, Fuji, and Waymo's lidar — and whether any of the designs infringed on patents — will be dissected thoroughly in court on Wednesday, but it's only one aspect of the preliminary injunction hearing. The last thing Waymo has to prove is that Uber needs to stop this work now.

The rush to win

At the core of the case is Waymo's belief that Uber "enticed" Levandowski to come to the ride-hailing company and "jump-started" its self-driving-car efforts by copying the designs.

"That 'head start' is exactly the irreparable harm Waymo seeks to prevent," Waymo said in a filing.

In a market that many analysts believe could be worth tens of billions of dollars, a company leapfrogging ahead could irreparably harm the competition, Waymo says. Yet Uber doesn't buy Waymo's argument that it needs to put an immediate stop to its work.

Google says it found out in October — months before it sued — that Levandowski had downloaded the 14,000 files from its servers. Uber says that alone should have been enough for Google to initiate legal action, since it's the basis of so much of the case and because Google also in October brought a claim against Levandowski privately in arbitration, accusing him of poaching employees.

But Waymo is more conservative, and the bar for any Google company to sue over patent infringement is already high. The company said it waited to file its lawsuit until it had evidence that Uber was using the trade secrets and designs, not just in possession of them.

On Wednesday, Alsup will hear the arguments on each side and determine whether a preliminary injunction is appropriate and, if so, what the scope of it could be. One route would be to block further development of Spider and remove Levandowski from working on self-driving cars — something he has mentioned is a possibility.

But it's not the only major decision expected this week.

One last twist

While the preliminary injunction hearing is a critical moment for the self-driving-car industry, one more decision hanging over the case could change everything: Uber's motion to compel arbitration.

Uber has been trying to keep the case from ever going to a jury trial, and its main justification is the mandatory arbitration clause in Google's employment contract with Levandowski.

Alsup appears to be relishing the irony of the situation, telling Waymo's attorneys during a court hearing last week that it would be "poetic justice" if the litigation were to wind up in private arbitration.

Arbitration clauses are increasingly common in everything from bank and credit card contracts to employment agreements, and Google is hardly alone in using them. Big companies in particular like private arbitration because it lets them resolve sensitive disputes with employees, about anything from sexual harassment to stealing confidential information, outside of the public's eye.

While Alsup has heard the arguments for and against the case going to arbitration, he still hasn't ruled, and he could rule on the preliminary injunction and arbitration motion together.

Regardless of Alsup's ruling on arbitration, the claims of patent infringement will move forward because they don't involve Levandowski's actions. But having that arbitration agreement could mean that the most controversial claims in the high-stakes case could be resolved in secret.