scorecardThe real fight between Uber and Google over what 'may be the most lucrative business in history' starts tomorrow
  1. Home
  2. tech
  3. The real fight between Uber and Google over what 'may be the most lucrative business in history' starts tomorrow

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

The real fight between Uber and Google over what 'may be the most lucrative business in history' starts tomorrow
Tech7 min read
Ubers Spider Lidar prototype that its been ordered to produce in court pimgdivp    Court filing

Associated Press

Uber CEO Travis Kalanick with Anthony Levandowski, the former head of its self-driving vehicle division

"This is not your garden variety trade secrets case. This is a case that involves what potentially may be the most lucrative business in history, and Google is trying to keep its main competitor on the sidelines."

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 for weeks 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 to the progress that other companies have made, Uber insists.

At Wednesday's hearing, each side will for the first time lay out its case in front of Judge William Alsup, a federal judge famous for learning 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 hid evidence from the court and an Uber exec pleading the Fifth Amendment to avoid self-incrimination.

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

First: Rewind to February

The dispute between the two companies kicked off in February when Waymo, the self-driving car division that spun out of Google in December 2016, accused Uber of stealing its trade secrets and its intellectual property and accused the company of infringing 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 their own in-house technology to get a leg up on the competition.

Anthony Levandowski


Anthony Levandowski

Waymo alleges that its former star engineer, Anthony Levandowski, downloaded more than 14,000 files (9.7 gigabytes of data) containing information about the company's self-driving technology to his laptop and then transferred those files to another external storage device. Those files included plans for Waymo's proprietary lidar system, according to the company.

Levandowski then left Google's self-driving division in January of 2016, weeks after downloading the files, Waymo says. He later 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 efforts until he recently had to step aside from the position because of the lawsuit.

Waymo says it was accidentally sent an email from one of Uber/Otto's suppliers for lidar equipment late in 2016. The lidar designs in the email "bore a striking resemblance to Waymo's unique lidar design," Waymo says.

Two weeks later, it filed the preliminary injunction motion to ban 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 for 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.

To start, despite not being named individually in the lawsuit (Waymo only sued Uber, Ottomotto, and Otto Trucking), Levandowski hired his own criminal attorneys and plead the Fifth Amendment to avoid self-incrimination more than 400 times in six hours when Waymo tried to depose him. He also tried use the Fifth Amendment to conceal the name of the firm, Stroz Friedberg, that did the due diligence report 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 not owned by Uber that he could've accessed while working from home nor has he answered any questions in his deposition that would deny that he's ever 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 that they're guilty of using misappropriated trade secrets and infringing on Waymo's trade secrets. (Waymo still believes that 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 argues that the Lidar design it is currently building, nicknamed Fuji, has very little to do with Levandowski and Waymo's intellectual property because it was developed independently and 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 up until October 2016 when Levandowski was convinced that it wasn't working and the team switched to Fuji. Levandowski had even helped 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 still argues that a non-working prototype can be found in violation of patents if it's never even been placed on a car and has already been sidelined from development.

The complicated triangle between Spider, Fuji, and Waymo's Lidar - and whether or not any of the designs did infringe 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 it needs to stop this work now.

The rush to win

At the core of the case, Waymo believes 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 cause irreparable harm to the competition, Waymo believes. Yet, Uber doesn't buy the argument that Waymo needs to put an immediate stop to its work.

Google says it found out that Levandowski had downloaded the 14,000 files off its servers in October 2016, months before it would eventually sue. Uber says that alone should have been enough for Google to initiate legal action since its the basis of so much of the case - and because Google also brought a claim privately in arbitration the same month against Levandowski for poaching people.

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

Come Wednesday, Judge Alsup will have to hear the arguments on all sides and determine whether or not a preliminary injunction is appropriate and what the scope of it could be. One route would be to block the further development of Spider and remove Levandowski from working on self-driving cars (something the Judge has already mentioned as a possibility). Yet, it's not the only major decision to be made this week.

One last twist

While the preliminary injunction hearing is a critical moment for the self-driving car industry, there's one more decision hanging over the case that 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.

The judge in the case appears to be relishing the rich irony of the situation, telling Waymo's lawyers during a court hearing last week that it would be "poetic justice" if the litigation wound 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 Judge Alsup has heard the arguments for and against it going to arbitration, he still hasn't decided on a ruling and could decide on the preliminary injunction and arbitration decision together. Regardless of Alsup's decision, the claims of patent infringement would move forward since they don't involve Levandowski's actions. But having that arbitration agreement, a common clause in so many contracts, could mean that the most controversial claims in the high-stakes case could be resolved in secret.

Get the latest Google stock price here.

NOW WATCH: Uber wants to carry you around in a flying car - here's what it could look like