By Greg Bensinger 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 5, 2018).

Technology companies are pouring billions of dollars into developing robot cars they hope will save lives, make human drivers obsolete and one day reap them riches.

The future of the technology might hinge on the outcome of a blockbuster trial between two leading lights in the development of driverless vehicles -- Uber Technologies Inc. and Alphabet Inc.'s Waymo, an offshoot of Google -- set to start Monday in San Francisco.

The biggest Silicon Valley legal battle in years pits a highflying startup against a tech behemoth, in a case that has already yielded a year of drama and legal wrangling. Waymo's lawsuit, filed in U.S. District Court for the Northern District of California, alleges Uber ransacked the tech giant's driverless-car design secrets after paying about $680 million in 2016 to buy autonomous-truck company Otto, founded by a former star engineer at Google, Anthony Levandowski.

Uber denies the allegations, though court filings indicate it knew before buying Otto that Mr. Levandowski had possession of sensitive Google files. The San Francisco startup has said it is using its own technology to create autonomous vehicles. Last May, it fired Mr. Levandowski in part due to what it said was his unwillingness to cooperate with its own investigation. His attorney didn't respond to a request for comment.

Waymo has "accumulated significant and compelling evidence of Uber's theft and use of Waymo's trade secrets," a spokesman said.

"We're pleased to finally be able to focus on what this case is really about: the technology," said an Uber spokesman. "We're very confident in our technical case."

The case has captivated Silicon Valley, with allegations of corporate espionage, a Who's Who of technology executives expected to testify and tough talk from a fiery federal judge, William Alsup, who has scolded both sides for what he said are failures to disclose pivotal information.

Waymo will seek an injunction to prevent Uber from further developing aspects of its driverless-car technology and possible damages that could reach into the billions. If Waymo wins, the ruling could hamstring a direct rival, as it eyes building out its own ride-hailing networks in coming years.

Uber has called the development of self-driving vehicles "existential" in its drive for more efficiency and eventual profitability. A ruling in its favor would deliver Uber an important moral victory, while allowing it to continue working on autonomous vehicles unabated.

With billions of dollars on the line and the future of personal transportation up for grabs, the case is expected to become a touchstone for intellectual property law.

"The stakes are awfully high," said John Marsh, an attorney with Bailey Cavalieri LLC, who specializes in trade-secrets law. "Companies will have to think very carefully about how and which other companies they acquire, and what the employees know that they are bringing aboard."

Waymo alleges Uber executives carefully orchestrated the acquisition to obtain the intellectual property and know-how Mr. Levandowski could bring from his time as a Google employee, getting a jolt in the yearslong race to get the vehicles on the road.

Waymo's allegations center on Uber's development of a technology used to guide self-driving vehicles known as lidar, or light detection and ranging systems. Waymo claims Mr. Levandowski downloaded some 14,000 sensitive files to his personal computer before quitting Google, imperiling eight patents.

But Judge Alsup has challenged Waymo attorneys to prove not just that Uber arranged for the trade secrets to be stolen, but also that it used them inappropriately in its development of lidar. That may mean convincing the jury of technical subtleties in software code and sensors.

"The amount of alleged misconduct is extraordinary," Mr. Marsh said. "But the burden is on Waymo to paint a convincing picture through circumstantial evidence."

The case took an unexpected turn late last year, when a 37-page letter from a former Uber security official emerged alleging the company had formed a covert team dedicated to stealing trade secrets and helping employees dodge regulators' scrutiny. Uber said in court the letter was an extortionist move designed to extract millions of dollars from the company and that many of its allegations were false. The judge last month said much of the letter won't be admissible unless the former executive testifies.

Mr. Levandowski, for his part, has indicated he will invoke his Fifth Amendment right protecting himself from self-incrimination, though he is not a named defendant in the case. Other boldface names likely to testify are former Uber CEO Travis Kalanick, Google co-founder Larry Page and Benchmark venture capitalist Bill Gurley, previously on Uber's board.

Regardless of the outcome, Uber faces continued heat ahead: The U.S. Justice Department may decide to prosecute Uber after Judge Alsup recommended a criminal investigation. The Department declined to comment.

--Jack Nicas contributed to this article.

 

(END) Dow Jones Newswires

February 05, 2018 02:47 ET (07:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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