Uber’s Date with Justice

By: Bridget Clerkin October 6, 2017
Federal District Court Judge William Alsup forwarded information from the upcoming Uber lawsuit to federal prosecutors to investigate if the Silicon Valley ride hailing firm committed crimes in its quest for self-driving car technology.
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Uber’s Date with Justice

Uber may have caught a breather now that its looming trial against archrival self-driving firm Waymo is postponed to December, but the company still can’t seem to catch a break.

The rideshare giant will not only have to do battle in court against the Google sister company; it may also have to face off against Uncle Sam himself, as the pending case has been recommended for review by the U.S. Justice Department.

Judge William Haskell Alsup, who is overseeing the Silicon Valley showdown in which Waymo has accused Uber of stealing trade secrets vital to the creation of self-driving cars, made the official referral to the U.S. Attorney earlier this year, saying evidence Waymo’s legal team submitted to him suggested the need for further investigation.

(It also marks the second time this year that Uber has been the subject of federal inquiry. This spring, the Justice Department started looking into the company’s “Greyball” program, a digital trick it allegedly used to help drivers evade law enforcement officials.)

But the federal referral made by Alsup is an almost unprecedented move—and one that could spell doom for Uber, not only stripping the $70 billion company of its pride and its fortune, but possibly coming with some pretty serious prison time.

On What Grounds?

Uber has largely thrived on disrupting long-established markets, styling itself a trailblazer and operating under the mentality of “If you’re not first, you’re last.” Indeed, that attitude played a role in its entering the self-driving race at all—a pursuit that ultimately led to the current legal troubles the company finds itself in.

But if the federal investigation into the Silicon Valley behemoth turns into a federal trial, Uber may find itself the unwitting pioneer of a new legal path.

Uber’s “if you’re not first, you’re last” mentality ultimately led to the current legal troubles the company finds itself in.

The Justice Department could potentially try the company under the Defend Trade Secrets Act of 2016. If it does, it will likely be the first high-profile case to utilize the legislation.

The Act essentially works to create nationwide definitions—and punishments—for trade secret theft. Before its creation, courts depended instead on the patchwork laws dealing with the situation on a state-by-state basis.

While the Act leaves room to try defendants by state laws, it offers a new form of punishment for perpetrators of trade secret theft: ex parte seizure.

The provision allows authorities to repossess any property made by using the information in question—which, in Uber’s case, could lead to the elimination of its self-driving fleets. (For now, the company has been granted an injunction by Judge Alsup to continue working on its autonomous vehicles while the case is ongoing.)

A federal prosecutor could also try the company under the rules of the Economic Espionage Act of 1996, a more familiar—and arguably harsher—set of national laws that would equate any wrongdoing found of Uber to a criminal offense.

Either way, any advancement in the federal case could spell trouble for the company—which will have to deal with the separate $1.86 billion civil case Waymo has brought against it regardless of whether the government takes action. And that the Justice Department is looking into things at all already speaks volumes about Uber’s vulnerability.

What’s the Worst that Could Happen?

Inviting federal investigators to get involved in the case isn’t a decision made lightly, according to former DOJ attorney Peter Toren.

“For a judge to do that, he must believe there’s a lot of smoke, if not fire, for criminal violations,” he told Wired. “If you get a referral, and I did get one or two in my career, you obviously take that very seriously.”

Former DOJ attorney Peter Toren says the sheer potential of major damages in the Uber-Waymo lawsuit (Waymo is asking for $1.86 billion) could spell big consequences in a potential criminal trial.

And the sheer magnitude of the case could also lead to unprecedented punishments.

When it comes to intellectual property cases, Toren said, the estimated market value of the trade secrets in question is a large factor in the sentencing process, helping determine the length of any potential jail time.

One man tried under the Economic Espionage Act received a 15-year prison sentence for stealing information worth $20 million, he said.

That’s exceptionally bad news for Uber, as the self-driving car industry, in general, has a projected worth of $7 trillion, and the special laser technology the company is being accused of lifting from Waymo, specifically, ranges up to $7,500 per sensor. (Autonomous models currently being tested often use several sensors per vehicle.)

Still, Uber may yet find themselves a way out of the situation—with help from an unlikely source.

Strange Bedfellows

In order for a federal prosecution to go smoothly, the government would have to seek cooperation from Waymo. And while the company certainly rejoiced when Uber’s bid for arbitration—that is, a private negotiation of the case, rather than a public court battle—was rejected earlier this year, it may not be as willing to work on the criminal case.

Participating in a federal trial would mean playing by the government’s rules, rather than those dictated by civil court, and Waymo would likely have to relinquish control over which of its own information is collected or made public.

Still, after months of submitting evidence to the court, the company’s case is apparently without a smoking gun—which may make working with the feds more appealing.

Regardless, it seems Uber’s case has the potential of being terminal.

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